Washington ? The Federal Reserve moved swiftly to break through a credit clog that is imperiling the economy, saying Tuesday it would buy massive amounts of short-term debt and hinting that it may cut interest rates.

Wall Street was unimpressed. The Dow Jones industrials shed more than 500 points.

Fed Chairman Ben Bernanke warned that the crisis has not only darkened the country’s current economic performance but also could prolong the pain.

“The outlook for economic growth has worsened,” Bernanke said in a speech at the annual meeting here of the National Association for Business Economics.

His more gloomy assessment appeared to open the door wider to an interest rate cut on or before Oct. 28-29, the central bank’s next meeting, to brace the wobbly economy. The Fed’s key interest rate now stands at 2 percent.

President Bush, saying the meltdown has brought tough times for many Americans, pledged that “we’re going to come through this.”

“Have faith, this economy is going to recover over time,” Bush said in a speech at an office supply company in the Washington suburb of Chantilly, Va. “I wish I could snap my fingers and make what happened stop. But that’s not the way it works.”

The president earlier reached out to European leaders to urge coordination on efforts to solve the financial crisis spreading around the globe. The White House said Bush was open to the idea of a leaders’ summit on the economic upheaval.

Stocks slumped, however, as investors focused on Bernanke’s warnings and worries about the weakness of financial companies. Bank of America Corp. reported its third-quarter profits fell 68 percent. The three major U.S. stock indexes all fell more than 5 percent a day after a huge selloff Monday put the Dow below 10,000 for the first time in four years.

The statements came against a backdrop of increasing concern that a global recession is rapidly developing. There is growing pressure for the U.S. government to do more beyond the $700 billion financial bailout package President Bush signed into law Friday.

To that end, the Fed invoked Depression-era emergency powers to begin buying commercial paper – short-term funding that many companies rely on to pay their workers and buy supplies.

The government’s bailout package is aimed at thawing lending by buying rotten mortgages and other bad debts from banks and other financial institutions. By getting these bad debts off bank’s balance sheets, they might be in a better position to raise capital and more willing to lend to each other and to customers.

Tight credit has made it increasingly difficult and expensive for companies to raise money to fund their operations.