Just 264 stocks rose on the New York Stock Exchange yesterday - and 2,986 dropped. That's a telling sign, considering that the stock market is a leading economic indicator, with investors tending to buy and sell based on where they believe the economy will be in six to nine months.
With stock prices falling, Bush twice made unscheduled remarks on the economy, saying in Cincinnati that the economy would be "just fine" but that the federal bailout package needed time to work.
The troubles that started with an overheated housing market in the United States have infected financial markets around the world, making banks fearful of lending to other banks, let alone to businesses and consumers. That has led to worries that economies around the world might not only sputter but slide into reverse.
Though the Dow regained some ground yesterday, it still closed below 10,000 - a figure that elicits emotions from many investors. The last time the market closed below that figure was Oct. 26, 2004, when the Dow reached 9,888.48.
"Many people in the market get over-hung up on supposed magical levels, and a big round number like 10,000 is widely watched," said Al Goldman, chief market strategist with Wachovia Securities in St. Louis. "But breaking them can be just as widely watched and can bring in additional selling pressure."
The drop below 10,000 won't have the same impact for every investor, said James Angel, associate professor of finance at Georgetown University.
Some "might think the end is near, the sky is falling and it's time to sell everything," he said.
Others will see it as a signal that stocks are cheap and it's time to buy, he said. Angel said yesterday afternoon that he plans to take advantage of the steep market drop to buy more stock.
Market experts, though, said the 10,000 benchmark carries more weight with investors than it should.
It has nothing to do with the future of companies, the credit market problems or the banking system, Goldman said.
"It is just a level. It magnifies fear for the very short term," he said.
The Dow is down almost 30 percent from its all-time high of 14,164.53, set a year ago Thursday.
Daniel McHugh, president of Lombard Securities in Baltimore, said seasoned investors consider a 30 percent decline in the S&P index typical for a recession.
"That's about where we are right now," said McHugh, who has been in the industry for 39 years. "This might be more than the average recession."
