Market bottom not in sight
By Adam Shell
USA Today
NEW YORK — The level of U.S. stock wealth destroyed since the market peaked in March 2000 has reached a staggering $7 trillion — more than twice the size of Japan's economy, the world's second-biggest.
And analysts say that while the stock bubble of the '90s burst more than two years ago, the painful process of letting out the air isn't over.
Even though some Wall Street pundits say the market is close to a bottom, and President Bush has vowed to crack down on corporate crooks, stocks keep falling. They are now at levels last seen in 1997.
Main Street investors are no doubt feeling the pain as 401(k) statements start showing steep losses.
"We are in a spiral," said Richard Cripps, strategist at Legg Mason. "Redemptions are very heavy. People are giving up."
The tech-heavy Nasdaq has been knocked to lows not seen since May 1997; the broader Standard & Poor's 500 index has fallen to November 1997 levels; and the Dow is threatening to punch through postiSept. 11 lows.
"The pain is now spreading to areas that had been holding up," said Rich Moroney, money manager at Investment Horizon Services.
New stocks under siege include:
• Defensive stalwarts.
Drug stocks, typically a spot where investors park money in tough markets, have been getting creamed. Merck, a top "druggernaut" that recently admitted overstating revenue by $12.4 billion back to 1999, has fallen 11 percent this week. Heavyweight Johnson & Johnson has lost 8 percent.
• Widow and orphan stocks.
Utilities, once considered the investment of choice for retirees in search of safety, have slumped to levels not seen since late 1997. Yesterday the Dow Jones utilities average lost almost 6 percent.
• Small-company stocks.
The market's shining stars of recent few years have started to crater. The Russell 2000, a small-cap index, has posted steeper losses than the S&P 500 in the last month and is down 14 percent this year.
Despite the broad selling, many experts say pessimism has not peaked enough to mark a bottom. Only 37 percent of investment advisers polled by Investor's Intelligence say they are "bearish." At the low in September, 43 percent were bearish.
"We're not quite there yet," said Joe Sunderman, trader at Schaeffer's Investment Research.
