Markets 'in panic mode'

The latest teeth-gnashing plunge Thursday virtually wiped out the remaining gains from the five-year bull market that began in 2002.

With the news dominated by grim economic data, including a 16-year high in weekly unemployment claims and the failure of Congress to reach a deal to help U.S. automakers, the Dow Jones industrial average sank almost 450 points -- its eighth triple-digit drop in 12 trading days.

The sell-off yanked the broad Standard & Poor's 500 stock index down 6.7% to its lowest point since 1997. The benchmark index, which is tracked by many mutual funds owned by individual investors, is down 52% from its all-time high reached 13 months ago. It's the sharpest decline since the Great Depression.

The descent in recent days, coming after investors had already endured brutal losses over the last year, reflected a sell-at-any-cost negativity pervading the market.

"People are saying, 'If I can salvage 50% of my money, it's better than having nothing left,' " said Sam Stovall, chief investment strategist at Standard & Poor's Corp. "It's emotions driving it all."

Thursday's sell-off played out as many others have recently, with the market succumbing to a feverish collapse late in the day that left Wall Street professionals hard-pressed to conjecture when share prices might stabilize.

Although the recent bailouts of banks and other financial firms by governments worldwide have eased worries about the stability of the global financial system, investors now fear that the economy is headed for its worst downturn since the 1930s.

For those who have held on, guided by the conventional advice against selling when the market is down, the losses have been staggering.

"It's wiping out all the retirement savings in all the 401(k) plans," said Bill Buechler, president of Buechler Capital Asset Management in La Jolla. "We'll have a whole generation of people whose retirement plans have been wiped out."

With the S&P 500 index now down 52% from its peak, it would have to rise 108% just to recoup its losses.

The Dow sank 444.99 points Thursday, or 5.6%, to close at 7,552.29. It has fallen 30% in the last month and a half and 47% since its October 2007 peak. That far surpasses the index's 38% drop in the two-year bear market that followed the late-1990s dot-com bubble.