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CNBC's Jim Cramer is used to taking heat for wrong stock market calls.
This time, he turned out to be right. But he's still getting skewered.
Cramer last Monday (Oct. 6) went on NBC's "Today" show and gave this advice to viewers: "Whatever money you may need for the next five years, please take it out of the stock market. Right now. This week. I do not believe that you should risk those assets in the stock market."
 He warned that the market could tumble an additional 20% because of fallout from the credit crunch.
The Dow Jones industrials fell as much as 800 points later that day, and closed with a loss of 369.88 points, or 3.6%, at 9,955.50.
The sell-off continued the rest of the week, leaving the Dow at 8,451 on Friday.
After Cramer's sell signal, I and others raised the question of whether his call would be remembered as the moment of final capitulation in this bear market -- i.e., the bottom.
But as the math shows, Cramer actually saved investors some money if they sold on Monday as opposed to Friday. Using the Dow as a proxy, the market lost 15% from Monday's close to Friday's close.
That hasn't stopped Fox Business News from mounting a vicious advertising campaign against Cramer -- naturally, hoping to steal viewer eyeballs from CNBC.
"The last thing you need is bad advice. The last thing you need is CNBC's Jim Cramer," Fox warned in TV and print ads late last week.
On the financial blog SeekingAlpha, Jason Schwarz of Lone Peak Asset Management asserted on Friday that "financial advisors across the nation have been trying to clean up the mess that Jim Cramer made. We had clients crying because of the panic he created."
Cramer created the panic last week? Please. I have no doubt that he helped trigger more selling, but there was a tidal wave of it coming from cash-desperate hedge funds, mutual funds and margin-account investors with or without Cramer's two cents.
Anyway, all Cramer did was state the obvious: Money that you're going to need in the next five years probably doesn't belong in stocks. We're living through the worst financial-system bust since the Depression. Maybe the stock market overall will recover within five years, but if you really will need to tap your portfolio for expenses in that period, you'll sleep better if the money is in a safer place. (And I realize that "safe" is a relative term these days.)
Now, whether people who dumped stocks this week will bless or curse Cramer in the longer run, we'll have to see. If the market is substantially higher in a few months, he'll look like a goat for his call. If we're going down 40% more, investors who pulled the plug on his advice will probably forget every bum recommendation he has ever made.
Photo: Jim Cramer. Credit: Al Seib / Los Angeles Times
Blame the "short sellers"?
That's going to be tempting for many investors today, after the market plummeted again -- one day after the Securities and Exchange Commission's ban on shorting about 1,000 financial stocks expired.
Coincidentally, financial issues led today's selling wave: The financial-sector index within the Standard & Poor's 500 plunged 11.7%, compared with a 7.6% drop in the S&P 500 overall.
We're talking massive declines in some big-name shares. Morgan Stanley sank $4.35, or 26%, to $12.45. Prudential Financial dived $10.02, or 23%, to $33.27. Bank of America lost $2.47, or 11%, to $19.63.
 Maybe the shorts couldn't wait to get back to betting against these stocks again, after the SEC took away the right to short them beginning Sept. 19 -- part of the federal government's plan to help restore "stability" to markets. Many traders were pointing at the shorts today, noting a surge in trading volume in some of the session's biggest losers.
But short sellers have become a convenient scapegoat for everything that ails the financial sector -- as if the companies never made a bad loan or bought a toxic collateralized debt obligation.
Here's an interesting statistic, just out from the New York Stock Exchange today: Total short interest in all NYSE-listed shares -- the number of shares borrowed and sold, typically in a bet the price would drop -- fell from 17.1 billion on Sept. 15 to 14.8 billion on Sept. 30, a 13.4% decline.
The new total was the lowest short-interest figure since mid-February.
On Nasdaq, short interest slid from 9.89 billion shares on Sept. 15 to 8.88 billion on Sept. 30, a drop of 10%.
The decline in the number of shorted shares tells us that many short sellers were buying stock to close out their positions in late September.
So even though the market faced less downward pressure from short sellers -- and indeed, even though the market was getting help from the shorts, as they bought stock to replace borrowed shares -- major indexes still fell between Sept. 15 and Sept. 30.
The S&P 500 gave up 2.2% in the period; the NYSE composite was off 1.9%; the Nasdaq composite lost 4%.
