Remember the not-so-old, but good days when Wall Street investors exuberantly rode a bull market?
These days, stock market investors are wrestling with a different kind of animal. And as the saying goes: some days you eat the bear; some days the bear eats you.
Yesterday, the Dow Jones Industrial Average plunged as much as 350 points before a shallow recovery allowed it to close down 292.22 at 9,485.71.
It was a familiar feeling for investors who are suffering whiplash from the market gyrations in March that sent the Dow careening closer to 9,000 than to the high it hit in January 2000: 11,722.98.
Yesterday's decline reflected Wall Street's continued pessimism over corporate earnings and the economy. China's baiting of the United States after a collision between the U.S. spy plane and a Chinese fighter jet added an extra edge.
The S&P 500 - a much more inclusive measurement of stocks than the Dow - slid 39.41, down more than 27 percent from its March 2000 high of 1,527.46. The technology-loaded Nasdaq was off by 109.97 at 167,300, putting it at its lowest point since October 1998.
A hefty 70 percent of the 1,036 companies that have pre-announced results thus far have issued profit warnings, versus 46 percent in the year-ago quarter, according to research firm Thomson Financial/First Call. Of the 220 technology companies that have pre-announced so far, 82 percent have issued profit warnings, versus just 39 percent last year.
But signs have emerged in recent days that the worst may be over in the U.S. economic slowdown. On Monday, a key gauge of the manufacturing activity indicated the sector's woes may be waning, and last week, data showed American consumers' confidence and spending habits were holding up.
Federal Reserve Bank of Philadelphia President Anthony Santomero said yesterday that the tight U.S. labor market had softened recently and manufacturing data suggested an uptick in the economy in the second half of 2001.
That offered investors little comfort, however, amid the onslaught of profit warnings.
So what should investors do next in this volatile market? Cut and run? Hang in there until the bear hollers Uncle?
Or go bargain-hunting for undervalued stocks and gamble on an upturn?
The answer depends on your individual circumstances and your threshold for financial pain, says Christopher Beck, portfolio manager for the Delaware Small Cap Value Fund at Delaware Investments in Philadelphia.
Beck said the massive retreat into bear territory by major stock indexes has "induced a degree of fear and skepticism" among investors not seen since the early 1980s.
"In this environment, having a sound financial goal and an understanding of one's risk tolerance is crucial," he said.
For example, if you have a low tolerance for risk, you might want to steer clear of computer-maker stocks right now. Yesterday, IBM shares fell $4.27 to $90.39, while Hewlett-Packard lost $1.51 to $27.41.
Investors also punished U.S. automakers, which reported domestic sales in March fell by 9 percent. General Motors dropped $1.10 to $50.93.
Even Dow stocks usually popular with investors in uncertain economic times suffered. Philip Morris fell $1.68 to $44.51, while Merck slid $1.44 to $72.81.
Market-watchers said the lack of any reason to buy was further depressing stocks. The Federal Reserve isn't expected to cut interest rates for another month and investors are worried stock prices will fall further when earnings reports start.
Then there is the issue of income taxes, which are due April 16. Some investors need cash to pay their tax bills. *
Daily News wire services contributed to this report.
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