CNNMoney had an article today on Irrational Anxiety in the stock market. http://money.cnn.com/2005/07/25/mark...ety/index.htm]
It states that investors are being overly affected by the news; gas prices, terror attacks, possible RE bubble, etc. I think it is also a case of large fund managers bloating and flushing the market too so they can turn a profit and dump shares. The news never seems to really explain the market ups and downs; it is more of an excuse and not a reason. There is much more going on under the surface than is ever reported on the news. Don't blame the average investor for being timid when as soon as the market makes a small rally the big investment houses rush to sell to capture a small profit so they can do it all over again. The small guy get hurt while the big guys get to show some gains for the year.
That being said, there is also a case to be made for many companies buying back shares to keep their cash reserves lower because they are heavy with cash right now. I believe investors are also heavy with cash and are waiting on the sidelines for the market to make a move. It is like a face off in hockey...everyone is waiting for the puck to drop and no one notices the guys robbing the ticket office.