Bruised blue-chip stocks prove none safe in today's economy

— -- The plunging market is not only hitting 12-year lows, in the process it is leaving many former world class blue-chip stocks black, blue and bloodied.

The Dow Jones industrial average skidded again Thursday, falling 281 points, or 4.1%, to 6594 — a level last seen in April 1997. And underscoring the ferocity of this historic bear is how, along the way, it is manhandling the shares of what were once global leaders.

"It's brutal out there," says Charles Carlson of Horizon Investment Services. "The market doesn't care about valuations," he says.

Blue chips have been punished so much that:

•More than half the firms in the Dow, 16, have seen their price-to-earnings ratios drop below 10, based on past 12 months of earnings, says Capital IQ. The P-E ratio is a widely used benchmark of how cheap a stock is based on its earnings, and historically, averages around 15 for the stock market.

Blue chips don't normally get single-digit P-Es. Just three current Dow stocks had P-Es below 10 at the end of 2007, and none did at the end of 2001, which also was the middle of a bear market.

The absolute pummeling of blue chips shows how investors don't care how cheap stocks are, that they just want out, Carlson says.

Investors are also making it clear they suspect earnings this year may be even weaker than the already lowered expectations, says Michael Farr of Farr Miller and Washington. "Earnings forecasts certainly are vulnerable," he says.