NEW YORK (CNN/Money) - The Dow broke to its lowest level since October 1998 Tuesday -- and with it went investor hopes that they'd seen the worst.

At 7,683 the Dow has fallen nearly 1,200 points in just one month, a loss of about 13 percent. The Nasdaq has fared even worse, down about 14 percent over the same period.

Stocks were in the red out of the gate Tuesday morning, but it wasn't until after the Fed announced in the afternoon that it would hold interest rates steady that the market really started to drop. Although the Fed decision was anything but a surprise, two members dissented, saying that rates should have been cut.

A brutal month Not one Dow stock is in the black for the past month -- here are the Top 10 losers Company  1-Month loss  Honeywell  -28.3%  J.P. Morgan Chase  -27.5%  Alcoa  -27.2%  McDonald's  -25.9%  IBM  -25.7%  General Motors  -20.4%  Intel  -20.2%  Citigroup  -20.0%  General Electric  -19.7%  Caterpillar  -17.8%  Dow -13%   * Losses from 8/24/02 through 9/24/02  Source: Baseline

That suggested to some traders that maybe the Fed needed to lower rates -- that the central bank has been bullheadedly upbeat about the pace of recovery, and thus has put the economy at risk of slipping back into recession because of its inaction.

"The Fed is hanging onto its long-term view," said Miller Tabak bond market strategist Tony Crescenzi. "Some will say this is just excessive optimism."

While the Fed may have been the catalyst for sending stocks to new lows, it was hardly the only negative influence on the market. Investors have been beset by a possible war with Iraq and a series of high-profile earnings warnings.

"Anybody who was asleep through all of this is getting jolted awake," said Brett Gallagher, head of U.S. equities at Julius Baer Investment Management. "A lot of people are back to where they were when they originally started investing."

Especially if, like many investors, they loaded up on tech. The Nasdaq is back where it was in September 1996 -- when enthusiasm over do-it-yourself investing just began to mount. Any money devoted to the index since then would be under water.

And of course much of the cash devoted to tech stocks flooded into the market near the Nasdaq's March 10, 2000, top. The index has fallen 77 percent since then.

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Although he wouldn't rule out any short-term snap-backs, Julius Baer's Gallagher thinks that stocks have further to fall. In the weeks to come he thinks investors are going to focus on how much "fluff" there is in earnings numbers.

Standard & Poor's is set to come out with fresh data on what it thinks U.S. companies' earnings really look like. Meanwhile, the Financial Accounting Standards Board is taking a fresh look at the expensing of options.

"I don't see anything fundamental that's going to reverse the market's direction," Gallagher said. "We're going to get a lot of red flashing on our screens."

Even for traders that share Gallagher's dour take on the market, right now may not be the best time to sell. For a while now stocks have been what traders like to call "oversold" -- a fancy term for when selling has been so protracted that it looks like it's going to exhaust itself. That, said Kirlin Securities strategist Tony Dwyer, makes it look like the market is due for a big snapback.

"Typically you don't want to sell into a whoosh," he said. "Things are so negative now, you're ripe for a vicious, counter-trend rally."

But ultimately Dwyer thinks the market is going to head lower still, and when the rally comes, he'd be selling into it.

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There are some optimists out there, however, who reckon that investors have become far too glum, driving stocks far below where they should be.

"The news is so bad, I almost have to jump to the contrarian side," said Jack Baker, head of equities at Putnam Lovell. "If you assume the economy is in the process of turning, I would say you have to start picking away."

But that assumption on the economy may get challenged in the weeks ahead. Even economists who think the recovery is on track fret that the next round of economic data looks like it's going to be on the weak side, and that the fourth quarter will be weaker than the third.

That doesn't bode well for the market, said Wells Fargo managing director of listed trading Todd Clark. "Stocks won't head higher unless we start getting back-to-back numbers showing economic strength," he said. "We certainly haven't been getting that."