Stocks on Wall Street Rack Up More Big Losses

Still another indicator came from the Conference Board, who said its October leading indicators index fell 0.8%, a greater decline than the 0.6% forecast by analysts.

For a time in the early afternoon, the market went firmly into positive territory following sketchy reports that the Senate had reached a bipartisan deal on a loan package for the auto industry. But the rally faded after legislators held a news conference at which they said they wanted to see more details from the carmakers before they would vote on any monetary help.

Jack Ablin, chief investment officer at Harris Private Bank, said a deal to help the automakers would've added clarity to a highly uncertain market. "I think that's part of the reason we moved from the doldrums early this morning," he said.

Ablin said that a bankruptcy filing by one of the Big Three could have significant impact on the economy. He said that as the companies' debt has had junk-equivalent ratings for more than a year, such an event would not have as large an impact on the capital markets as Lehman Brothers' bankruptcy did. However, he said, there are additional risks.

"Flying an airline that is bankrupt, you can hold your nose and do it, but buying a car from a company that's bankrupt, that's a risk I'm not sure a consumer wants to take," said Ablin.

Ablin said that Thursday's volatility was analogous to the market mood when Congress was working on the TARP plan. "I generally don't watch C-SPAN, but these days any equity investor has to be tuned into Capitol Hill," a development he said doesn't inspire confidence.