Shares on Wall Street tumbled more than 4 percent on Wednesday as frightened investors wondered how long the economic slowdown will last, how deep it will cut, and whether Washington can do anything to stanch the bleeding.
Financial markets compounded their early losses in afternoon trading, ending down for a third day. The Dow Jones industrial average fell 411.30 points or 4.73 percent, while the broader Standard & Poor's 500-stock index was down more than 5 percent for the day and nearly 9 percent for the week.
"It's just a downward spiral caused by fear," said Richard Sparks, senior equity analyst at Schaeffer's Investment Research. "We've got bad news everywhere."
Wall Street looked to Washington for guidance and reassurance, and investors did not like what they saw, analysts said.
"Wall Street is increasingly taking its cues from D.C.," Mark Zandi, chief economist at Moody's Economy.com, said by e-mail message. "Policymakers are deciding who survives and who doesn't."
The financial markets had been trading down all morning, but began a sharp slide just before Treasury Secretary Henry M. Paulson Jr. appeared at a lectern to discuss the $700-billion financial bailout. Paulson said government assets would not be used to buy troubled assets, as originally planned, but would instead go to buying stock in banks and infusing money into other financial institutions.
Sam Stovall, chief investment strategist at Standard & Poor's Equity Research, described Paulson's approach as ad hoc, and said that investors, hungry for a steady, deliberate recovery plan, were not happy.
"I think that in some ways it's investors who are disappointed with Washington and think that Paulson has become a retailer engaged in a bait-and-switch," Stovall said.
Oil prices also extended their decline, falling more than 5 percent to settle at $56.16 a barrel, the lowest since March 2007.
Wednesday began with more troubling news from the retail sector. Best Buy said its sales at stores open at least a year could decline 5 to 15 percent from November until February. Best Buy lowered its earnings expectations to $2.30 to $2.90 a share, compared with an earlier prediction of $3.25 to $3.40.
In a statement, Best Buy's chief executive, Brad Anderson, called the economic changes of the last two months seismic and said the company was facing "the most difficult climate we've ever seen."
Analysts said they expected the bleeding to continue through the holiday season.
"We're not done," said Stacey Widlitz, a retail analyst at Pali Research. "This is just the beginning. Retailers are saying they've never seen this kind of shift in consumer behavior in this short a period of time."
Also Wednesday, the Organization of Petroleum Exporting Countries' president, Chakib Khelil, repeated that the oil cartel could decide once more to trim its supplies when it meets next month. He hinted that the group might even decide to reduce its production if prices keep sliding.