Bears clawed their way into the stock market this week amid rising anxiety over oil prices and problems in the financial sector.
The Dow Jones Industrial Average fell nearly 500 points over the past two days and traded in bear market territory Friday before closing at 11,346.51, down 106.91 points.
The blue chip indicator has lost 2,818 points since October's peak, a drop of 19.9 percent. Many investors view a 20 percent decline as confirmation of a bear market, as opposed to a mere "correction." However, others say there is no magic number that defines a bear, which is a prolonged period of falling prices and investor gloom.
Many investors certainly were feeling gloomy Friday as crude oil hit another record at $142.99 a barrel, and stocks continued their slide.
"Energy prices are driving the market now," said Kenneth City retiree Bob Girard, 73. "My stocks are all going down. When you're on a fixed income, it hurts even more."
Others were taking the decline in stride.
"This has happened before, and it's going to happen again," said Evelyn Bothwell, 51, of St. Petersburg, a neonatal nurse. "I started buying funds back in 1977, and I know when you're investing for the long term, you have to just hang in there."
Given a severe drop in consumer confidence and the sluggish economy, analysts are sharply divided over whether the markets are in short-term fall or at the beginning of a deeper, recessionary trading environment. The last bear market, in 2000 to 2002, was triggered by the dot-com bust.
"The problem is that there's not one, single worry," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. He pointed to high gas prices, still-tight credit market conditions and the contracting housing market. "If you're looking for problems that face investors, that face the U.S. economy, they're everywhere."
"People are trading with a lot of emotion," said Alexander Paris, an economist and market analyst for Chicago-based Barrington Research. "I think the market is trying to make a bottom, but the question is will it hold there or just crash through."
Jeffrey Saut, chief market strategist at Raymond James & Associates in St. Petersburg, predicts the rout could be over as soon as next week.
"It's 28 (trading) sessions since the selling stampede started," he said. "These things rarely go more than 30 sessions unless we're into a crash, and I put the odds of that at one in 10. My oversold indicators are more oversold than they've been in the past couple of years. For the well-prepared investor, I think next week might present a pretty good buying opportunity."
Information from Times wires was used in this report. Helen Huntley can be reached at (727) 893-8230 or firstname.lastname@example.org.