The Dow Jones industrial average plunged below the 10,000 mark for the first time this year as investors continued to blame the threat of higher interest rates for a market that is afflicted by many less obvious woes.
Falling for the fourth day in a row, the Dow dropped 127 points to 9990.02, its first close below the 10,000 mark since early last December. Other measures of the market also retreated the last year's levels. The Nasdaq Stock Market composite index fell 22 points to 1896.07 and the Standard & Poors 500 stock index dropped 12 points to 1087.12.
As the market's month-long retreat continued, the official excuse that stocks are retreating because investors fear rising rates began to wear a bit thin.
Wall Street prides itself on "pricing in" developments as soon as they surface -- which is why government economic reports, corporate actions and even decisions by the Federal Reserve sometimes produce no market reaction whatsoever.
Yet day after day, market-watchers continue to blame skidding stock prices on "the threat of higher interest rates" even though higher rates are already more than a threat.
In the last month, rates on government bonds and home mortgages have jumped by a full percentage point -- driven entirely by the Fed's rhetoric.
Demonstrating that he can raise interest rates without actually raising interest rates, Fed Chairman Alan Greenspan has managed to manipulate the market to implement a monetary policy that sometimes contradicts the actual words the Fed uses.
For example, when the Fed proclaimed six weeks ago that it would be "patient" in raising rates, the market interpreted "patient" to mean it should act "immediately" and at that point began pushing up bond and mortgage rates.
Again last week, when the Fed stopped talking about being "patient" but promised rates would go up at a "measured" pace, the markets responded instantly by again boosting rates.
It's hard to believe that the incredibly efficient market has yet to factor those increases -- or any the Fed delivers in the weeks ahead -- into stock prices.
But again today, the word from Wall Street was that stocks are falling because of higher rates ahead.
The only new spin is coming from Fed critics who say the real problem is that the Fed hasn't raised rates fast enough -- leaving the economy exposed to the danger of inflation. By this theory, stocks are falling because the Fed has failed to act and once the Fed finally raises rates, stocks will rebound.
Aside from the logical difficulty of reconciling the contradictory interest rate theories, Wall Street's focus on rates ignores other factors that more subtly influence the markets.
The state of the world -- and the state of the union -- both give investors plenty of reason to worry about whether this is a good time to buy stocks.
Today Chechnya became the latest area of concern. Most traders had never heard of Chechnya's president before he was assassinated yesterday and by Tuesday they'll forget his name.
They will, however, tuck away the recollection that terrorists struck again -- this time killing a head of state -- on a day when there was more intense fighting in Iraq, new reports of abuse of prisoners at Abu Ghraib prison and new political problems for President Bush.
Weekend news reports asserted that the president is losing the support of conservative lawmakers and Pentagon generals. Critics were quoted suggesting that the White House has lost its way and no longer knows what to do about Iraq or about domestic political issues that could be decisive in this fall's elections.
The ominous state of the world and the potentially precarious status of the Bush presidency are in the headlines that traders absorb every morning on their way to Wall Street. And they are reflected in the retreating stock market that traders leave in their wake when they go home for the night.
Their influence may be subtle and purely psychological, but they do a better job of explaining what ails the market than the repeated references to "fear of higher interest rates."