NEW YORK -- After the Black Monday stock market crash in October 1987, many investors took it for granted that the debacle marked the end of the great bull market of the 1980s.

They were wrong.

Now, the steep slump on Wall Street triggered by the Persian Gulf crisis has revived fears that the stock market has entered a new era of stagnation that could last for years. This time the pessimists may be right, according to portfolio managers and other professional market analysts.

There is plenty of dispute, as always, among the experts paid to predict where stocks are headed. But the swift rise in oil prices and other economic fallout from Iraq's seizure of Kuwait on Aug. 2 already has caused gurus of all stripes to lower their forecasts on the market, despite a modest rally in stocks last week. The crisis has led "bulls," or optimists about the market, to turn cautious, while the pessimistic "bears" are boasting that they were right all along.

At the very least, experts agree, the latest setback has brought to an end the upward trend that the market had enjoyed since December 1987, two months after Black Monday. That upturn lifted the Dow Jones industrial average to a record high just shy of 3000 as recently as mid-July.

"At a minimum, you've got to say that the bull market has been interrupted, both because of general economic uncertainty and inflationary uncertainty related to oil," said Peter J. Canelo, chief investment strategist at Bear Stearns & Co.

More ominously, the market's recent decline has strengthened longstanding suspicions that the 1990s will be a generally less robust environment for financial markets than the unusually lucrative 1980s. The fear has grown that the August slump marks the end not only of the market upturn of the last 2 1/2 years, but also of the rising, bullish trend that began in the early 1980s when the Dow was hovering around the 800 mark.

"The '80s were a period of low inflation, low interest rates and low energy prices. Taxes were coming down, and you had a pretty positive environment. In the '90s, it looks like a lot of those things have reversed," said James A.C. Kennedy, director of research at the Baltimore-based T. Rowe Price Associates Inc. money management firm.

"It looks like energy prices will be higher, inflation will be higher, interest rates will be higher" in this decade, Kennedy said. It still will be possible to make a lot of money in the stock market, he said, but only by picking the right stocks. The kind of across-the-board gains seen in the 1980s, which lifted most stocks to an extraordinary degree, seem unlikely.

Taking the Long View

Such forecasts come as little surprise to experts who look at the market in terms of decades because the market's advances in the 1980s were the historical exception rather than the rule. The average annual total return -- price changes plus dividends -- for shares listed on the New York Stock Exchange during the 1980s was 18 percent, according to Richard T. McCabe, first vice president and manager of market analysis for Merrill Lynch & Co. That was well above the average of 10 percent over the last 50 years, and it may well be unsustainable, he said.

"Periods of tremendous gains like that {in the 1980s} have usually occurred once every generation," McCabe said. Similar periods of dramatic gains have included the 1920s, which ended with the famous 1929 market crash and Great Depression, and the period of the 1950s and early 1960s, he said.

"It seems like, in this century, you get 10 good years, and then 20 years of seesaw," McCabe said.

While the evidence is mixed as to whether the long-term bull market of the 1980s is over, he was not willing to predict that it would last another 10 years.

The view that the long-term bull market has ended is by no means unanimous. Many experts assert that the end of the Cold War and historic defeat of communism are bound to be major positive developments for stocks in the 1990s. Another important factor cited as a long-term bullish trend is the recent slump in real estate prices, which could encourage American families to invest a higher share of their assets in the financial markets rather than in new houses.

But there are also a number of long-term trends that augur poorly for stocks. Chief among these is the end of the era of corporate takeovers and buyouts, which helped bid up stock prices significantly during the middle to late 1980s. In general, corporations are expected to issue more stock in the 1990s and thus depress prices by adding to supply, whereas corporations bought back significant chunks of their shares and thus bolstered prices in the 1980s.

Whatever the long-term outlook for stocks, the medium-term outlook is certainly cloudy. The Dow has plunged nearly 400 points, or about 13 percent, since its all-time high of 2999.75 on July 17, and it closed Friday at 2614.36. The earliest that experts foresee any end to the decline is late autumn, and many believe the slump in prices could last up to two years.

The steep rise in oil prices provoked by the Middle East crisis and the ongoing worries that the confrontation could spark a shooting war have led many investors who were optimistic about the market to rethink their positions.

Canelo of Bear Stearns said he had been "really quite bullish" before Iraq's invasion. Now, he believes that the market will remain trapped in a "trading range," without any overall direction up or down, for between nine and 18 months until economic prospects become clearer. The current range for the Dow average is probably 2500 to 2650, Canelo said.

"If there is an outbreak of fighting, a shooting war, we could see the market fall to 2250 or 2300. I think that would be a major low, and a buying opportunity," Canelo said.

Chastened Bull

Michael H. Sherman, chief investment strategist for Lehman Brothers Inc., is another chastened bull. He was optimistic about the market as recently as late July, because he believed that interest rates would drop and corporate profits would improve with an economic upturn in 1991.

"That was the bull case. That case obviously got a shot in the head by the invasion of Kuwait," Sherman said ruefully. Now, he said, the outlook has altered so much that he would remain skeptical about the market even if the Persian Gulf crisis disappeared overnight.

The military confrontation in the Middle East may have cost the United States the "peace dividend" of lower defense spending that was expected to result from the end of the Cold War, Sherman said. In addition, the crisis atmosphere in Washington and increased likelihood of a recession have made it easier for the Bush administration and Congress to delay achieving meaningful progress on reducing the budget deficit, he said.

Nevertheless, Sherman is convinced that the long-term bull market will ultimately recover and that the overall upward trend begun in the 1980s will resume.

"There are no {permanent} impediments to growth. There's opportunity worldwide," Sherman said. A long-term bear market would begin only if there were a prolonged economic depression or a return to double-digit inflation characteristic of the late 1970s, Sherman said, and he doesn't expect either.

For those investors who were bearish about the market even before the Iraqi invasion, the Middle East crisis has merely exposed and worsened the weak tendencies that were already present.

The longtime pessimists had argued even back in July that the Dow's record highs were the product of speculative froth rather than fundamental strengths. They noted that most buying then was concentrated in a very narrow group of stocks -- particularly the 30 that make up the Dow average itself -- and that the majority of stocks were lagging the well-known indicators.

"Really, this is not a new bear cycle that began in July and accelerated in August. It's a bear cycle that for many stocks is already a year old," Merrill Lynch's McCabe said.

Paradoxically, that analysis leaves McCabe more optimistic than many other analysts about how soon the market could begin to recover. Bear cycles "usually last about a year," McCabe 1990} or the first quarter {of 1991}," he said.

The longtime bears also believed that the economy may have been headed into recession even before the jump in oil prices and that corporate profits were unlikely to rise in the second half of the year as the bulls were hoping.

Where's the Bottom?

Abby Joseph Cohen, chief strategist in the New York office of Barclays de Zoete Wedd bank, who has been bearish for months, predicted in her latest newsletter that the market would continue to sink in coming weeks as investors lowered their estimates of corporate earnings for the rest of this year and 1991.

"The positive sentiment in the U.S. equity market began to erode even before the Iraqi invasion of Kuwait. Economic growth appeared tepid at best, and equity prices had reached substantially overvalued levels based upon consensus expectations for corporate profits," Cohen wrote.

"Investors have now been presented with more than the usual level of uncertainty in the form of higher oil prices and the potential for disruptions in supply, rising inflation expectations and interest rates, and a falling dollar.

"The 'bottom' for the market is a moving target," Cohen wrote. "We're not there yet."