NEW YORK (CNNMoney.com) -- Stocks slumped Friday in volatile trade, with the Dow sliding 550 points as the credit market crisis intensified, spooking investors. Credit markets remained tight, although short-term lending showed some improvement from recent days. Treasury prices fell, raising the corresponding yields. The dollar gained versus the yen and fell against the euro. Oil, gas and gold prices fell. The Dow Jones industrial average (INDU) lost 550 points or nearly 6.5% with around two hours left in the session. Within the first five minutes of trade, the Dow had plunged 697 points, falling below 7900 to its lowest level since March 17, 2003. The Standard & Poor's 500 (SPX) index lost 7.2% and the Nasdaq composite (COMP) lost 6%. Both major gauges had tumbled along with the Dow at the open. Markets tanked Thursday, extending the Dow's losses over the last seven sessions to 2,271 points, or 20%, as panicked investors ditched stocks across the board. That panic spread to global markets Friday, with the Japanese Nikkei tumbling 9.6% and the London FTSE down 8.9%. The global selloff kept the pressure on U.S. markets Friday. "The magnitude of what's going on is unprecedented and people are frightened," said Robert Philips, senior portfolio strategist at BLB&B Advisors. A key measure of investor fear hit an all-time high: The CBOE Volatility (VIX) index, or the VIX, hit 74 Friday afternoon before pulling back a bit. Stocks have plunged despite a series of efforts on the part of the government to unfreeze the credit markets and get money flowing through the system again. "Fear is feeding upon itself and nothing the officials have done to this point seems to stem the tide," said Ryan Atkinson, market analyst at Balestra Capital. Earlier this week, the Fed announced an emergency rate cut, coordinated with banks around the world. The central bank has also pumped billions into the system. "Central banks of the world have been flooding the markets with liquidity, but banks are hoarding cash," Atkinson said. "This is the lynchpin of the entire financial system and as long as this is still going on, the markets will be driven by fear." On Friday, President Bush said that the government will continue to work to resolve the economic crisis to return stability to the markets. He is hosting a meeting with G7 Finance Ministers early Saturday morning, with a statement expected shortly after. Meanwhile, House Democrats are meeting Monday to discuss a potential second economic stimulus package, although House Republicans are reportedly skeptical of a second package, CNN reports. Stocks have been in a bear market for most of the year, but the selling began accelerating in September following a series of bank failures and mergers. Movers: Declines were broad based, with 25 out of 30 Dow stocks falling, led by oil services firms Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500), as crude prices continued their plunge amid worries of slowing demand. Dow financial components JP Morgan Chase (JPM, Fortune 500), Bank of America (BAC, Fortune 500) and Citigroup (C, Fortune 500) gained along with other financial services stocks as investors scooped up hard-hit issues. Citi said late Thursday that it failed to reach a deal with Wachovia and that while it will seek damages, it won't block a Wachovia (WB, Fortune 500)-Wells Fargo (WFC, Fortune 500) merger. But Goldman Sachs (GS, Fortune 500) and Morgan Stanley (MS, Fortune 500) tumbled on concerns that ratings agency Moody's might downgrade the two. (Full story) General Electric (GE, Fortune 500) reported lower quarterly earnings Friday that met estimates on higher revenue that was just shy of estimates. The conglomerate, seen as a bellwether for the economy, due to the breadth of its businesses, also reaffirmed its 2008 forecast and said it is maintaining its dividend. (Full story). Market breadth was decidedly negative. On the New York Stock Exchange, losers beat winners 15 to 1 on volume of 1.54 billion shares. On the Nasdaq, decliners topped advancers almost 6 to 1 on volume of 2.44 billion shares Reaction to Fed action: The Federal reserve has taken several concrete steps in an effort to thaw out the frozen credit market. Wednesday brought an emergency rate cut. On Thursday, the Treasury said it will soon buy stakes in some banks. Earlier in the week, the Fed said it will buy short-term debt needed to finance daily operations directly from businesses. It also said it will make $300 billion available to banks in return for damaged assets, on top of $300 billion already available. And Congress approved the $700 billion bank bailout plan last Friday, which allows the Treasury to buy bad debts from banks. Yet, despite all these developments, credit markets have barely budged. Credit markets frozen: Amid the ongoing crisis, lending has dried up, making it difficult for businesses to function on a daily basis and for consumers to get loans. The TED spread, the difference between what banks pay to borrow from each other for three months and what the Treasury pays, spiked to an all-time high of 4.65% Friday before pulling back slightly. The wider the spread, the more reluctant banks are to lend to each other, rather than from the federal government. When markets are fairly calm, banks charge each other premiums that are not much higher than the U.S. government. Three-month Libor, or what banks charge each other to borrow for three months, rose to a 2008 high of 4.82% from 4.75% Thursday. The yield on the 3-month Treasury bill, seen by many as the safest place to put money in the short term, fell to 0.25% from 0.5% Thursday, with panicked investors willing to take a piddling return on their money rather than risk stocks. Last month, the yield on the 3-month bill skidded to a 68-year low around 0%. But one bank lending measure fared better. Libor, the overnight bank lending rate, eased to 2.47% from 5.09% Thursday, according to Bloomberg.com. However, the levels were still high considering that Libor was at 2.15% a month ago. Still, it is an indication that banks were willing to take a chance on near-term lending. Treasury prices slipped, raising the yields. The benchmark 10-year note rallied to 3.88% from 3.76% Thursday. Treasury prices and yields move in opposite directions. Other markets: Oil prices plunged to a 13-month low Friday on bets that the slowing global economy will drag down oil demand. U.S. light crude oil for November delivery fell $5.93 to $80.66 a barrel on the New York Mercantile Exchange. Prices slipped on continued bets that the slowing global economy will hurt demand. Oil prices have tumbled on bets of slowing demand since the price of crude hit an all-time high of $147.27 a barrel on July 11. The price of gas decreased for the 23rd consecutive day, according to a survey of credit card activity by motorist group AAA. COMEX gold for December delivery rose $14.50 to $901 an ounce.