Pressure Mounts For Fed To Make Big Rate Cut

With unemployment rising to 5 percent in December and jobs growth coming in well below forecasts, economists said the Federal Reserve may be forced to slash interest rates when it meets later this month in order to stave off a recession.

In another step to combat the slowing economy, the Fed also announced Friday that it was going to lend up to $60 billion more to banks in two auctions later this month and that it would decide by Feb. 1 if it will conduct more auctions. The auctions are part of a plan the Fed announced in December to to try and restore order to the distressed financial markets.

But worries about a recession trumped the Fed's willingness to lend more money on Wall Street Friday. The Dow plummeted nearly 260 points, or 2 percent. The S&P 500 finished the day about 2.5 percent lower while the Nasdaq plunged 3.8 percent.

Read more on CNN/Money