And even though financial stocks couldn't be shorted in the first three days of this week, the S&P financial-sector index dived 17.8% in that period.
Blame the shorts?
One last stat: Short interest in Morgan Stanley plunged from 45.3 million shares on Sept. 15 to 18.4 million on Sept. 30. The stock still tumbled 40% in that period.
The world’s central banks tried to jump-start investors’ confidence today with coordinated interest rate cuts.
On Wall Street, it looked like the move was doing the trick late in the day -- until the final 30 minutes of trading.
The Dow Jones industrials had been up as much as 150 points going into the final half hour, then abruptly gave it all up and closed down 189.01 points, or 2%, to 9,258.10. Broader indexes also lost between 1% and 2%. It was the market's sixth straight loss, and left the Dow off 34.6% from its record high reached a year ago this week.
Still, the action today was dramatically improved from the previous two sessions. The Dow was off 370 points Monday and 508 points Tuesday.
 And Wall Street fared much better than Europe, where most market indexes plunged between 5% and 7% today despite the rate cut announcement.
On the New York Stock Exchange, 749 stocks rose and 2,457 fell. That’s lousy, except when compared with Tuesday’s sell-off, when just 387 issues rose while 2,879 fell. On Monday, a mere 248 stocks were up.
Some stocks today sparked genuine enthusiasm: Agricultural products giant Monsanto Co. reported a fiscal fourth-quarter loss, which was expected (it’s a seasonal issue). But the company said it expected fiscal 2009 earnings to be up 15% to 20% and that its farmer customers weren’t reporting trouble getting credit.
Monsanto’s shares surged $7.26, or 9.8%, to $81.44.
Among blue chips, battered General Electric Co. sank as low as $19.90 but finished at $20.65, up 35 cents. The overnight rate the company was offering on commercial paper was 1.25%, down from 1.90% on Tuesday, Bloomberg News reported. That hinted at some improvement in the credit markets.
But other key short-term rates continued to climb, despite the central banks’ rate cuts. The three-month dollar Libor loan rate (short for London interbank offered rate) rose to 4.52% from 4.32% on Tuesday.
If there’s to be a noticeable turn in confidence, "We’ll see it first in the credit markets and then in the equity markets," said Marshall Front, chairman of money manager Front Barnett Associates in Chicago.
One other encouraging signal from the credit side: Massachusetts was able to sell $750 million in short-term tax-free notes today, a sign that investors were returning to the municipal debt market. That could bode well for California, which plans to tap the muni market for $4 billion in short-term funding next week.
Photo: At the New York Stock Exchange today. Richard Drew / Associated Press
As bear markets go, this one now is worse than average.
At Tuesday’s close of 996.23 the Standard & Poor’s 500 index was down 36.3% from its record closing high reached on Oct. 9, 2007.
 Since 1937 there have been 11 bear markets, as Standard & Poor’s measures them. The average loss of value, from peak to trough, was 34% (not counting the current decline).
The minimum decline to qualify as a bear market is a 20% drop in the index.
Ned Davis Research calculates bull and bear markets differently, and counts 21 bear phases since the late 1930s, excluding this one. By its measure the average S&P 500 loss has been 29%.
In terms of duration, bear markets have been as short as three months (in 1987 and again in 1990) and as long as 62 months (1937-42), according to S&P.
At 12 months, the current bear is well short of the average length of 20 months, although excluding 1937-42 the average is 16.2 months, based on S&P data.
Two other historical notes:
--- If you’re rooting for this sell-off to end soon, we’re in the right month for it: October has a reputation as a bear slayer. Five of the 11 bear markets that S&P counts have ended in October (in 1957, 1966, 1974, 1990 and 2002).
--- Thursday marks a double anniversary in the annals of recent bull and bear markets: The 2000-02 bear ended on Oct. 9, 2002, with the S&P 500 at 776.76. The bull market that followed ended last year on the same date, with the index at 1,565.15.
Just 19 more days like this one and the Dow Jones industrial average will be at zero. And we can all start over from scratch.
Stocks were hammered today by what many traders described as another round of desperation selling.
The Dow lost 508.39 points, or 5.1%, to 9,447.11, its lowest since September 2003.
