Stocks declined after a brief uptick as Fed Chairman Ben Bernanke seemed unable to soothe this cranky market for more than five minutes.
The Dow Jones Industrial Average doubled its loss to about 250 points, or 2.7 percent, in the time that Bernanke was speaking, leaving the index below 9,700.
To be fair, it's not just Bernanke. Nothing seems to stop the screaming and crying for too long.
Even the Fed's announcement this morning that it will create a special facilitytobuy unsecured and asset-backed commercial paper directly from eligible issuers only bought the market a half hour of bliss, then it was right back in the tank.
On any other day, in any other market, Bernanke's afternoon remarks should've given the market a boost. It was as decisive a signal as the Fed has ever sent: Bernanke said the outlook for growth has worsened and downside risks to growth have gained. "In light of these developments," Bernanke said, "the Federal Reserve will need to consider whether the current stance of policy remains appropriate."
Instead, stocks tanked.
"It's my opinion that the market doesn't believe enough is being done," said Richard Sparks, senior equities analyst at Schaeffer's Investment Research. "Specifically, I think they want a coordinated rate cut — certainly in the U.S., but maybe in the EU and almost world-wide," he said.
Expectations for a U.S. rate cut were heightened after Australia unexpectedly cut rates — and amid expectations that an ECB cut is almost a definite.
Talk of a possible Fed rate cut have been kicking around the market for a few days. In fact, traders said that was some of what spurred the late rally on Monday: expectations that it might happen today.
Stocks survived the selloff Monday, ending down just 370 points, after being down as much as 800 earlier in the session. But the benchmark index still ended below 10,000 for the first time in four year.
But even a rate cut may not buy us more than an hour.
"I don't think [the market] knows what it needs or wants," Sparks said. "Can't say if [Bernanke said this, then we'd be in the green."
"Even a rate cut at this point may be viewed as being too little, too late," he said.
Shares in Asia were mixed. Japan shed 3 percent, but markets closing later received a boost after Australia cut interest by a full percentate point. European stocks declined, led by a wave of selling in U.K. bank stocks after they asked the government for money and that some may be nationalized.
Bank stocks led the decline in the U.S., with Bank of America the biggest drag on the Dow, after the company jumped the gun and reported its earnings two weeks early. After the closing bell Monday, the bank said its profit fell 68 percent and that it was cutting its dividend. The bank has also launched a $10 billion capital raise, whidch is about half finished.
Citigroup and JPMorgan were also big drags on the Dow.
There have been 32 dividend cuts in the financial sector this year, which have resulted in shareholders taking a hit to the tune of more than $30 billion, Standard & Poor's senior index analyst Howard Silverblatt wrote in a note.
Bank of America's earnings announcement pre-empted Alcoa, which typically kicks off the earnings season. Alcoa reports after the bell today; analysts expect a slight decline in profit.
Techs took another hit as investors worried that this global slowdown is going to crush tech demand — from companies and consumers.
IBM , Apple and Google were all down more than 4 percent.
Advanced Micro Devices shot up more than 25 percent after the chip maker announced that it would spin off its manufacturing business into a joint venturewith Abu Dhabi-backed Advanced Technology Investment.
Amid increasing signs of panic and running for the exits in the market, there's an underlying murmur that we may be nearing a bottom and it might be time to follow Warren Buffett’s lead.
“There are signs” of a bottom, said Scott Redler, chief strategic officer at T3Live.com. “Investors should be putting money to work now month over month – not take your money out if you need it for the next five years,” Redler said. (CNBC’s Jim Cramer has taken a lot of heat for his advice yesterday on the “Today Show” that if you need money for the next five years,take it out of stocks now.)
“I feel very confident that if they put a long-term plan together and start buying S&P 500 funds, maybe even the ETF MOO, the agricultural stocks that have been crushed … I think that they can make money in the long term,” Redler said.
TUESDAY: Bernanke, Stern speak; Fed minutes; consumer credit; Earnings season kicks off with Alcoa, Yum Brands; Second presidential debate
WEDNESDAY: Weekly mortgage applications; Fed's Plosser speaks; Pending-home sales; Weekly crude inventories; Earnings from Costco, Monsanto and Ruby Tuesday
THURSDAY: Retailers report Sept. sales; Bank of England announcement; Weekly jobless claims; Wholesale trade; Natural-gas inventories; Fed's Stern speaks; Earnings from Chevron
FRIDAY: Import/export prices; Trade gap; Treasury budget; Earnings from GE