The recent housing and price data have considerable shock value. Housing starts in October fell to the lowest number since the figure was first tracked in 1959, while the headline inflation figure fell 1 percent, the largest one-month fall since 1947, The Washington Post reported Thursday.

The DJIA closed Wednesday at 7,997.28, a drop slightly greater than 5 percent. But, breaching the 8,000 barrier carries a psychological message.

"When you break through these kinds of levels, it strongly suggests there's more to go," Ed Yardeni, president of Yardeni Research told The New York Times.

The dropping consumer price index is a strong signal that consumers, who drive two-thirds of the economy, are putting on the brakes.

"It's not simply that (stores) don't have pricing power," said Joel Naroff, president of Naroff Economic Advisors. "It's that they can't sell what they have," he said.

"It's a tough environment, you've got layoffs, you've got bad news, people are worried about banks," said Andrew Brooks, head equity trader at T. Rowe Price. "It's a nervous, anxious market," he said.