NEW YORK >> When the Dow Jones industrials skidded into bear-market territory this past week, the message on Wall Street was clear: There are no safe havens in the stock market. Investors running out
of places to hideBears eyeing Dow as their next victim
By Amy Baldwin
Associated PressWhat's more, market watchers say, investors might as well hunker down and settle in. It could be a long time before stocks move higher.
"There isn't so much a sellers' mentality out there as a buyers' strike," said Tony Cecin, a trader for U.S. Bancorp Piper Jaffray. "People are going to keep their hands in their pockets until they see the sun shining again."
No one on Wall Street is forecasting anything but gloom for the foreseeable future. But what else can be expected if even the pillars of Corporate America are suffering?
Taking a beating similar to what tech stocks previously endured, the Dow plunged 1,139.84, or 10.7 percent, over the past two weeks. Only a last-minute spate of buying Thursday managed to keep the Dow from closing in bear-market territory -- characterized by a 20 percent drop from its Jan. 14, 2000 high of 11,722.98.
That late rally continued into yesterday, when the Dow rose 115.30 to 9,504.78. But analysts say stock prices won't be able to put together a sustained advance, simply because the problems that incited the latest selloff are still weighing on the market:
>> Investors fear the 0.5 percentage point interest rate cut the Federal Reserve made Tuesday won't help reinvigorate the economy in the near term.
>> There's growing uneasiness about the possibility of a global recession that would curb demand for U.S. goods and services abroad.
>> Blue-chip companies have joined high-techs in warning that the economy is hurting business. Procter & Gamble, for example, announced Thursday it is laying off 9,600 employees worldwide.
"There really is an air of caution out there," said Alan Ackerman, executive vice president of Fahnestock & Co. "It's not a hiccup; it's a real concern over whether the economy will continue to slow into next year."
As investors' confidence in the overall market slips, they see little choice other than to bail out of even relatively safe sectors such as drug and consumer product stocks. And as Cecin, the U.S. Bancorp trader, put it, even if investors aren't selling, many aren't buying stocks either.
Many cautious investors are dealing with their fears by putting their money in bonds, CDs, money markets or even savings accounts.
"I feel paralyzed, frozen, kind of not sure what to do. But I don't think about cashing out or getting out of the stock market or my mutual funds," said Jason Wolfe, a public relations executive in Portland, Maine.
"I'm putting all new money into bond mutual funds, because I'm nervous about the situation," Wolfe said. "There is that nagging question of, 'Will this all work out?"'
Investors' nervousness is bad news for the Dow, which until now had been seen as quite strong compared to the Nasdaq composite index. The Nasdaq is down nearly 62 percent from the peak of 5,048.62 it reached just over a year ago.
For the week, the Dow lost 318.63, or 3.2 percent, closing at 9,504.78 after advancing 115.30 on Friday. The blue chips have now fallen 18.9 percent from their high, quite close to the 20 percent drop that defines a bear market.
The Nasdaq advanced 37.77, or 2.0 percent, for the week. It closed at 1,928.68 after gaining 30.98 yesterday.
The Standard & Poor's 500 fell 10.70 to post a 0.9 percent weekly loss. The S&P climbed 22.25 yesterday to end the week at 1,139.83. The Russell 2000 index, which measures smaller companies, slipped 1.47, or 0.3 percent, for the week. It closed yesterday at 443.27 after gaining 10.47.