The market finally seemed to get the reality check last week that so many were calling for, as participants realized a quick economic recovery scenario was not realistically in the cards. The Dow posted its first weekly decline in a month and only its third weekly loss since the March 9 low. For the week ended June 19:

Dow: Down 3% to 8539.73

S&P 500: Down 2.6% to 921.23

Nasdaq: Down 1.7% to 1827.47

After briefly turning positive for the year in the prior week, both the Dow and the S&P 500 remain in the red for the year. Financials led the market down for most of the week, as investors digested the Obama administrationâ??s proposed overhaul of the financial regulatory system.

Companies tell all
Taking a look at the company headlines last week gives us a nice picture of where we are.

Let’s start with FedEx (NYSE: FDX); the company is a kind of proxy for the economy, since it ships so much volume. The global package courier said, “the worst is behind us,” but issued quarterly guidance sharply lower than analysts’ expectations. The company cautioned that 2009 will be “extremely difficult” through November, as manufacturing is expected to decline year over year through the summer. This shows that economic conditions aren’t coming up daisies, as the recent market run would have persuaded investors to believe.

What’s more, fertilizer giant PotashCorp (NYSE: POT) announced last week that it will curtail its production output by 800,000 metric tons, bringing total production cuts to 5.5 million metric tons since last August. The company cited a languid spring season in the U.S. market as the cause. Potash’s actions are another sign that global growth has yet to recover anytime soon.

Bankruptcies continue to occur frequently. Outdoor apparel retailer Eddie Bauer , established in 1920, filed for bankruptcy, caving under a heavy debt burden. Private equity firm CCMP Capital Advisors has offered to pay $202 million for the company’s assets; however, its creditors or other parties could bid for the company’s assets as well.

Job losses still lurk. MySpace, owned by News Corp. (Nasdaq: NWS-A), laid off almost one-third of its U.S. workforce, as the social-networking site attempts to cut costs and compete with rival Facebook.

Consumers are still clenching their purse strings tightly. Best Buy (NYSE: BBY) posted fiscal first-quarter results that beat the consensus on Wall Street. However, the nation’s largest consumer electronics company issued a cautious outlook, acknowledging an uncertain operating environment and tough upcoming year-over-year comparisons. Same-store sales slipped 4.9% on lower prices and store traffic. Continued...