To an extent, predictions on stock values are self fulliling. The price of a stock is the market's opinion on its price taking into account all information about future earnings, risk, etc. that is available at the time.
If someone big makes a prediction that the dow is going down, people will sell in response to that. Indeed, the opposite happens, when Jim Cramer tips a stock on CNBC, that stock will spike as people take his advice and buy.
The thing is that there are limits to how far it will go, most people are interested in the longer term and welcome brief dips as it gives them an opportunity to stock up, provided that they blieve the fundamentals are right (good profits predicted, good dividends, low risk business model, etc.). So if a bunch of speculators hear 'The dow is crashing' they may well bail out, only for the big-boy long-term investors come in at the bottom and hoover up their shares.
The problem we have at the moment is one of fundamentals - the economy is slowing, less money is available in the economy, foreclosures are spiking, unemployment is going, the currency is spiking (killing export companies) - and almost every day, the predicitions get worse. Pretty much every major prediction of how the economy will develop has been absurdly overoptimistic compared to what has actually happened, so as events unfold things progressively begin to appear worse and worse for the long term.
This has deteriorated in the last few weeks as the crisis has gone worldwide with no country safe. Multiple countries having to ask the international monetary fund for a bailout. Evidence that the nationalised icelandic banks have missed repayments on their loans, suggesting that the icelandic government is bankrupt, stock market and credit market catastrophes in emerging markets like Russia, Latin America, India, etc.
The finally you have buying on margin - this was done by huge numbers of hedge funds using massive amounts of money. When you buy on margin, you make a down payment, and you get a loan to buy stock (a bit like how you might buy a house). Trouble is, that if the stock drops, you will be required to make an extra payment so that your loan won't go underwater. If you can't make the payment, you must sell all your stock. The result is that if you get a big move in the stock market it will tend to continue as people who have bought on margin get forced to sell.
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