For many traders, such as Seaport Securities broker Ted Weisberg, last week's rally was a high point. "It was clearly a highly charged atmosphere, a lot of excitement, a lot of running around."

But by Monday, investors were once again hedging their bets.  Demand for three-year Treasury bills fell sharply early in the day, suggesting widespread uncertainty about interest rates. Although investors welcomed the Fed decision last week to cut the rate it charges banks by half a percentage point, investors were busy Monday wondering how far the central bank would go. 

Sam Stovall is a senior equity strategist with Standard & Poor's. "The real question is whether they will have to do more in order to calm the fears of investors. Their efforts right now are really not meant to stop the fall in share prices, but to make sure that the mortgage market does not grind to a halt."

Some analysts speculate that last week's cut to the discount rate might signal a similar cut in the federal rate. That is the rate banks charge each other, and experts consider it a more important benchmark in lessening the impact of mass mortgage defaults in the U.S. 

But since the Fed is not scheduled to meet formally until next month, Weisberg said that traders will have to wait.  "At this point I think you have to view it as technical in nature from an oversold condition and we'll just have to see where we are next week as we get into next Tuesday and Wednesday."

The cautious showing on Wall Street dampened some of the earlier gains in Europe, but Asian markets closed sharply higher Monday.  Tokyo saw its biggest single-day point rise since June of last year.  And Shanghai's benchmark index gained more than five percent.