Wall Street's worst meltdown in recent memory ended the week with a whimper, leaving panicked investors wondering whether the vicious sell-off will end soon or will keep ravaging the market.
Ironically, some analysts say the meltdown on Wall Street and other global markets could mean a "bottom" has been established, but it remained unclear whether shell-shocked investors were ready to emerge to start buying again.
"The market is moving more on emotion right now than fundamental logic," said Sam Stovall, analyst at Standard and Poor's. The Dow Jones Industrial Average of 30 blue chips lost a dizzying 18 percent for the week to 8,451.19 on seven straight consecutive declines as the indexes plumbed five-year lows.
The broad-market Standard & Poor's 500 index retreated 18.2 percent to 899.22 and the technology-heavy Nasdaq composite tumbled 15.3 percent to 1,649.51.
Mark Fightmaster at Schaeffer's Investment Research said the weekly losses were the worst on record for the Dow and S&P indexes. But the losses were more limited Friday amid heightened volatility, leading to a smidgen of hope for battered investors.
Barry Ritholtz at Ritholtz Research & Analytics said there were signs that "suggest to us that we are increasingly close to a bottom that can be purchased for an upside trade of 20 to 30 percent from these levels."
Others say the market remains paralysed by fear, in a Shakespearean drama on Wall Street. "Global financial markets this week gave a stunning performance as King Lear: standing naked, gripped with madness, screaming in rage into the storm but to no avail," said economist Lewis Alexander at TD Bank Financial in a research note recapping the week.
"Betrayed by evil daughters Fear and Panic, and failing to listen in the past to the calming voice of good daughter Rationality, equity markets retreated despite ardent efforts by governments and central banks to stem the rout." Fred Dickson at DA Davidson & Co also waxed eloquently on the subject.
"At some point, the raging fear shown in the stock market will begin to be replaced by rationality and investors will wake up and realise that hundreds of wonderful companies have been dumped overboard along with the banks and financial institutions that have deservedly seen their stock prices decimated." Sal Guateieri at BMO Capital Markets said the economic backdrop is mixed with a credit crunch making recovery difficult.
"Six of the nine last bear markets ended during recessions. And the subsequent rallies/new bull markets can be fierce and quite rewarding - that's assuming you haven't fully bailed out of stocks during the pain on the downside." Bond offered little refuge in the horrific week. The yield on the 10-year Treasury bond rose to 3.861 percent from 3.644 percent a week earlier, and that on the 30-year bond increased to 4.137 percent from 4.123 percent. Bond yields and prices move in opposite directions.
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