We said goodbye to Dow 10,000 on Monday. Today, the Standard & Poor’s 500 index closed below the 1,000 mark for the first time in five years, tumbling 60.66 points, or 5.7%, to 996.23.
The severity of Wall Street’s decline over just the last 2 1/2 weeks has been breathtaking. By the classic bear-market yardstick -- a minimum 20% drop in a major stock index -- the S&P 500 now has experienced a bear market in just 12 trading sessions: The index has fallen 20.6% since Sept. 19.
 That would be a bear-within-a-bear. Measured from its record high a year ago, the S&P now is down 36.3%.
Yes, investors are fearful of what will happen to the economy because of the credit crunch. But when selling reaches this magnitude, some portion of it surely has to be disconnected from economic fundamentals.
Art Hogan, veteran analyst at Jefferies & Co. in Boston, noted the relatively uniform percentage declines in broad market indexes today: 5.4% in the New York Stock Exchange composite, 5.6% in the S&P small-stock index, 5.8% in the Nasdaq composite.
"That tells you it’s just waves of people selling everything that’s traded," Hogan said.
Who is so desperate to get out? Many analysts point to hedge fund managers, who are believed to be facing another round of massive redemption notices from clients who want their cash back.
"You’re seeing selling by people whose hands are forced now," said Christopher Johnson, head of Johnson Research Group in Cincinnati.
Ditto for stock mutual fund managers, as retail investors join the exodus.
Then throw in gun-to-the-head selling by investors who bought stock on margin and now are facing margin calls by their lenders -- demands to put up more cash to offset the tumbling value of their portfolios.
As I noted in this post on Monday, everyone’s looking for signs of capitulation -- a final deluge of selling by investors too disgusted and demoralized to hold on any longer.
"Bottoms don’t happen until everyone walks away," said Johnson.
The last two days certainly have had the feel of capitulation. But is it enough, already?
Some analysts say there still are too many market pros reluctant to exit stocks because they’re sure a bottom is near.
Mark Hulbert, who tracks investment newsletters, wrote today on MarketWatch.com that Monday’s market dive -- which saw the Dow off 800 points before recovering about half that loss -- probably was another capitulation false alarm.
"An eagerness to declare that capitulation has occurred probably means that it hasn't," Hulbert wrote. Read his piece here. And be prepared to weep, if he’s right.
Photo: On the NYSE floor today. RIchard Drew / Associated Press
Did CNBC’s Jim Cramer call the stock market bottom -- by telling investors to get out today?
The Dow Jones industrial average was off as much as 800 points at its low just before noon PDT, then staged a powerful rally that cut the day’s loss to 369.88 points, or 3.6%, to 9,955.50. The broader market also rebounded from the worst levels of the day.
The massive sell-off for much of the session had everyone on Wall Street looking for signs of capitulation -- the moment, or moments, when the market feels utterly hopeless.
 Historically, it’s when the mood is blackest that share prices often start to scratch out a bottom.
"The emotion issue is the element that everyone’s trying to come to grips with," said Todd Clark, director of trading at Nollenberger Capital Partners in San Francisco. "Everyone’s looking to stand up and wave the flag and say, ‘That was it.’ "
But was "it" today, with the Dow, at its lowest point, off nearly 33% from its record closing high reached a year ago this month?
Cramer, the host of CNBC’s "Mad Money" and someone usually regarded as a cheerleader for the market, helped stoke the sense of capitulation with his extremely bearish comments on NBC’s "Today" show this morning.
Warning that the global credit crunch could drive the market down another 20%, Cramer advised: "Whatever money you may need for the next five years, please take it out of the stock market. Right now. This week. I do not believe that you should risk those assets in the stock market."
"I thought about this all weekend," he said. "I do not want to say these things on TV."
 Another sign of abject panic: The so-called VIX index, a closely watched gauge of investor fear levels, closed at a record high of 52.05, after reaching 58.24 intraday.
Even at the gloomiest points of the last bear market, which ended in 2002, the VIX -- which measures investors’ expectations of market volatility by tracking activity in stock index put and call options -- never closed above 46.
Still, there’s a big difference between 2002 and now: The global credit markets weren’t imploding then, as they are today.
Without credit, the economy can’t function. The stock market, at these depths, clearly is discounting a recession stemming from the credit crisis. The question is, if we’ve never seen a credit catastrophe on this scale in the modern global economy, how can the stock market know how much discounting it needs to do?
