The far-flung disconnecting equities have held in the past year with the overall state of the U.S. economy is coming down, and many experts say it may fall much further.
U. S. stocks pushed lower Thursday, moving the Standard & Poor's 500 into correction territory, as Wall Street saw investors making a run from equities to cash over domestic and global economic concerns.
The Dow dropped 4.31 percent, or 512.68 points, to 11,383.76. The Nasdaq dropped 5.08 percent, or 136.68 points, to 2,556.39, while the S&P dropped 4.78 percent Thursday, or 60.27 points, to 1,200.07.
But earlier this year, as U.S. unemployment remained high and growth remained slow almost two years after the official end of the recession, Wall Street's bulls were in a full sprint forward. U.S. stocks closed out the first quarter of 2011 with their best performance in that period in more than a decade.
In early 2011, the S&P rose 5.6 in the first quarter, its best first quarter since the tech bubble in 1998. In the same period, the Dow rose 6.7 percent, its first first quarter since 1999 -- also in a stock market bubble.
Nagging concerns were there, but one expert called it a Scarlet O'Hara moment for the market. "I'll worry about that tomorrow," said Art Cashin, director of floor operations at UBS in an interview of the overall market mood with CNBC in March. "Instead of a flight-to-safety in the dollar, there's now a flight-to-safety in the Dow."
After sliding as much as 372 points Thursday, the Dow Jones Industrial Average had recovered some by mid-afternoon, but after dropping below the 12,000 barrier earlier in the week the Dow remained 293.88 points down, a decline of 2.47 percent.
Washington had set the stage for the negative sentiment on Wall Street, wrangling for more than a week in difficult debt ceiling talks before finally reaching a conclusion just before an Aug. 2 deadline.
But other concerns are weighing heavy too, like financial weakness and uncertainty in Europe, revised U.S. GDP numbers that show the economy is barely growing at all, and an unemployment rate that refuses to budge. Manufacturing is weak, consumer spending is weak, and America's political environment has been uncomfortable.
Companies are hoarding cash, something the equities markets were rewarding. But that practice has not been putting people back to work, and the cycle may have final come full circle, closing the gap between Wall Street's success and Main Street's woes. Now, Wall Street is singing a similar tune with Main Street.
Making the situation more worrisome for many investors, though are continuing European concerns.
"We're just worrying ourselves to death," said Bruce McCain, chief investment strategist at Key Private Bank, in an interview with MarketWatch. "How do you get out of this roller coaster of the relentless onslaught of bad news?"
The current market correction underway began almost un-noticeably in early July, but didn't hit full stride until the past week-and-a-half. By Thursday, the S&P was 10 percent off its 52-week high hit in early May. Also, 40 percent of the S&P's 500 stocks have officially moved into "bear market" territory, according to one expert.
"Investors are deciding that now is the time to take risk off the table," said Brian Gendreau, a market strategist for Cetera Financial Group, in an interview with the Associated Press.
The Dow rose 30 points on Wednesday to break an eight-day losing streak. Nine days would have been the longest negative streak for the Dow since 1978.
"This is a fear-driven market," said Christian Thwaites, president and chief executive at Sentinel Investments, in an interview with the Wall Street Journal. "We're in a mini-free fall. It's not Black Monday, or Black Thursday, but it's in pretty bad shape -- all the big stocks are being liquidated."