By Kate Gibson

The stock market's fall Friday had the S&P 500 Index near its bear-market low as companies listed on the broad-market index engaged in another record-breaking quarter of slashed dividends.

After lapsing more than 200 points, the Dow Jones Industrial Average (DJI) was more recently off 50.02 points to trade at 7,415.93. Earlier, the blue-chip index fell to an intraday low of 7,249.47, its lowest level since October 2002. The S&P 500 (SPX) also pared losses, lately off 5.78 points to 773.16, and the Nasdaq Composite (RIXF) shifted to positive turf, up 3.10 points to 1,445.92.

After leading losses earlier on, financials fronted sector gains in afternoon trade, which also had gold futures closing above $1,000 an ounce.

"Given the uncertainty with corporate earnings, gold is one area investors should be looking at to hedge themselves against the perception that the dollar decline is somewhere on the horizon," said Dan Greenhaus, an analyst at Miller Tabak.

Gold is often purchased as a hedge against inflation, which is not an immediate concern, with consumer prices flat for the past 24 months.

While inflation could be on the more distant horizon, it is an unlikely cause for concern for near-term investors, analysts said.

"The rational investor is hiding, not investing in gold, money markets and Treasuries -- those harbors of safety represent pent-up demand for stocks," said Art Hogan, chief market strategist at Jefferies & Co.

Dividend reductions within the S&P 500 in the fourth quarter of 2008 came to a record $15.9 billion, according to Howard Silverblatt, senior index analyst at Standard & Poor's.

"Now, 50 days into the quarter, the record has already been broken, with 26 issues cutting $16.6 billion," the analyst said, adding that further cuts are expected.

Those cutting dividends in February included motorcycle maker Harley-Davidson Inc. (HOG), retailer Macy's Inc. (M) and institutional money manager State Street Corp. (STT).

Conversely, agricultural giant Archer-Daniels Midland Co. (ADM), beverage giant Coca-Cola Co. (KO) and paint supplier Sherwin-Williams Co. (SHW) all boosted their payouts to investors during the month.

The S&P, trading near its Nov. 20, 2008, low of 752.96, has shed $7.02 billion -- more than half its value -- since its Oct. 9, 2007, highs, said Silverblatt.

Still, he managed to find a silver lining in the losses: "We've already lost more than is left, so things have to be better ahead than behind."

Another positive, according to Jefferies & Co.'s Hogan, is that the once-wide gap between top-down and bottom-up estimates of corporate earnings for 2009 has narrowed, with consensus estimates effectively adjusted to a level "that is probably attainable."

A $60 estimate for 2009, multiplied by 12.5 times, yields a 750 target on the S&P, which is "extremely fairly valued," said Hogan.

Greenhaus instead opted to use an 11 times multiple in light of a more disruptive-than-usual economic contraction, saying $60 times his now-reduced multiple puts the S&P's "fair value" at 660, assuming the multiple and price target hold.