The bear market that is ravaging investor portfolios is now one of the worst in modern U.S. history and has wiped out more than $7 trillion...

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CHICAGO — The bear market that is ravaging investor portfolios is now one of the worst in modern U.S. history and has wiped out more than $7 trillion in shareholder value, with no bottom clearly in sight.

When it stops and how far it drops, no one can predict with any accuracy — a painful uncertainty underscored by Wall Street’s giddy mood at the moment the steep descent began.

A year ago Thursday, Wall Street was celebrating the fifth anniversary of a bull market that had created $10 trillion in shareholder wealth since 2002. The Dow Jones industrial average and the Standard & Poor’s 500 index hit all-time highs on Oct. 9, 2007.

A headline in USA Today captured the prevailing sentiment: “Market’s run could keep going for a while.”

In fact, the party was over. The subprime-mortgage problem that was laid bare by a decline in home values developed into a much broader credit crisis that toppled giant banks and financial institutions.

On Wednesday, the Dow ended at 9,258.10, down 189.01 for the day. The S&P 500 index slid 11.29 to 984.94, down 37 percent from its peak of 1,565 a year ago. The tech-share-heavy Nasdaq composite index ended down 14.55 to 1,740.33, off 38 percent from where it stood a year ago at 2,803.91.

Most experts don’t see a recovery until there’s greater stability in the housing market, banks are lending freely and employment improves.

Unlike other periods that saw precipitous drops, this one is rooted in foundering credit markets. That makes predictions more difficult than if the plunge were based on company profits or stocks alone.

“When you have an environment like this where the crisis is so deeply rooted from the credit standpoint, it adds an extra layer of ambiguity and ultimately of uncertainty,” said Mark Freeman, portfolio manager for Westwood Holdings Group. “That is what the markets are struggling with.”

No turnaround is seen before 2009 or later.

Even with the Federal Reserve and other major central banks around the world slashing interest rates Wednesday, experts were hesitant to call a bottom.

“Technical indicators tell us that we’re overdue for at least a short-term bounce,” said Liz Ann Sonders, chief investment strategist for San Francisco-based brokerage Charles Schwab Corp. “That doesn’t tell us that the bear market is necessarily over.”

This bear market — a term often defined as a prolonged drop in stock prices of 20 percent or more — already is harsher than most of the 10 bear markets since the 1930s. Those markets have lasted an average of about 16 months from peak to trough, based on S&P data.

Since the record 83 percent plunge in 1929-32, the current market is exceeded only by the drops of 49 percent in 2000-02 during the tech-stock implosion and 48 percent in 1973-74 during a recession and energy crisis.

The magnitude of this decline is close to the dot-com collapse earlier this decade, but this time, it’s not just retirement accounts and stock portfolios that are being hurt. Increasingly, the availability of loans and credit is drying up, too.

Rob Arnott, chairman of Research Affiliates in Newport Beach, Calif., thinks the big difference this time is that Americans are feeling increasing pain apart from the stock market.

“People in 2000-02 saw their 401(k)s become 201(k)s, but the impact on their personal lives otherwise was minimal,” he said. “This time, it is starting to be significant. People who have home-equity lines and use them to pay for holidays or buy a car are finding that their loan facilities are getting pulled. That affects the way they look at their own spending.”

He sees another six to nine months for this bear market.

Some are more pessimistic.

Money manager Peter Schiff, who has long espoused the bleakest of market views, said the Dow has a good chance to sink to 7,500 or lower. He expects the bear market to last another five years or more. That would signal a possible loss of at least 20 percent more in shareholder value.

“Everybody wants to think there’s a government solution to spare us the pain,” said Schiff, who runs the investment firm Euro Pacific Capital in Darien, Conn. “There is no government solution. All there is, is more pain.”

Once the bear market ends, investors could still have a long wait to recover their losses. After a stock-market index falls 33 percent, it has to rise 50 percent to get back to where it started.

It took 12 ½ years for the S&P to recover its losses from the devastating three-year period ending in 1932, and four years to make up the decline from the 2000-02 market plunge.

Still, the tumbling stocks also raise buying opportunities.

Dan Seiver, a finance professor at San Diego State University, said many stocks are now cheap and investor panic is a sign the bear market may nearer the end than the beginning.

“The only time you get cheap stocks is when the world looks awful,” he said. “Nobody’s going to give you cheap stocks when everything looks good.”

Information from Associated Press reporter David Pitt in Des Moines

is included in this story.