Stocks continued their slide today despite the Fed’s best efforts to keep the Street happy.

Major indexes opened sharply lower Monday, seesawed early in the session, then sank into negative territory again in the afternoon. The Dow Jones Industrial Average recently traded 44.21 points down, off 0.4%, at 11906.88.

Prior to the opening bell, a wave of selling overseas and in futures markets set the stage for a lower session in the U.S. stock market. The session’s losses so far come on the heels of a 194-point drop on Friday.

In a signal that investors remain very nervous and that markets are thus likely to remain prone to wide swings, the Chicago Volatility Index climbed to a two-month high, recently gaining 8% to 33.66.

Source: The Wall Street Journal

The markets are clearly spooked. Even CNN says “the Fed can’t put out the fire.”

Even those economists in favor of such a move concede it will do little to calm investor fears.

It doesn’t address the fundamental problems, which is that financial markets are just scared,” said David Wyss, Standard & Poor’s chief economist. “The Fed is trying, but they don’t have a magic wand to wave and make everyone confident again.”

“The US Federal Reserve is playing a much-more-involved role than usual in the U.S. economy’s health and operation,” says William Patalon III.

“Team Bernanke is calling some very creative plays. But whether it’s a viable game plan remains to be seen. The stakes are high: The economic numbers remain weak and the recession talks are escalating with each passing day.”

“The Fed’s big bank bailout will not really wipe out losses,” says Bill Bonner, “nor make Wall Street more profitable; what it will do is save the big banks from going broke – if they’re lucky – while destroying the dollar.”