NEW YORK -- Wall Street has reached a disturbing juncture, one where the catalysts that typically break a losing cycle aren't working.
Investors are brushing off earnings reports, even though some have been stronger than expected, and taking little notice of the improving economy.
Analysts say the apathy is a result of the market's terrible performance, which of course produces even more losses. After nine straight losing weeks, investors have little incentive to do anything but sell more shares.
Friday saw the Dow Jones industrials plunge as much as 442 points, before finishing down 390 points and below the Sept. 21 post-attack low of 8,235.81. The blue chips came close to falling through the 8,000 level. The Nasdaq composite and Standard & Poor's 500 indexes dropped below their Sept. 21 lows early this month.
Investors see no reason to buy right now, not with the market falling to new records week after week.
"It sort of feeds on itself," said Tony Cecin, director of institutional trading at US Bancorp Piper Jaffray in Minneapolis. "You have people going into bond funds or money markets in mass. They are getting out of equities."
Another factor in the protracted selloff is the dollar, which has been weakening against international currencies, and has prompted many foreign investors to get out of U.S. equities. It's another downward cycle.
"There's a buyers strike, especially on the part of foreigners," said Dan Ascani, editor of a financial newsletter called "Profits Without Borders."
Wall Street's recent losses have been building on themselves as evidenced by an increase in computer trading programs, set to sell or buy thousands of shares at a time when the market reaches certain levels. As the market keeps falling, more sell triggers are being hit.
Put simply: "Selling begets selling. As stocks keep going down, more people sell off their holdings," said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee.
Fears about earnings growth and disgust over corporate accounting scandals triggered the initial selling, but the steep declines themselves are now having as much or even greater impact. Investors have seen the Dow drop by triple digits in seven of the past 10 sessions, and analysts say that for many of them that's enough reason to keep unloading shares.
"It is a reflection of raw emotions at play," said Hugh Johnson, chief investment officer at First Albany Corp. "Market dynamics take over, and turn small declines into big declines.
While there has been good news on the earnings and economic fronts, including stronger-than-expected profits at IBM and reassurance this past week from Federal Reserve Chairman that the economy is recovering, there hasn't been enough of it to staunch the selling.
And bad news about earnings and corporate accounting hasn't let up either. This past week's batch of negative reports included disappointing earnings and layoffs at Intel, questionable accounting practices at AOL Time Warner and DaimlerChrysler, and a government investigation of a Johnson & Johnson factory in Puerto Rico.
"What the market needs is for the bad news to stop," Berman said.
It was a horrid week on Wall Street.
The Dow ended the week down 665.27, or 7.7 percent, at 8,019.26. On Friday the Dow dropped 390.23 points, its seventh biggest one-day point loss ever. The Dow also closed 216.55, or 2.6 percent, below its Sept. 21 close of 8,235.81.
The Nasdaq had a weekly loss of 54.35, or nearly 4 percent. It fell 37.80 to 1,319.15 on Friday.
For the week, the S&P 500 tumbled 73.64, or 8 percent. On Friday, the index fell 33.81 to 847.75.
The Russell 2000 index suffered a weekly loss of 27.08, or 6.6 percent, after falling 10.51 to 386.20 on Friday.
The Wilshire Associates Equity Index, which represents the combined market value of all New York Stock Exchange, American Stock Exchange and Nasdaq issues, ended the week at $8.082 trillion, off $628.61 billion from the previous week. A year ago, the index was $11.212 trillion.
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