Dow tumbles as investors continue to unload stocks

NEW YORK (AP) — Despairing investors keep unloading stocks – and there are no signs that the selling will end anytime soon.

Wall Street tumbled again Friday, giving the market a painful end to another terrible week, one that left the major indexes down more than six percent. The reality of a protracted recession, and the likelihood that government intervention can do little to hasten its end, had investors again abandoning stocks, particularly those of struggling financial companies.

Friday’s drop, which shaved 100 points off the Dow Jones industrial average, was led by financial stocks and came a day after the market’s best-known indicator dropped to its lowest level since the depths of the last bear market, in 2002. And the Standard & Poor’s 500 index, the barometer most closely watched by market pros, came close to its lowest point in nearly 12 years.

Wall Street has been sinking lower and lower as investors come to terms with the fact that the optimism that fed a late-2008 rally was clearly unfounded. Companies’ forecasts for this year, which accompanied a dismal series of fourth-quarter earnings reports, pounded home the fact that no one can figure out when the recession will end.

“It was a market that was built on that hope and what we’re seeing now is an unwinding of that,” said Todd Salamone, director of trading and vice president of research at Schaeffer’s Investment Research in Cincinnati, of the rally from late November to early January.

The disappointment seen this week grew out of the market’s growing recognition that the multibillion dollar stimulus package and bailout program put together by the Obama administration are not likely to turn the economy around for some time.

“There were a lot of people that were banking on Washington to get us out of this. I don’t know if there is anything Washington can do,” Salamone said. He said the global economy is going through the tedious process of reducing borrowing and working through bad debt – something that government help can’t speed up.