Photo: Jim Cramer, in happier times. Jennifer S. Altman / Los Angeles Times
The New York Stock Exchange has "circuit breakers" in place that are designed to temporarily halt trading in the event of a market freefall.
But it would take a lot more than the current 547-point drop in the Dow Jones industrials (as of 12:15 p.m. PDT) to trigger the circuit breakers.
Here are the rules:
--- If the Dow falls 1,100 points before 11 a.m. PDT, trading is halted for one hour.
--- If the Dow falls 1,100 points between 11 a.m. and 11:30 a.m. PDT, trading is halted for 30 minutes.
--- After 11:30 a.m. PDT (with 90 minutes left in the trading day), the Dow could continue to decline past 1,100 points and no halt would be called until it fell 2,200 points.
--- A Dow drop of 2,200 points any time after 11 a.m. would close the markets for the rest of the day.
The circuit breakers are reset each quarter. The 1,100-point threshold for the first circuit breaker equates to a 10% drop in the Dow -- or, rather, to what would have been a 10% drop based on where the Dow ended the previous quarter.
The Dow was down as much as 800 points before noon, still far from the 1,100-point trigger for the first circuit breaker.
The financial-system bailout bill may save the banks, but investors today don’t have much hope that it will help the rest of the economy.
Industrial, commodity and transportation stocks are leading the market’s latest dive, after another batch of grim data on the economy deepened worries about recession.
"There’s a lot of gloom and doom out there," said Anthony Conroy, head trader at BNY ConvergEx in New York.
Remember how manufacturing was almost single-handedly keeping the U.S. economy on a growth track? No more.  Orders to U.S. factories sank 4% in August, the government said today. And that was before the worst of the credit crunch began to show up in the real economy in September.
"The depth and breadth of this drop in manufacturing orders indicates that the previously encouraging conditions in this sector have deteriorated substantially," said David Resler, economist at Nomura Securities.
The factory data followed Wednesday's awful figures on September auto sales. Most auto makers reported sales off more than 20% from a year earlier.
In the industrial sector today, farm machinery leader Deere was off $6.71, or 14.5%, to $39.59 at about 12:40 a.m. PDT; Reliance Steel lost $5.26, or 14.3%, to $31.52; and mining giant BHP Billiton was off $5.09, or 9.9%, to $46.26, its lowest since March 2007.
Hit the manufacturing sector and you hit the transportation companies that move goods from plant to customer.
Shares of trucking firm Con-way Inc. were down $9.13, or 21.3%, to $33.81 after the San Mateo, Calif.-based company late Wednesday slashed its 2008 operating earnings forecast to a range of $2.60 to $2.80 a share, from a previous range of $3 to $3.40.
"The economy has been battered by an unprecedented confluence of macroeconomic crises, curtailing demand for freight transportation services," said Douglas Stotlar, Con-way’s CEO, in a statement.
The Dow Jones index of 20 transportation stocks was down a stunning 406.77 points, or 8.9%, to 4,169.60 at about 12:40 a.m. PDT, nearly three times the drop in the Dow industrials.
Railroad stocks are plunging along with trucking shares. Union Pacific was down $8.23, or 11.8%, to $61.21.
Another sign that people are giving up hope on the economy: Commodity prices are diving again as investors anticipate waning demand. The Reuters/Jefferies CRB index is off 4.3% to 328.42, its lowest in nearly a year.
Photo: You can make 'em, but can you sell 'em? SUV production at a Ford plant in Wayne, Mich. Credit: Bill Pugliano / Getty Images
Let’s hope this isn’t telling us that the next bull market will be in soup kitchens.
The only stock to rise in the Standard & Poor’s 500 index today was . . . Campbell Soup Co., which edged up 12 cents to $37.75.
 On days like this investors often find refuge in stocks of companies that make the basic, low-priced things we need to live. The reasoning is that even if the markets are melting down, and the economy will soon follow, we all still gotta eat, drink and (hopefully) use deodorant.
Personal-care products giant Procter & Gamble slid $2.09, or 3%, to $66.75, but that was far less painful than the 8.8% drop in the S&P 500 index overall.
