If this is the market &#39;correction,&#39; it isn&#39;t much so far

The stock market may feel awful, but memories tend to be short on Wall Street: Measured by most major indexes, the pullback over the last two weeks still is shy of the last significant decline, from June to mid-July.

The Standard & Poor?s 500 index, which slumped almost 2% to 1,042.63 on Wednesday, is down 5% since it reached a one-year closing high of 1,097.91 on Oct. 19.

By contrast, the sell-off that hit the S&P from June 15 to July 10 took it down 7.1% before buyers swarmed again.

The average New York Stock Exchange issue is down 6.3% since the NYSE composite index hit its recent high Oct. 19. The index was off 9% from its June high to its July low.

So we're still quite a ways from even a classic "correction" in a bull market, meaning a short-term drop of 10% to 15% in major indexes.

In early July, as now, many investors feared the market was on the verge of a deep decline because of worries that the economic recovery was running out of gas. But as second-quarter corporate earnings reports rolled in beginning in mid-July, the bulls were able to regain control, and they stayed in charge through August and September.

Third-quarter earnings reporting season also got off to a strong start, lifting the market in the first two weeks of this month. But in the last few days some high-profile reports, including from software giant SAP and Goodyear Tire, have disappointed investors, contributing to the darkening mood -- and fueling fresh predictions of a steep market sell-off.

Weaker-than-expected economic data, including the new-home-sales report Wednesday and a consumer confidence report Tuesday, also have hurt the optimists' case.

Stop me if you've heard this one: Many market bulls say they would welcome a classic 10% to 15% correction to take some of the froth out of share prices and attract new money from the sidelines. In theory, so many cautious investors have been waiting for a pullback that there should be plenty of cash ready to jump in as stocks cheapen.

But how cheap is cheap enough?

Consider: The 7.1% drop in the S&P from mid-June to mid-July took it down to 879. This time around, the market is falling from a much higher level. Even if this pullback were to slash a painful 15% from the S&P 500's recent high, the index would be at 933 -- still 6% above its July low of 879.

-- Tom Petruno

Photo: Traders on the NYSE floor Wednesday. Credit: Richard Drew / Associated Press