Stock market investors lost some $169 billion last week, at least in paper value if they didn't actually sell declining stocks.
But they still own stock worth $6.329 trillion, according to the Wilshire Associates Equity Index, which measures the combined market value of all New York Stock Exchange, American Stock Exchange, and Nasdaq issues.
The concern on Wall Street - after sharp drops last Thursday and July 5 - is that last week's sizable price downturn will become a full-fledged "correction," or worse, a "bear market."
The market has been pummeled by lower-than-expected corporate earnings, especially in the high-tech sector, and a suspicion that the Federal Reserve will raise interest rates in the next few weeks.
The Dow Jones industrial average is off 4.6 percent from its high on May 20; the Standard & Poor's 500 index is down 4.8 percent from its high on May 24. The technology-heavy Nasdaq composite index has tumbled almost 12 percent since June 5.
"It looks like we're in a correction," says Rao Chalasani, chief investment strategist at Chicago-based Everen Securities Inc., an investment house. "But we always get [market] rallies in an election year, so it should be over by the end of July or August."
"We're in a correction," says Gene Jay Seagle, who heads Tactics & Technics, a private stock-market consulting firm in Weston, Conn. "What I'm wondering now is if I'm also sniffing a bear market."
In Wall Street terminology, a "correction" is seen as a decline in the market of from 5 to 15 percent. In a bear market, price indexes can plummet by more than 20 percent. Millions of investors have never experienced a real bear market.
The last protracted bear market occurred in 1973 and 1974. "It was like Chinese water torture," says one longtime market watcher here. "Month after month would go by, and your stocks would either be going down, or, if you were fortunate, just staying where they were. But nothing ever went up."
Seagle does not see evidence of a protracted bear market, given the underlying strength of the US economy.
"Trading has been thin, with many people away on vacation, so sell-offs can seem more pronounced than they actually are. So far, it looks like a normal correction," Seagle says. "But one probably shouldn't buy into this market without some care now." The key to investing during the next few months, he says, is buying only stocks having solid underlying value.
A long-time market "technician," or trend watcher, Seagle expects to see prices supported by investors during the next few weeks at "around 5,400 points" on the Dow. "I would be very concerned if the market were to [drop below] the 5,400 point level." The Dow ended last week at 5510.56.
"The market is definitely on the defensive," says Hildegard Zagorski, an analyst at Prudential Securities Inc. in New York. She says the verdict is still out on exactly what stage the market is heading into - be it bull or bear.
Philip Tasho, chief investment officer for Washington-based RIMCO, the Riggs Investment Management Corp., says a modest correction of about 5 percent - which he says may be under way - is "healthy." "This will produce some better buying opportunities and shake out weaker investors," he says. Mr. Tasho reckons that the bull market will resume in the months ahead, as investors realize that inflation is under control. "No one can raise prices now."
The current bull market has thundered upward for just a few months shy of six years, the second-longest bull market since World War II.