NEW YORK -- The Dow Jones industrial average plunged 300 points on Tuesday, suffering its third-biggest point drop ever and raising fears the stock market's tumble is far from over.
The Dow fell 299.43 points -- the biggest one-day point-drop since the Oct. 27 slide of 554 points -- to finish at 8,487.31 in the second busiest day in history.
In just 12 sessions since it closed at a record 9,337.97, the Dow has fallen 850 points or 9.1 percent to its lowest level since March.
The past few weeks have been dominated by a series of discouraging signals on the economy and company profits, as well as continuing troubles in Asia, dashing hopes that improving conditions in the second half of 1998 would justify the market's lofty heights.
The surprising drop has left investment pros divided over whether the market is mired in one of its frequent post-rally downturns, popularly known as a correction, or caught in the throes of something far more severe.
Several of Wall Street's most prominent optimists have expressed doubts about the bull market's staying power in recent days.
Ralph Acampora, an outspoken market analyst at Prudential Securities noted for his predictions that the Dow would hit 10,000 this year, appeared on CNBC twice on Tuesday, declaring that the bull is giving way to a bear market.
A normal "correction" is typically defined as a 10 percent drop, while "bear markets" are usually described as drops of more than 20 percent.
Other leading analysts, however, maintained an optimistic stance, noting that there's still no recession and that both interest rates and inflation remain low.
"You don't have much more than a correction in the stock market here," said Jeffrey Applegate, chief investment strategist at Lehman Brothers, standing by his year-end target of 1,250 for the Standard & Poor's 500, which plunged 40.32 to 1,072.12 on Tuesday. "The overriding reason why the market's done so well this year is not because of earnings, but because interest and inflation fell."
On Tuesday, the Conference Board, a business research group, said its Index of Leading Economic Indicators slipped in June for the second straight month. The lengthy General Motors strikes got most of the blame and economists said it was too early to warn of a recession in the months ahead.
But perhaps even more threatening than the economic backdrop, has been an apparent shift in market sentiment. While bargain hunters have helped cushion every slide over the past few years, any hint of a rebound during the past few days has quickly evaporated.
"It's a little early to tell, but it seems as though what we're seeing is a change in psychology from buying the dips to selling the rallies," said Richard A. Dickson, a technical analyst at Scott & Stringfellow Inc. in Richmond, Va.
"People keep saying `The market's oversold, it's got to bounce.' They're missing the point," said Dickson. "If it's oversold and not bouncing, that's a very bad sign. It says that there's just no buying interest."
For now, it seems that individual investors, though jittery, aren't dumping their mutual fund holdings.
At Fidelity Investments, the biggest mutual-fund company, phone calls from investors surged around midday, when the Dow was off more than 200 points, but tapered off in the afternoon, said spokeswoman Jessica Johnson, acknowledging a slight shift away from stock funds.
The Nasdaq composite index fell 65.46, the second biggest point drop after Oct. 27's 115-point plunge, closing at 1,785.64. The index, dominated by leading technology companies like Microsoft and Intel, has seen its 1998 gain cut by more than half, from 28.3 percent to 13.7 percent.
Declining issues outnumbered advancers by a 5-to-1 margin on the New York Stock Exchange.
Volume totaled a hefty 1.007 billion shares, only the second time more than one billion New York Stock Exchange-listed shares changed hands.
In other trading, the Russell 2000 index of smaller companies fell 11.73 to 401.63 and the small-company dominated American Stock Exchange Index fell 19.11 to 678.76. Both of those measures are now showing a loss for the year.
Overseas, Tokyo's Nikkei stock average fell 0.9 percent, Frankfurt's DAX index rose 0.9 percent and London's FT-SE 100 fell 1.3 percent.
The Dow Jones industrial average suffered its third-biggest point loss ever on Tuesday. But it was not among the largest percentage declines.
Oct. 27, 1997 -- 554.26 to 7,161.15, 7.2 percent.
Oct. 19, 1987 -- 508.00 to 1,738.74, 22.6 percent.
Aug. 4, 1998 -- 299.43 to 8,487.31, 3.4 percent.
Aug. 15, 1997 -- 247.37 to 7,694.66, 3.1 percent.
Jan. 9, 1998 -- 222.20 to 7,580.42, 2.8 percent
June 15, 1998 -- 207.01 to 8,627.93, 2.3 percent.
July 23, 1998 -- 195.93 to 8932.98, 2.1 percent.
June 23, 1997 -- 192.25 to 7,604.26, 2.5 percent.
Oct. 13, 1989 -- 190.58 to 2,569.26, 6.9 percent.
Oct. 23, 1997 -- 186.88 to 7,847.77, 2.3 percent.
March 8, 1996 -- 171.24 to 5,470.45, 3.0 percent.
July 15, 1996 -- 161.05 to 5,349.51, 2.9 percent.
March 13, 1997 -- 160.48 to 6,878.89, 2.3 percent.
June 11, 1998 -- 159.93 to 8,811.77, 1.8 percent.
Nov. 12, 1997 -- 157.41 to 7,401.32, 2.1 percent.