The Federal Reserve announced a bold plan this morning to buy massive amounts of short-term debt to help ease investors’ fears and prevent further company shutdowns, the Associated Press reported.

The government will buy “commercial paper,” a short-term debt instrument companies rely on to finance day-to-day operations such as payrolls. This market, which depends on investors rather than banks, has nearly dried up, making it difficult and expensive for companies to raise money needed to fund their operations. This has put many businesses in a shaky position.

The government now will serve as a place for these companies to get cash, which could make the Fed a source of credit for nonfinancial businesses in addition to commercial banks and investment firms, depending on how the plan shapes up.

Pressure is also mounting for Federal Reserve policy-makers to cut their key interest rate below its current 2 percent.

Fed Chairman Ben Bernanke is expected to speak this afternoon on the economic outlook and developments in financial markets. President George Bush also plans to talk about the government’s $700 billion financial bailout plan.

As the Dow Jones industrial average dropped more than 350 points, the Fed also announced yesterday that it would double its cash auctions to banks to as much as $900 billion.

Stocks were up slightly this morning, with the Dow Jones industrial index just making it past the 10,000 mark as of 9:40 a.m. By 10:35 they had fallen again, with the Dow down 55.91 points to 9,899.59. The Nasdaq composite index was down 16.19 points to 1,846.77 and the Standard & Poor’s 500 index was down 6.48 points to 1,050.41