On Friday, US stock indexes declined for a third consecutive day despite having a brief rally in the early session, the Dow Jones Industrial Average wipe out all the 300 point gain, as fears intensified that the $700 billion bank rescue plan won’t unfreeze the credit markets.

The House approved the financial rescue plan by a vote of 263 to 171 ending two weeks of high stakes haggling in Washington that had roiled global markets. The Dow hit session highs as House members began to vote but immediately scale back when the measure was passed as investors began to focus on the economy and credit crisis instead.

The market ended up with its worst week in seven years with the Dow finishing at 10,325.38, down 157.47 points adding a total weekly loss of 7.4%. The S&P 500 fell 15.05 points to 1,099.23, down 9.4% for the week. The Nasdaq Composite lost 29 points to 1,947.39, a 10.8% decline from last week’s close.

Volatility continue to soar with the VIX index topping above the 48 mark, a levels last seen in 2002, the Dow and S&P were right on track for their biggest point losses. The biggest point drops prior to last week losses was after the 9/11 attacks in 2001. All the major indices were down more than 6% for the first time since 1998.

As the economy continues to weaken, investors are increasingly responding to the likelihood of a global recession by pushing the dollar higher and selling commodities. The third quarter promises to be a rough earnings season and will pressure stocks in the coming weeks.

The market are expecting the Fed to slash the current 2% target Fed funds rate by a half point before its next meeting, Oct. 28.

Economic reports for next week include the Fed’s minutes from last meeting on Tuesday and also the consumer credit. Wednesday, pending home sales are released at 10 a.m. Weekly jobless claims and wholesale trade on Thursday and on Friday, international trade and import prices data are released.

“Wall Street, with its army of brokers, analysts, and advisers funneling trillions of dollars into mutual funds, hedge funds, and private equity funds, is an elaborate fraud” - Michael Lewis

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