Dow to start Friday on brink of bear market

NEW YORK (Reuters) - The Dow .DJI will start Friday just one moderately bad day away from being in a bear market, the closest it's been to that technical threshold in eight years.

The Dow closed on Thursday at a level roughly 120 points above bear market territory, or 20 percent below its all-time high. A drop of 120 points is not unusual these days, with six of the 19 trading days so far this month featuring drops of that level or more.

Many on Wall Street think a bear market has already taken hold, said Stephen Massocca, co-chief executive of San Francisco-based investment bank Pacific Growth Equities.

"Since Bear Stearns went out in March, I think that was the defining moment when everyone said this is a bear market," he said.

That's "how everything has felt, in terms of the decline in activity, the decline in investment banking activity, the poor financial performance of broker dealers, the poor financial performance of banks and the lack of animal spirits and speculative interest on Wall Street."

On Thursday, the Dow slid 360 points to its lowest level since September 2006, as oil hit a record and Wall Street powerhouse Goldman Sachs urged investors to sell bank and auto maker stocks.

All 30 Dow components ended the day in the red. General Motors GM.N shares slid to a 53-year low, and Citigroup (C.N) dropped to a 10-year low.

The Dow closed at 11,453.42, down 19.1 percent from its October 9, 2007, record closing high of 14,164.53.

(Reporting by Kristina Cooke; Editing by Leslie Adler)