The so-called consumer-staples sector of the S&P index held up best today, with a 4.2% decline. The S&P’s worst-performing sector: financial stocks, which plunged 16%. That left the financials down 39% year to date, compared with a 24.6% drop for the S&P 500 and a modest 7.2% loss for the consumer-staples group.
Another place you could have found refuge today, relatively speaking: shares of Hormel Foods Corp., which slipped just 13 cents to $36.25.
Hormel’s most famous product: Spam.
The perfect complement to soup?
Photo credit: Stefano Paltera / Los Angeles Times
How bad was it today on Wall Street? Very bad -- setting a dangerous scene for Tuesday morning:
--- Falling stocks outnumbered winners by more than 18 to 1 on the New York Stock Exchange, with 3,065 down and just 164 up. Trading volume was huge.
--- The drop in the Dow Jones industrials was 504.48 points, or 4.4%, to 10,917.51. That was the worst percentage decline since July 19, 2002, when the index fell 4.6% amid the sell-off tied to the accounting scandals of that era (WorldCom etc.).
 In point terms the Dow’s loss was the largest since it fell 684.81 points, or 7.1%, to 8,920.70 on Sept. 17, 2001, the day trading reopened after the terrorist attacks.
--- Other major indexes also had their worst days since Sept. 17, 2001. The broad Dow Jones Wilshire 5,000 tumbled 578.30 points, or 4.5%, to 12,186.58. It had dropped 5.1% on the Monday after the terrorist attacks.
--- The Standard & Poor’s 500 entered a new phase of the current bear market by falling through the previous 2008 closing low reached in July. The S&P sank 59 points, or 4.7%, to finish at 1,192.70. The previous low was 1,214.91 on July 15.
The index now is down 23.8% from its record high of 1,565.15 last October. This still is a mild bear market compared with the last one: The 2000-02 bear saw the S&P 500 fall nearly 50%. The average peak-to-trough bear decline since 1929 is 29.4%, according to the Stock Trader’s Almanac.
That’s the problem with bear markets, though: There almost never is an "average" one.
--- If there’s a bright spot today, it’s smaller stocks -- which have been surprisingly resilient all year. The Russell 2,000 small-stock index fell 4.2%, which was less than what the S&P 500 or the Dow gave up. The index is down 10% year to date, compared with the 17.7% drop in the Dow this year.
But in this environment, it’s tempting fate to point to a market sector that’s holding up better than the rest.
Photo credit: Al Grillo / Associated Press
In this latest episode of panic selling in the financial sector, Wall Street is targeting a relative handful of the usual suspects -- including Lehman Bros. Holdings Inc., Washington Mutual Inc. and insurance giant American International Group.
Unlike in mid-July, the damage to financial stocks overall hasn’t been severe.
Market bulls see that as a positive sign. The bears say investors are delusional.
Lehman’s shares, which plunged 42% today to $4.22, have dived 74% since Friday. WaMu has lost 34% since Friday and fell as low as $1.75 today but got a late bounce and finished up 51 cents at $2.83. AIG is off 21% in four days, although it edged up 5 cents to $17.55 today after falling as low as $13.82.
 By contrast, the Standard & Poor’s index of 87 financial stocks in the S&P 500 index has declined just 1.5% since Friday -- despite the wipeout of shares of Fannie Mae and Freddie Mac since the government seized the companies Sunday. The index rallied 1.5% today to close at 285.67.
What’s more, the financial-stock index is 23% above its 10-year low reached July 15, when the last major selling wave hit banks, brokerages and insurers.
Jim Swanson, chief investment strategist at MFS Investment Management in Boston, says this time the market is differentiating between financial companies that clearly face serious capital threats and those that appear much more likely to survive the credit crunch.
Unlike during the July storm, "the investing community worldwide doesn’t feel like the dike has broken this time," Swanson said.
Interestingly, the S&P financial-stock index has held up much better than the broader market. Early today the S&P 500 fell as low as 1,211.54, below its July 15 closing low of 1,214.91. It rallied back to finish at 1,249.05, up 1.4% for the session. That left it less than 3% above the July low.
The broader market has been weighed down this time by losses in energy and other commodity stocks and by selling in the tech sector.
Despite the resilience of most financial stocks in recent days, some market pros say it’s ridiculous to think that Lehman, WaMu or AIG could fail, or be forced into shotgun marriages with rivals, without broader fallout.
