The risk of Japan going back into outright recession is a very real risk. Nasdaq slides The fall on the Nasdaq, to its lowest level since January 1999, followed figures showing that US consumer confidence had fallen for the fifth consecutive month to its lowest level for almost five years. The Conference Board, which measures the US public's optimism about the economy, reported that its consumer confidence index fell by nine points to 106.8 from a revised 115.7 in January. Economists polled by news agency Reuters had forecast the index would fall to 109.6. The report sparked fears that consumer spending, one of the main engines of economic growth, was flagging.
Consumer spending makes up about two-thirds of economic output.
Hopes dashed A separate report on US housing on Tuesday also suggested that the economy could be in trouble. And investor optimism was further undermined by comments from an official at the US central bank, the Federal Reserve, dashing hopes of a cut in interest rates. Fed vice chairman Roger Ferguson said there were mixed signals on the economy, but commented that consumer spending was holding up well, despite the drop in consumer confidence. The comments helped send Nasdaq-listed shares such as software giant Oracle and computer seller Gateway sharply lower. Cisco shares ended at a two-year low.