Dow up 485

There's lots of chatter about some sort of rescue package making it through Congress by the end of the week. Judging from what's going on in the credit markets, there's no time to lose. From the NYT:

“The money markets have completely broken down, with no trading taking place at all,” said Christoph Rieger, a fixed-income strategist at Dresdner Kleinwort in Frankfurt. “There is no market any more. Central banks are the only providers of cash to the market; no one else is lending.”

[CUT]

Several measures were taken to calm investors Tuesday. But injections of money into the markets by central banks failed to dampen a hoarding mentality among financial institutions. Analysts and economists have pointed to the problems in the credit markets as posing a more serious threat to the health of the economy, at least in the short term, than the recent declines in stocks.

As for today's big gain, Times reporter Michael Grynbaum points out that routs are often followed by recoveries. This is bound to create a false sense of calm. Meantime, the key measure of market anxiety, something called the Volatility Index, or VIX, is trading below 41, down from yesterday when it briefly crossed the 48 mark. These are still nosebleed levels, according to MarketBeat's Mark Gongloff:

In its 25-year existence, the VIX has cracked 40 only three other times — during the Long Term Capital Management crisis in the fall of 1998; on the day markets opened after the Sept. 11, 2001, terror attacks; and in 2002, when the post-bubble bear market was reaching its greatest frenzy.