U.S. stock markets reopened Monday following the longest period of shutdown since the Great Depression started October 29, 1926.

An hour before the opening bell, the U.S. Federal Reserve announced it had cut the Fed Funds short-term interest rate by 0.5%, to 3% and the Board of Governors also approved a 0.5% reduction in the discount rate, to 2.5%. This is the eighth rate cut in 2001.

In its decision to drop rates, the Fed not only was hoping to belay first-day jitters. It also had ongoing concerns about the state of the economy before the markets closed last week, saying, "even before the tragic events of last week, employment, production, and business spending remained weak and last week's events have the potential to damp spending further."

The Fed also said it would continue to supply liquidity to the financial system as needed.

Other world central banks soon followed suit, with the European Central Bank, the Bank of Canada and the Swiss National Bank all announcing approximately half point reductions. The Bank of England and the Bank of Japan are expected to follow suit shortly.

In the end, however, the U.S. stock market fell, with the Dow Jones Industrial Average posting its largest-ever single day drop, 684 points, or 7.13%. The NASDAQ was also off almost 7% for the day.

On a positive note, the drops were not as severe as some had expected. Today's 7% drops are severe, but do not rate anywhere among the market's largest declines. On October 19, 1987, for example, the Dow Jones Industrial Average fell 22%.

Through mid-day, Japan's Nikkei responded strongly and favorably to the relatively mild U.S. market drop, especially reacting to the unified central bank interest rate responses. The Nikkei was up over 306 points through mid-day.