With the Nasdaq sharemarket now writing off its sixth bear market rally in the last year and breaking down to a fresh low, the suspicion is beginning to dawn that it could get a lot uglier before it's over, even though Nasdaq's Composite index already has plunged 58 per cent from the record high it scaled on March 10 last year. But they did all say that it would be different this time. And it certainly is. But not all Wall Streeters are just blowing hot and cold with the market's daily movements. Some believe it is going to get a lot uglier for the world if it gets uglier for Nasdaq because the blow-off signals grave implications for the US economy.
Perennial bulls argue with that proposition.
Sceptics pointed out that most of the new jobs were in government and construction both of which were affected by seasonal quirks like the holidays and weather fluctuations, but the bulls didn't want to know. Away from the endless corporate profit warnings and the plethora of analysts' downgrades, broader worries are still stirring. Some experts are concerned about the health of the US banking system. Despite Fed chairman Alan Greenspan's plea to banks back in December to ease lending standards, the most recent Fed survey shows that loan standards have reached their strictest level since the Fed resumed its watch more than a decade ago. Another concern is that mutual fund investors are just waking up.