"Lehman doesn’t go away without repercussions," said Peter Boockvar, equity strategist at investment firm Miller, Tabak & Co. in New York. "AIG is the biggest insurance company in the world. That doesn’t go down without repercussions."
The disturbing message in the troubles of these giants, Boockvar says, is that "the credit contraction is intenstifying."
"People can’t forget the real-world effect this is having" on the economy, he said. "We’re still in a bear market."
From Times staff writer Walter Hamilton:
If the U.S. stock market gets a bounce today from the Fannie Mae/Freddie Mac rescue, it will come just in the nick of time: After last week's drubbing, major market indexes are in danger of falling through the lows they reached in mid-July.
The Dow Jones industrial average edged up 32.73 points, or 0.3%, to 11,220.96 on Friday, but was down 2.8% for the week. That left it 2.4% above its summer closing low of 10,962.54 on July 15. The Standard & Poor's 500 index, at 1,242.31 on Friday, was less than 2.3% above its summer low reached the same day.
Many Wall Street chart-watchers say the market’s internal dynamics have been grim recently. The rally off the July 15 bottom was uninspiring, investor buying demand has steadily dried up and trading volume has swelled on down days.
"It’s a slow deterioration now," said Brian Rauscher, director of portfolio strategy at Brown Bros. Harriman.
The recent rally also has turned the leaders of the second quarter on their heads -- no comfort to investors who have been looking for market trends they can stick with. Of the 10 major industry groups in the S&P 500, energy, utilities and raw materials are the worst performers this quarter -- a complete reversal from the second quarter.
"It’s been such a turbulent market it’s been hard to glean any sense of direction," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.
Some analysts say the market needs more pain before it can hope for lasting gains.
On Thursday, when the Dow dived 344 points, trading volume was 90% to the downside -- a fairly rare occurrence that last happened twice during the market’s plunge in June, said Paul Desmond, president of stock research firm Lowry Research Corp. in North Palm Beach, Fla.
Desmond thinks stocks need a few more batterings like that to clean out the ranks of sellers who emerge each time the market tries to move up.
"If we don’t get this done the bear market is just going to linger on," he said.
From Times staff writer Martin Zimmerman:
If history is any guide, the 2008 national elections won’t provide the kindling for a major stock market boom.
Since 1949 -- the first year of Democrat Harry S. Truman’s only elected term -- the best possible political alignment in Washington for investors has been a Democratic president and a Republican Congress.
 During such eras (think Clinton-Gingrich), the Dow Jones industrial average has posted average annual gains of 19.5%, according to the Stock Trader’s Almanac, which tracks stock market trends and tendencies. That compares with an average annual gain of 8.7% for the entire 1949-2007 period.
In other words, Wall Street historically has liked that particular form of political gridlock, with "two competing parties pushing against each other," said Jeffrey A. Hirsch, the almanac’s chief editor. Gridlock can put the brakes on overly activist lawmaking, which generally suits Wall Street just fine.
 The problem for investors is that the chances for such an outcome are remote this year. True, the White House clearly is up for grabs. And the Democrats’ slim majority in the Senate, resting as it does on the votes of two independents who “caucus” with the Democrats, isn’t exactly insurmountable.
But it would take a shocker of Dewey-defeats-Truman proportions for the Democrats to squander their 36-seat lead in the House. That also means that the political alignment with the second-best stock market record since ‘49 — a Republican president paired with GOP control of the House and Senate, which yielded a 14.1% average annual Dow gain — probably isn’t in the cards either.
So where does that leave us? Since 1949 there hasn’t been a scenario where a Democratic lived in the White House while control of Congress was split between the Democrats and the GOP, so there’s no track record to go by there.
The most likely outcomes of this year's election have proved the least satisfying for the stock market in the modern era. During periods in which a GOP president ruled with either a Democrat-controlled or split Congress, the Dow notched average annual gains of 6.7%. And the set-up of a Democratic president and Democrat-controlled Congress fared the worst of the six possible combinations, although only slightly so, with a 6.6% average annual gain in the Dow.
In other words, from the market's historical point of view, Decision '08 is looking like a wash.
Photos: John McCain (Stephan Savoia / Associated Press); Barack Obama (Robyn Beck / AFP Getty Images)
Wall Street is handling the lousy August employment report and dismal mortgage foreclosure data relatively well today -- perhaps because investors got a lot out of their system on Thursday, when the Dow Jones industrials dived 344 points.
