Another Black Monday for Wall Street

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Beyond the "short term noise" of the bailout drama, Farr notes that economic fundamentals are in decline. "Consumer spending is contracting, energy and food prices remain high for the consumer. Unemployment is rising and other developed markets around the world are beginning their decline which removes them from the list of really good customers of our goods and services."

"The Dow is down about 4,000 points from its high almost a year ago - that by anyone's definition is a bear market," says Farr. "It may have more to go but we are much closer to the bottom than the top."

What should investors take away from Monday's market? "Emotional decisions are mistakes - if you feel like you need to do something think about what you want to buy when things are down and don't think about what you want to sell when things are down," says Farr.

Finance, commodity and technology related industry groups were hammered mercilessly Monday. Among the S&P industry indexes under the gun:

Investment Banking & Brokerage fell 14.82% amid big drops in Goldman Sachs (GS) and Morgan Stanley (MS). Asset Management was down 17.12%.

Diversified Banks was down 13.50%, paced by Wachovia Corp. (WB), which fell nearly 80% after it announced plans to sell its retail bank, corporate and investment bank and wealth management businesses to Citigroup (C).

Regional Banks was down 13.14% amid investor jitters likely due to the assumption that this group faces a similar situation as Washington Mutual. The shares of industry member National City Corp. (NCC) were down significantly.

Consumer Finance was down 12.78% as shares of American Express (AXP) were weak after Credit Suisse cut its estimates and target on the stock. Credit Suisse said it expects AmEx's credit quality deterioration to continue over next several quarters.

In technology, Computer Hardware was down 9.23%, dragged lower by Apple (AAPL) after Morgan Stanley downgraded its rating on the stock to equal weight from overweight. RBC Capital lowered its rating on the stock to sector perform from outperform, citing a worsening consumer spending environment.

In commodities, Diversified Metals & Mining fell 16.60%, while other commodity groups such as Coal (-17.63%), Steel (-18.50%) and Aluminum (-9.96%) came under pressure as a defeated financial rescue plan heightened fears the world is headed into a severe recession that will reduce demand for commodities.

Oil & Gas Exploration & Production sank 13.83% along with November crude oil futures amid concerns that slowing global economic growth would likely lessen demand for oil.

Treasuries surged on the back of a flight to safety as the House of Representatives failed to pass a rescue package for the financial sector. The 10-year note soared 66/32 to 103-04/32 for a yield of 3.62%. The 30-year bond rocketed 120/32 to 105-25/32 for a yield of 4.16%.

Fed funds futures are almost fully priced for a 50 basis point Fed rate cut next month, says Action Economics. "While the market is being dramatically skewed by flight to quality flows, many are starting to factor in the probability of a recession, and perhaps a deep one which the Fed might address with further easing."