Stocks Finish in Bear-Market Territory

[CNBC]

Stocks Finish in Bear-Market Territory

By Cindy Perman CNBC.com | 09 Jul 2008 | 04:19 PM ET

Stocks snapped a two-day rally with a late selloff that left all three major indexes in bear-market territory.

Financials fell sharply amid worries about more shoes to drop and techs took a hit after Cisco's chief raised concerns about business spending.

The Dow Jones Industrial Average fell 2.1 percent to close at 11147.44, while the S&P 500 lost 2.3 percent to 1244.69 and the Nasdaq tumbled 2.6 percent to 2234.89.

Stocks snapped a two-day rally with a late selloff that left all three major indexes in bear-market territory.

Financials fell sharply amid worries about more shoes to drop and techs took a hit after Cisco's chief raised concerns about business spending.

The Dow Jones Industrial Average fell 2.1 percent to close at 11147.44, while the S&P 500 lost 2.3 percent to 1244.69 and the Nasdaq tumbled 2.6 percent to 2234.89.

Today's topsy-turvy session was keeping with the pattern this week, something analysts say will continue as the market frantically grasps for a bottom.

"At this stage it's becoming a bit of fear mongering," said David Bianco, a strategist at UBS Investment Research. "It's self-feeding momentum," he said, as stocks plunged in the last half-hour of trading, leaving all three major indexes in bear-market territory.

The culprit was the financials and worries about earnings, which will get into full swing next week.

"I find it remarkable how much of the S&P's earnings are being masked by financials," Bianco said. "The market is 25 to 30 percent undervalued right now," he said, adding that earnings look pretty solid outside of the financial sector.

Bianco says it's going to take a pullback in oil prices and "just getting through the second-quarter reporting -- for people to see there isn't a profit contagion" for the market to settle down.
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