At about 12:15 p.m. PDT the Dow was up 6 points, or less than 0.1%, to 11,194.181 after falling as low as 11,038 early on. The index held above its summer closing low of 10,962 reached on July 15, which may have helped boost sentiment today once prices turned up.
Markets were hit harder overseas -- continuing the pattern of the last few months -- amid fears that overseas economies may fare worse than the U.S. (believe it or not). A Bloomberg index of 500 European blue-chip stocks slumped 2.2% after sliding 2.5% on Thursday. It’s down 25.5% year to date, compared with a 15.6% decline in the Dow.
Japan’s Nikkei 225 index lost 2.7% today after falling 1% on Thursday, and is down 20.2% this year.
And in China, new lows again: The Shanghai composite tumbled 3.3% to 2,202.45, which puts it down 64% from the record high last October. To put that in perspective: If the Dow had fallen that much, it would be at 5,100 now.
With the sell-off in markets overseas, it looks as though money again is coming back to the U.S. -- at least if the dollar’s continuing rally is an indication. The euro has fallen to $1.425 today, down from $1.433 on Thursday. The Australian dollar is at 81.2 U.S. cents, down from 82.3 cents.
So the U.S. started this mess with its housing crash, but our currency is back in favor, and our stocks aren’t suffering nearly as much as most foreign markets this year.
That’s some kind of justice, eh?
Say hello again to the bear. Did he ever really leave?
Today's stock market rout left major indexes down more than 20% from their 2007 record highs, which means they're officially back in bear-market territory.
The more important issue: Key indexes still are above their July lows. If they break through those levels, stock bargain-hunters will realize they've been suckered twice -- first by the spring rally, then by the midsummer bounce.
You know the old line: Fool me once, shame on you; fool me twice, shame on me.
 The Dow Jones industrial average first crossed the 20%-loss threshold on July 2, when it closed at 11,215.51. That left it down 20.8% from its record closing high of 14,164.53 reached on Oct. 9.
The Dow then slid further, reaching a mid-summer closing low of 10,962.54 on July 15, when -- for the second time this year -- fears of a financial-system meltdown gripped the markets.
After that, stocks fought their way higher in late July and in August, helped by plunging oil prices and hopes that the financial sector had hit bottom. But this week, investors' mood has darkened again for a host of reasons, which I listed here.
With today's 344-point, 3% plunge to 11,188.23, the Dow is down 21% from its record high.
The Standard & Poor's 500 index, which slid 3% to 1,236.83 today, is down 20.9% from its record high, also reached last Oct. 9.
The Dow now is 2.1% above its mid-July low. The S&P 500 has less of a cushion: It's just 1.8% above its July 15 closing low of 1,214.91.
"It will be very important for the July lows to hold," said Bruce Bittles, investment strategist at brokerage Robert W. Baird & Co. in Milwaukee. New lows, he said, could lead investors to believe that the stock market is foreshadowing something much worse to come in the economy.
One bit of good news: As a group, financial stocks remain significantly above their July lows. The S&P 500 financial-stock index, which dived 4.7% to 280.89 today, still is 21% above its July 15 nadir.
There are times when Wall Street sees boogeymen around every corner. That pretty well describes today in the markets.
Stocks worldwide are being hammered even as oil and many other commodities slide again. The Dow Jones industrial average was down 286 points, or 2.5%, to 11,247 shortly after noon.
The only investments attracting buyers in a big way are government bonds -- the classic refuge. The yield on the 10-year U.S. Treasury note has tumbled to 3.63%, down from 3.70% on Wednesday and the lowest since April.
Fear is in excess supply today. Fear of what? Let’s run down the list:
--- Fear that the cash pinch on U.S. consumers is worsening, despite falling gasoline prices. The generally poor August sales reports from major U.S. retailers today confirmed the Federal Reserve’s report on Wednesday on U.S. regional economic trends, which mostly described conditions as "weak," "soft" or "subdued."
 What’s more, the government’s report today that initial unemployment-benefit claims rose 15,000 to 444,000 last week sets the scene for the August employment data due Friday. Many analysts expect the report to show the economy lost jobs for an eighth straight month, which would further dim the outlook for consumer spending.
