US Stock Index Flirts with ‘Bear Market’

Posted October 4th, 2011 at 4:55 pm (UTC-5)
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A late rally Tuesday kept a major U.S. stock index from winding up in the dreaded “bear market” territory.

The Standard & Poors-500 index closed 25 points higher, or 2.5 percent.

At one point Tuesday, the S&P was down more than 2 percent, putting it more than 20 percent below its April 29th high of 1,363.

When stock indexes drop 20 percent or more below a recent high, financial analysts consider that to be a “bear market.” They call stock advances a “bull market.”

While Tuesday's late rally pushed U.S. stocks sharpy higher, European and Asian stocks plunged on continued worries about a Greek debt default and a slowing world economy.

Financial historians have cited various origins for the “bear” and “bull.” Some think the terms can be attributed to actions of the two animals, with spirited and burly bulls thrusting their horns into the air, while bears at times can be sluggish and swipe down with their paws.

In the United States, bears have been linked to financial transactions at least since the early 18th century. Frontier traders speculated on the price of bearskins they sold, even though they had yet to receive them from trappers. The traders were betting the actual price of the skins would be lower than what they prospectively sold them for, and thus they would make a profit.

As it turned out, the middlemen in the bearskin trade came to be known as “bears.” Now, three centuries later, Wall Street still defines its falling fortunes as a bear market.