Tension grew in the financial markets today, sending stocks mostly lower as investors worried about the effectiveness of a still-emerging government plan to rescue banks from crippling debt. The credit markets also showed added strain, with rising demand for short-term Treasury bills, considered the safest of investments.

Wall Street was calmer than during the first two days of this week, with stocks meandering in and out of positive territory while investors tried to determine what shape the $700 billion plan might take.

Initial enthusiasm over investor Warren Buffett’s decision to invest $5 billion in Goldman Sachs Group Inc. gave way to broader concerns that the dealmaking in Washington could produce less potent medicine than proponents say is necessary to aid moribund credit markets. Fear about bad debt on the books of financial companies has led to tightness in credit markets. That has made it difficult for businesses and consumers alike to borrow money.

Treasury Secretary Paulson told the House Financial Services Committee that he agreed to limit the pay of Wall Street executives whose companies might benefit from the proposed $700 billion measure for financial services firms.

Mr. Paulson appeared with the Federal Reserve chairman, Ben Bernanke, before Congress for a second day to brief lawmakers on the plan. Their appearance on Capitol Hill yesterday unnerved investors, who questioned whether lawmakers were beginning to doubt the necessity and form of the government bailout.

The waiting was clearly wearing on the credit markets, raising concern again about liquidity.

Demand for short-term government Treasuries increased as investors again sought safe places to keep cash. The yield on the 3-month Treasury bill, considered the safest short-term financial asset, was at 0.49% late today, down from 0.79% late yesterday. Last week, demand spiked so high that the yield briefly dipped into negative territory; investors were so focused on putting their money in safe assets that they have been willing to accept very little or even negative returns.

In other Treasury trading, the yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.81% from 3.80% late yesterday.

“I think you’re seeing a lot of tough talk from politicians who don’t want to seem like they’re rolling over for Wall Street and, normally, people would see that for what it is. But right now investors are exceptionally nervous,” the co-chief executive of Pacific Growth Equities in San Francisco, Stephen Massocca, said.

The Dow Jones industrial average fell 29.00, or 0.27%, to 10,825.17 after moving in and out of positive territory. The decline leaves the Dow down more than 560 points, or about 5%, for the week.

Broader stock indicators were mixed. The Standard & Poor’s 500 index slipped 2.35, or 0.20%, to 1,185.87, and the Nasdaq composite index rose 2.35, or 0.11%, to 2,155.68.

The dollar, whose struggles earlier this week contributed to extreme volatility in other markets, was mixed. Meanwhile, gold prices rose.