In frantic selling that one trader compared to a "wild cattle stampede", markets on Wall Street came close to crashing yesterday before suddenly snapping back, making it one of the most volatile days in Wall Street history. Conor O'Clery, International Business Editor reports from New York

The Dow Jones Industrial Index plummeted by 436 points by early afternoon, just slightly above the September 11th low. The Nasdaq and the Standard & Poor's hit new five-year lows.

Then, in the space of 90 minutes before the close, the major indices staged a remarkable recovery. The Dow finished down just 0.52 per cent at 8,639.19 having fallen 5 per cent in earlier trade. The tech-laden Nasdaq, in contrast, was up 8.7 points at 1,382.2

Investors recovered confidence late in the day on hopes that when Federal Reserve chairman Mr Alan Greenspan addresses a Congressional committee today, he will do something to restore steadiness to a badly shaken Wall Street.

The Dow began its steep dive yesterday morning as the US President, Mr George W. Bush, was making a confidence-building speech on the economy.

Mr Bush emphasised that the US economy was fundamentally strong and there was still a good foundation for growth, but the market seemed impervious to what he said.

Analysts later dismissed his speech as containing nothing new. At the New York Stock Exchange, traders expressed fury at the behaviour of corporate America for eroding confidence in the markets.

"We feel betrayed," said specialist Mr Peter Hendersen. "It's all about the numbers, but what we thought were real earnings turned out not to be real earnings."

Despite its stunning recovery, the Dow has now posted its first six-session losing streak since mid-January.

The early sell-off in the market, propelled by worries about weak earnings reports and fears that new accounting scandals may surface, helped push the euro above parity with the dollar for the first time since February 2000.

The negative reaction to Mr Bush's speech in Birmingham, Alabama has increased pressure on Washington to produce action rather than words. The problem was, the US president said, that the country was suffering from a "hangover" from the 1990s. "America must get rid of the hangover as a result of the binge, the economic binge we just went through," he said.

"We were in a land where there was endless profit, no tomorrow when it came to the stock markets and corporate profits, and now we're suffering a hangover from that binge."

Mr Bush has yet to support two major reform items on Capitol Hill, the Sarbanes bill to separate auditing from consultancy, and a move to have stock options treated as an expense on balance sheets. He may now be unable to resist the pressure.

In his address he said he wanted Congress to give him a bill he could sign before August and, in the present climate of near-panic among legislators, a rushed regulatory bill to combat corporate fraud will be tougher than the pro-business administration would like.

Senator Paul Sarbanes, chairman of the Banking Committee, called on Mr Bush yesterday to ask the Securities and Exchange Commission to release its findings of a 10-year-old investigation of Harken Energy in which Mr Bush was a director.

New evidence shows that Mr Bush was alerted to poor results before selling off $840,000 (€844,000) worth of shares.

"The president ought to lay out all the facts and let the country take a look at them," he said.

Market analysts said that yesterday's sell-off and snap-back could be a climactic ending to the slide. Mr Dick McCabe, chief market analyst for Merrill Lynch, said the market could hit its low this week. However, the sharp drop in the dollar shrinks the return on dollar-denominated assets, which in turn will encourage more foreign investors to repatriate their assets.

A feature of yesterday's decline was the fall in stocks of big companies.

Meanwhile, it emerged that a WorldCom executive notified the company's auditor, Arthur Andersen, more than two years ago that the company was improperly accounting for expenses, but these practices continued, according to WorldCom documents released by congressional investigators.