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KAI RYSSDAL: It was pretty easy to figure out what was going to be sold off on Wall Street today -- all you had to do was look for anything labeled "stock" and it was going to go down. All 30 Dow components finished the day lower than where they started.
General Motors led the way with a $39 billion quarterly loss. That's not a typo -- $39 billion is the actual number. And get this, CEO Rick Wagoner said part of it was due to subprimes. That's for a car company.
By the closing bell, the major indices had given it up by about 2.5 percent apiece. Take a look around at the rest of the economy -- it's pretty obvious Wall Street's been needing a reality check for some time now.
Marketplace's Bob Moon looked into what happens if investors overdose on the bad news.
Bob Moon: Wall Street's recent euphoria finally gave way to worries over the ever-deepening subprime credit crisis, the weakening dollar and record oil prices. The risk now is the market could swing too far in the opposite direction. Tim Hayes is chief investment strategist for Ned Davis Research:
Tim Hayes: What happens when you go from extreme optimism back toward, you know, new concerns coming to the forefront, then the momentum begins to shift. And really, what then you need to look for is to see if we get excessive pessimism that we've really factored in too much of the bad news.
Hayes says it's safer to take a wait-and-see approach to the stock market right now, mindful that it's long overdue for a big correction.
Hayes: We haven't had what's called a "cyclical bear market" since 2002. This is really one of the longest periods we've ever seen, going back all the way to the beginning of the 1900s. To go this long without anything more than a 10 percent correction in the major averages is really unusual.
But even as the trading floor was shifting -- figuratively, at least -- at the New York Stock Exchange today, Seaport Securities broker Ted Weisberg was still sounding optimistic.
Ted Weisberg: I just think that we're going through a difficult period -- I think we understand why we're going through a difficult period. The big question is, how long will it take for us to work through the softness in the real estate market, and to work though the problems in many of the big, large financial institutions.
Economists caution that those aren't the only risks. But Weisberg is still able to see a silver lining, even in rising oil prices.
Weisberg: If oil is up, because economies are good and there's a lot of demand out there. Yes it's inflationary, and yes it costs more at the pump, but it also is a reflection of growth.
Weisberg says it still comes down to whether the glass is half empty, or half full. In Los Angeles, I'm Bob Moon for Marketplace.