Investors are beginning a holiday-shortened week on cautious footing.

Stocks ended mixed but mostly higher after the Fed said the economy was on the mend. However, bond prices fell after the Fed said it wouldn’t step up its spending to purchase Treasurys and other debt to pry interest rates lower.

A surprisingly bleak forecast for the world economy pushed stocks to their biggest loss in two months. Major stock indexes tumbled by more than 2 percent Monday, sending the Dow Jones industrial average down 201 points, after the World Bank estimated the global economy will shrink 2.9 percent in 2009.

Stocks fell sharply today as investors sold financial stocks and locked in profits after a six-week rally, overshawdowing announcement of the Oracle-Sun Microsystems deal.

Wells Fargo & Co. said it expects record first-quarter earnings of $3 billion, easily surpassing analysts’ estimates and providing an encouraging sign for the banking industry.

European stock markets fell today despite earlier gains in Asia amid ongoing pessimism surrounding the Group of 20 summit of world leaders and concerns about the future of U.S. carmakers General Motors Corp. and Chrysler.

Wall Street got the news it wanted on the economy’s biggest problems — banks and housing — and responded with a rally that hurtled the Dow Jones industrials up nearly 500 points.

Wall Street snapped out of its stupor and posted its best performance of the year, storming higher yesterday after some good news from Citigroup Inc. Citigroup said it operated at a profit during the first two months of the year.

Do you permit your children to swim when it’s lightning outside? There’s a hurricane blowing through the financial markets. Like most investors, you entrust your nest egg to financial consultants who declare that you should always buy and hold, that over time the market generates good returns—that enduring a bear market is inevitable. Let’s look at some facts:

After the stock-market carnage of 2008, investors can’t be blamed for going into 2009 fearing another year of the bear market devouring investment portfolios. The bear may lurk for a good while yet, but don’t lose hope for the eventual return of the bull either.

If the job of a mutual-fund manager is to deliver returns that beat a stock market benchmark or that put them near the top of their peer group, then there is little doubt that most fund managers haven’t earned their keep this year. That hasn’t stopped them from taking it. Fund companies have taken in billions of dollars from investors, despite what can only be described as miserable, below-expectation performance.

The steep drop of the markets this morning had analysts wondering if declines would get so large the market’s automatic brakes would be activated. So far they haven’t, but before the markets opened trading in futures contracts was halted when the Dow Jones industrials futures hit 550. After the bell, stocks skidded in early trading, but the Dow leveled out and was trading between 300 and 400 points lower this afternoon.Circuit breakers stop trading on all markets if the Dow Jones industrial average drops by 10-, 20or 30-percent.

Stock markets around the world plummeted today and oil prices plunged to their lowest in more than a year. Even gold, the traditional safe haven in times of panic, fell sharply. The common denominator was growing fears that governments, central banks and finance ministers seem powerless to stop the deepening of a global recession that will slam corporate earnings and lead to deep job losses around the world.

LONDON (AP)—World stock markets tumbled today on growing alarm that a global recession will ravage corporate profits and push smaller developing economies to the brink of collapse. Futures indicated a sharp drop on Wall Street, with futures down 550 points, the maximum daily price change. In the European morning, Germany’s benchmark DAX index was down a massive 10.76 percent at 4,033.27. The French CAC40 down 10 percent at 2979.95 while Britain’s FTSE 100 was 8.67 percent lower at 3,733.33 after third quarter GDP fell 0.5 percent, putting the country on the brink of recession, which is technically defined as two quarters of negative growth. The previous quarter’s growth was 0.0 percent.

NEW YORK (AP)—Wall Street headed for another precipitous drop today as fears of a punishing global recession stirred panic among investors and sent world financial markets into a tailspin. The Dow Jones industrial average futures were down 550 points, the maximum allowed price change. The increasingly grim outlook convinced investors that the world economy is headed for a long and severe downturn despite a raft of government rescue efforts aimed at pulling the financial system from the brink. Fearing more carnage in equity markets, big hedge funds and other institutional investors have been pulling out their money in a bid to reduce risk and raise cash.