Debt Deal Does Little To Arrest Stock Market Decline

Market Indicators Point To Continuing Plunge Despite Deal On Deficit

The stock market closed slightly up Wednesday after eight straight days of big losses, but analysts are expecting more big swings in the days ahead, making some Hoosiers nervous.

The Dow has dropped nearly 7 percent in less than two weeks, and the Standard and Poor's Index is now in negative territory for the year.

Many economists had predicted that the stock market would crash without a deal on the debt ceiling, but even with a deal, prices keep plunging, leaving many investors worried that another bear market, like the one that wrecked their 401(k)s in 2008, is in the works.

University of Indianapolis business professor Matt Will said more factors than just the spending debate are driving down stocks.

"Last week, the market dropped five straight days … because the GDP figures came out, and they were much lower than expected -- a 0.4 percent increase in the first quarter. That's almost recessionary levels," he said. "On top of that, this week, the PMI Index came out, which is the Production Manufacturing Index. That was at recessionary levels."

Will said lousy employment figures and disappointing corporate profits are adding to the market drop.

He also said debt rating services are disappointed that the budget deal doesn't reduce the deficit as much as they had hoped.

Certified Financial Planner Chris McCauley said he's advising some, but not most, of his clients to cut back on stocks.

"A couple we've moved out a little bit, not entirely, and some we've encouraged to, you know, hang in there," he said. "The last seven days have been awful, frankly. You know, we've given up all of our gain for the year in the stock market. But longer term, I think our clients need to be invested with some portion of their money in the stock market."

The conventional wisdom is that most investors should stay in the market because stocks will rebound over the long haul. But experts said that does not apply to people approaching retirement or who will need their money soon, because they won't have the time to recover any losses.