Updated from 3:28 p.m. EDT

One of the last of the major technical dominoes fell today as the

S&P 500

closed below 800, breaching its July closing low of 797.70. Other major averages fell in concert, extending their growing string of multiyear lows.

The S&P 500, which remains the benchmark for most professional money managers, fell 1.9%, to 785.28, its lowest close since April 28, 1997.

The S&P's ability to stay above 800 prior to Monday had encouraged some talk the index was putting in a double bottom, a bullish technical pattern. Now, the only significant technical level for the index left to test is 775.96, its intraday low on July 24.

As noted here on

Friday, the action in other major averages suggests a breach of that level is looking inevitable, and likely sooner rather than later.

The

Dow Jones Industrial Average

entered this week at its lowest level since November 1997, and on Monday slumped 1.4%, to 7422.98. Meanwhile, the

Nasdaq Composite

, which closed Friday at its lowest level since September 1996, fell 1.8%, to 1119.83.

The setback was fairly extensive, judging by market internals. Declining stocks bested advancing issues by nearly 3-to-1 in

Big Board

trading, where declining volume was 82% of the 1.5 billion-share total. New 52-week lows swamped new highs by 468, to 33 in

New York Stock Exchange

activity and by 442, to 15 in over-the-counter trading, where 1.2 billion shares traded.

Midday Lift Falls Flat

Early in the trading day, the S&P 500 dipped below 800 amid more disappointing news about Japan's economy, concerns about Germany's third-largest bank, and an explosion on a French oil tanker off Yemen, which raised concerns about terrorism before President Bush's scheduled speech on Iraq tonight.

Additionally, a profit warning by

Sears

(S) - Get Report

, which cited a slowdown in its credit card business, renewed worries about U.S. consumer spending, retailing stocks and creditors alike; the Amex Retail Index fell 4.8%, while

American Express

(AXP) - Get Report

was among the Dow's biggest negative influences, shedding 6.8%.

Reports of layoffs at

J.P. Morgan Chase

(JPM) - Get Report

, Morgan Stanley's downgrades of

United Parcel Service

(UPS) - Get Report

and

FedEx

(FDX) - Get Report

, plus UBS Warburg's downgrade of Dutch chip-equipment maker

ASML

(ASML) - Get Report

further weighed on major averages.

But after trading as low as 792.43 shortly after 11 a.m. EDT, the S&P 500 rallied smartly and was as high as 808.21 about two hours later, with the Dow and Comp enjoying similar gains from the morning lows.

Catalysts cited for the reversal included news that President Bush has taken the initial step toward intervention in the lockout of West Coast port workers; positive comments by

Intel

(INTC) - Get Report

CEO Craig Barrett about a tech-sector recovery in 2003; and strength in energy names such as

ExxonMobil

(XOM) - Get Report

.

Renewed hopes for an intermeeting rate cut by the

Federal Reserve

also apparently aided the market's late-morning bounce. A notice on the Fed Web site described a meeting in which a "review and determination by the Board of Governors of the rates of discount to be charged by the Federal Reserve Banks" would occur. However, the meeting was described as routine and not of the emergency variety, for which there have been no advance Web site notifications in the past.

Whatever positive momentum was generated by the rate-cut rumors, or Barrett's comments or hopes that the president would settle the lockout at West Coast ports dissipated as quickly as it emerged. Still, traders' eagerness to glom onto rumors or the latest promise of a tech recovery again demonstrates how desperate many of them are for something positive to which to cling. Optimists have managed to keep hope alive despite the market's ongoing duress, indicating maybe sentiment isn't really so negative after all.

The Media and the Message

Speaking of sentiment and negativity, I wanted to respond to something the always thought-provoking Tero Kuittinen posted in

RealMoney.com's

Columnist Conversation this morning.

Kuittinen, vice president of wireless communications at investment firm Halsey Advisory & Management of New York and tech adviser to Opstock Investment Banking of Helsinki, Finland, today opined that U.S.-based media are blinding pushing a "pathologically chirpy" agenda even as "the global financial system slowly spins out of control."

Longtime readers of this column know (hopefully) that I'm no Pollyanna about the state of the markets or the world economy, but I thought Kuittinen's critique was off-base. You'll have a chance to put your two cents in at the end of this piece, but first, here are some of the thoughts I shared with Tero this morning.

The role of reporters in the classic sense is to be objective, unbiased, third-party observers. I would contend the "pathological chirpiness" from the mainstream media about the state of the economy stems from the following:

The repeated insistence of President Bush, Treasury Secretary O'Neill, et al, that the economy is fine, growing, and on the cusp of explosive growth. Just this morning, Fed Chairman Greenspan said "banks in this country remain quite healthy," despite concerns about the level of non- and underperforming loans on their books. In a separate address at the American Bankers Association convention in Phoenix, O'Neill urged banks to not become overly risk-averse and miss the "genuine opportunities for investment in our country."

The repeated insistence of the vast majority of Wall Street economists that the risks of a double-dip recession are minimal, at best. Morgan Stanley's Stephen Roach remains very much in the minority in forecasting another recession and the consensus estimate of economists is for growth over 3% in the next several quarters.

The repeated insistence of the vast majority of fund managers and other professional investors that the stock market recovery is imminent. They get paid millions to run billions of dollars. Journalists get paid a lot less to report on what they do.

Clearly, there are problems with the media as many would argue it's largely abandoned its traditional adversarial role, especially when it comes to money matters. Tero also argued the press has become too passive in the wake of 9/11, or at least too concerned with issues of patriotism: The press is "following meekly the White House playbook and opting for 24/7 Iraq coverage" rather than covering the hard truth about the world's economy, he wrote.

Still, I contend a large aspect of the upbeat attitudes you're seeing is a reflection of what the experts are saying. Mainstream journalists are trained to keep their personal views under wraps. That's the difference between columnists, who are encouraged to give personal opinions and reporters, who aren't.

I'd bet if you did a poll of the "average" U.S. citizen, they would say the bias of the financial press is too negative and gloomy. I think sometimes we get the news we deserve and a lot of press outlets are pandering to their readers/viewers. But take our poll and let us know how you really feel:

Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to

Aaron L. Task.