Not a panic, a sigh of resignation

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I wasn’t really paying attention, and I definitely wasn’t watching CNBC, but it appears the stock market had a pretty bad day–the Dow down 7.8%, the S&P 9%. As always, I think the main lesson here is that these are volatile times, and in volatile times you’ll get days like this.

But a pretty convincing narrative thread for the day’s events, and one that appears to be backed up by the individual stocks I looked at, is that today’s market reaction was no longer about financial-system panic but about the reality of recession, possibly a pretty harsh one. The stocks of financial companies perceived last week to be at significant risk of some kind of less-than-friendly government takeover–Morgan Stanley, Citi, Goldman Sachs–are still much higher than they were last Friday. Pretty much every company on the stock market, though, was down today because of fears that the sharp slowdown in consumer spending hinted at in today’s September retail sales report and Fed Beige Book means that earnings will be much lower in the quarters ahead.

Those fears are almost certainly justified. And they’re kinda scary. But I’ll take ‘em any day over the fear that the banking system is about to shut down.

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