Fickle Wall Street traders thwarted hopes for a rally, as unshakeable fears from the credit freeze combined with the expiration of short-selling rules to hold down the stock market.
Technology shares helped salvage an otherwise lackluster day in which banks and automakers languised. The Dow and S&P 500 spent most of the day waffling between breakeven and about 1 percent losses, while the Nasdaq fought to get over the breakeven point.
Nevertheless, hope still presented itself that a capitulation selling bottom might be on the horizon for the battered market with its six-day losing streak.
"To me it just feels like the market is trying to feel its parameters out," Robert Hardy, of LaBranche & Co., said on CNBC. "I came in today bullish, I'm still bullish today. I think we're going to have a crackback rally. There's a rally out there. There's a rip-your-face-off rally out there because everybody is short. Everyone is still negative."
Stocks popped off the open, but as Morgan Stanley led a charge lower in a number of big banks, while shares of leading automakers got pummeled amid credit worries.
Banking issues also ceded positive territory as industry leaders continued an unwillingness to lend with Libor and credit spreads growing. There also were whispers that shorts were taking aggressive positions in some leading financials.
Morgan Stanley shares tumbled amid pessimism surrounding the broker-bank's looming earnings report and doubts over the status of a planned $9 billion investment by Japan's top bank, Mitsubishi UFJ Financial Group. There also was speculation that the end Wednesday of a ban on short-selling financials sparked the Morgan Stanley selloff, while the company's mortgage-default costs rose today as well.