JIM LEHRER: Fears of recession overwhelmed Wall Street today. Heavy new losses erased most of the gains in Monday's record rally.
The Dow Jones industrial average fell 733 points to close below 8,578. Its only worst day was last month, when it dropped 777 points. The Nasdaq fell 150 points today to close at 1,628.
Two new government reports fed the sell-off. They showed retail sales falling and wholesale prices rising much more than expected.
Oil prices also fell sharply, finishing near $74.50 a barrel. Oil is down nearly 50 percent from its peak last July.
The market's pessimism was reinforced when the chairman of the Federal Reserve spoke today. Ben Bernanke warned the economy's road back to health will not be easy. He spoke in New York.
BEN BERNANKE, Federal Reserve chairman: Stabilization of the financial markets is a critical first step. But even if they stabilize as we hope they will, broader economic recovery will not happen right away.
Economic activity had been decelerating even before the recent intensification of the crisis. Ultimately, the trajectory of economic activity beyond the next few quarters will depend greatly on the extent to which financial and credit markets return to more normal functioning.
JIM LEHRER: The Fed reported worsening conditions nationwide in its latest survey today. Consumer spending and manufacturing were down in most regions.
Despite the bad news, President Bush offered reassurance again today. He said he believes the economy will come out "better than ever" in the long run.
The European Union today endorsed a banking crisis plan for the entire continent. Britain and 15 other E.U. members had already adopted the plan. It will cost $2.3 trillion.
European leaders also called today for revamping the worldwide financial system. German Chancellor Merkel spoke in Berlin.
ANGELA MERKEL, chancellor, Germany (through translator): We decide on comprehensive, far-reaching, and dramatic measures. We take drastic steps. We take drastic steps so that what we've experienced now will not happen again. There with, we establish the structures for a humane market economy in the 21st century.
JIM LEHRER: British Prime Minister Brown joined that appeal. He said there must be "very large and very radical changes" in the global financial system.
French President Sarkozy said a summit should be held in New York. He said that is "where everything started."
Later, the U.S. and the other Group of 7 industrial powers agreed to meet soon to address the crisis.
The U.S. presidential candidates spent this day making ready for their final debate. Democrat Barack Obama and Republican John McCain face off tonight at Hofstra University in Hempstead, New York.
Obama now has a growing lead in the polls, and chief strategist David Axelrod said tonight is a chance to close the deal.
DAVID AXELROD, Obama campaign chief strategist: It's the last chance for folks to see these candidates side-by-side and take the measure of them. And I think that it's going to accelerate the decision-making process for people who are still pondering their choices. So, you know, we're going to round the corner here to the final sprint.
JIM LEHRER: On the Republican side, vice presidential nominee Sarah Palin sought to rally support in Dover, New Hampshire. She said the critics have counted out John McCain before.
GOV. SARAH PALIN (R-Alaska): They said there's no way that he would win the primary up here. He was down in the polls, but the people of New Hampshire went to the voting booth, and they turned the underdog into the victor.
So John McCain has a history of overcoming the odds in this great state, and that is exactly what you can help us do on Election Day on November 4th.
JIM LEHRER: The 90-minute debate will air on most PBS stations and all other networks starting at 9 p.m. Eastern time. We'll have more on the story later in the program tonight.
Vice President Cheney was treated for an abnormal heartbeat today at a Washington hospital. Doctors applied a small electrical shock to restore the heart's rhythm for the second time in the last year. Later, Mr. Cheney left the hospital and waved to reporters.
A spokeswoman said the procedure went smoothly. The vice president is 67 years old. He has a history of heart trouble.
The prime minister of Canada called for political cooperation on economic issues today after his party won national elections. Stephen Harper's Conservatives gained ground, but fell a dozen seats short of a majority in parliament. Today, Harper said all parties must work together to help Canada weather the world financial crisis.
Leaders in Iraq mulled a new draft security pact with the U.S. today. Prime Minister al-Maliki submitted the agreement for review.
It was widely reported to set a deadline for a U.S. pullout by the end of 2011. And American troops and contractors could face trial in Iraqi courts for major crimes committed off-duty.
In Washington, State Department spokesman Sean McCormack confirmed a text is under review, but he insisted it is not final yet.
SEAN MCCORMACK, State Department spokesman: Nothing is done until everything is done. Everything isn't done. The Iraqis are still talking among themselves. We are still talking to the Iraqis.
You know, I see all these terms -- you know, draft, final draft, everything else. But, you know, my standard is, is it done? And it's not. It is not done yet, because there's still discussions ongoing.
JIM LEHRER: Also today, the U.S. military reported the number-two leader of al-Qaida in Iraq was killed. Abu Qaswarah died in a raid earlier this month. It happened in the northern city of Mosul.
Officials in Afghanistan reported nearly 90 insurgents were killed overnight in Helmand province. Police said coalition forces killed 18 Taliban fighters outside the provincial capital. They were massing to attack for the second time in three days.
And the local governor claimed an air strike killed 70 more Taliban to the south. NATO said the figure was much lower.
Firefighters in Southern California gained ground today with the help of calmer winds. Crews again battled two large fires in the Los Angeles area and a third at Camp Pendleton, near San Diego. Flames still threatened homes and have already scorched 34 square miles.
Storm warnings went up today for Puerto Rico and the U.S. Virgin Islands as Hurricane Omar approached. It was heading northeast on a direct course for St. Croix, in the Virgin Islands. Neighboring islands were also on alert. The storm's path was expected to take it into the Central Atlantic and away from the U.S. mainland.
