Dow Jones becomes a bear market

A bear market is commonly defined as one that is 20% below its peak

The Dow Jones Industrial Average closed more than 20% below its October 2007 peak on Wednesday, meaning it is officially a bear market.

The blue-chip index fell 166.8 points or 1.46% to 11,215.5, which is 21.0% below its 14,198.1 close on 11 October.

The biggest drag on the index was General Motors, which fell below $10 a share for the first time since September 1954.

The S&P 500 index closed just shy of 20% below its peak levels.

"Twenty percent is just kind of an artificial line in the sand," said Keith Hembre from First American Funds.

"It's more a validation that all hell has already broken."

'Knife in our back'

One surprising thing about the entry into bear market status is the reminder that the Dow Jones was so high in October, when the sub-prime crisis was already well underway.

The peak came less than a week after the investment bank Merrill Lynch revealed $5.6bn (£2.8bn) in sub-prime losses.

Analysts are now looking for factors that will return the market to such levels, but some are blaming the record oil prices for the continuing falls.

"The market needs a positive catalyst. It could be the jobs number," said Mark Pado at Cantor Fitzgerald.

"Crude [oil] has been a knife in our back and it keeps twisting."