Investors looking for some good news as the stock market headed into the second half of the year were disappointed today as the Dow Jones Industrial Average fell 166 points and officially entered the much-dreaded bear market territories.
It was only back on Oct. 9 when the Dow hit its all-time record high close of 14,164.53 points.
The Dow closed today at 11,215, down more than 20 percent from the October high, officially making this a bear market.
Driving down stocks today was yet another new record for oil and a poor report showing poor factory orders. Oil closed at $143.57 a barrel today, up $2.60 in just one day.
Also leading to today's sell-off was fear from investors about tomorrow's government report on employment in June and an analyst report downgrading automaker GM, sending its shares plummeting.
Nobody needed this official designation to know things are bad on Wall Street.
It has been a miserable 2008 for stocks, thanks to a bad housing market, credit problems that have shaken the nation's largest banks, skyrocketing oil prices and declining automobile sales.
The first half of the year was the worst since 1970 for the Dow and last month was the worst June on record since 1930 -- yes, during the Great Depression -- for the Dow and the much broader Standard & Poor's 500.
The Dow fell 10.2 percent in June. It was the worst monthly performance since September 2002, when it fell 12.4 percent.
"This feels like a recession to us," said Art Hogan, chief market analyst for Jeffries and Co. "We certainly have consumers losing confidence. We certainly have a bear market. If oil continues to go higher, stocks will go lower."
Hogan said that oil is the "main concern of the financial sector." Basically, as oil prices go up, stocks go down. When oil declines, stocks rebound.
This downturn is very different in his mind than 1930.
"In June of 1930, you're looking at a market that was going down 80 percent," Hogan said. "Our economies are structurally different. Are we in a depression? No. There are a lot of things you can't compare in our global economy, compared to the domestic economy in 1930."
So how concerned should we be?
Not as much as the media would make you think, Hogan said, noting that 94 percent of the people who can work are employed.
"The concern is not at the level that the media makes you believe," he said. "The magnitude has changed by a couple of dynamics but remains the same on some other things. I think that discretionary spending is based on what's in your wallet, not the equity of your home. Money has been taken out of their hands by what they're putting into their gas tank and grocery store."
Paul Larson, editor of Morningstar Investor, said that "over the long term it is safe to say stocks will increase, but in the short term I am confident that the market will be quiet volatile. The stock market is a very volatile place."
Larson said there are several things driving down this economy.
"There are of course oil prices, and you also have falling real estate prices and because of them you are seeing falling home equity now that it has been turned off, people are spending less," he said. "Food prices are going up. Rising food prices eats into consumer discretionary spending. Unemployment has been going up rapidly. There are just a lot of very negative things happening in the moment. Doesn't mean that it's not going to get better."
Larson warned that investors must look beyond the short-term market.
"There will be no economic apocalypse," he said. "I wouldn't compare our current situation to 1930."
All eyes on Wall Street are now looking at the June employment figures being released tomorrow.
"Some of the leading indicators show that employment is quite weak," Larson said. "I wouldn't be surprised if we saw a continued decline."