The jump in unemployment claims shows "the labor market remains in a recession-like situation," said economist Asha Bangalore at Northern Trust Co., in a report today.
--- Fear that things are worse in Europe than in the U.S. The European Central Bank today held its benchmark short-term interest rate at 4.25%, even though policymakers say they’re still worried about inflation pressures. The Bank of England also held its rate steady, at 5%. Given the deteriorating economic backdrop in Europe, central bank policymakers have little choice but to put inflation worries aside for now, many economists say.
In Germany -- Europe’s biggest economy -- new industrial orders tumbled 1.7% in July, the eighth straight drop, the government said today. The German stock market plunged 2.9%, leading a broad decline in shares across the region. In Britain last weekend, the finance minister, Alistair Darling, said the country’s economic woes would be "more profound and long-lasting than people thought."
"People are getting nervous about a real global slowdown," said Scott Gewirtz, head of Treasury bond trading at Lehman Bros. in New York. That is driving more investors into government bonds here and in Europe.
--- Fear that struggling economies in the developed world will drag down the developing world as well. Bad as the U.S. stock market has fared over the last four sessions, it’s still above its mid-July lows. By contrast, Brazil’s main stock index has sunk to a 52-week low today, and has plummeted almost 30% since late May. China’s Shanghai composite stock index also hit a new 52-week low on Wednesday.
--- Fear of more financial-sector fallout from the credit crunch. Jitters about the health of banks, brokerages and hedge funds had eased a bit in August, but they've come back to the fore today. Financial stocks are leading the market lower in this sell-off, thanks in part to an ominous new commentary from Pimco bond-market guru Bill Gross.
--- Fear that there’s just no good reason to stay in stocks in the near term. Given the rising risks to the global economy and the ongoing credit crunch, "it just feels like people want out of the market," said Dan McMahon, a trader at Raymond James & Associates.
What’s more, veteran investors know that September historically has been the worst month of the year for the stock market. So the feeling, McMahon said, is why fight it?
" ‘Sell the rallies’ is the mantra," he said. "You tell me -- why would you want to buy something now?"
September has kicked off true to its reputation on Wall Street: as a downer of a month.
The Dow Jones industrial average on Tuesday surrendered a 247-point early rally to close off 26.63 points, or 0.2%, at 11,516.92.
Despite a $5.75-a-barrel drop in crude oil futures prices, to $109.71 -- the lowest since April 8 -- sellers took control of the market as the session wore on.
"It was kind of a euphoria buy and then it gave way to reality," said Georges Yared, chief investment strategist at Yared Investment Research in Minneapolis. The rally "just didn’t have any wheels to it."
 Maybe the calendar is too powerful a force to overcome. As Wall Street strategists are wont to point out every year at this time, September’s historical track record is abysmal for stocks -- although reciting the facts is easier than explaining why they’re so:
--- Since 1950, the Standard & Poor’s 500 index has lost about 0.6%, on average, in September, according to the Stock Trader’s Almanac. The next-worse month for performance is February, with an average loss of 0.1%. Every other month of the year has been positive, on average. (Remember, since World War II the market has gone up much more often than it has gone down.)
--- The stock market’s poor average performance in September isn’t the result of a few very bad months that skew the number. It’s just more likely to be a bum month, period: The S&P 500 has lost ground in September 32 times since 1950, while it has risen 25 times. Every other month of the year has seen more advances than declines, Stock Trader’s Almanac says.
Why so much red ink in September? One theory is that investors get back to work after summer vacation and decide to overhaul their portfolios, jettisoning what hasn’t worked. Also, for accounting purposes many mutual funds end their fiscal year on Oct. 31, which may encourage more housecleaning beginning this month.
But every trend has notable hiccups, and that’s the story of the last four years. September was positive for the S&P 500 every year from 2004 through 2007. The index was up 3.6% this month last year.
Ominously, though, in the bear-market years of 2000 through 2002 September was calamitous for the S&P -- down 5.4% in 2000, 8.2% in 2001 (the month of the terrorist attacks) and 11% in 2002.
So if the bear market that began last year isn’t over, helmets again are advisable this month.
Photo: Autumn leaves aren't the only thing that's usually falling this month. Beatrice de Gea / Los Angeles Times
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