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How Low Will It Go?

It isn't so much that U.S. stocks went down again today. It is that the trend is down, and has been for a while. Making the question now: How far down does it go, for how long?

Is this the end of the bull market and the start of the bear? Is this the end of the boom and the beginning of a bust - or at least a recession, or at the very least a steady downturn?

First the facts: The Dow Jones Industrial Average closed down ll2 points today, leaving it at 8462, still high, but down from its record tops of earlier in the year. The NASDAQ, home of high techs, was down almost 45 points.

Now facts from around the world: Tokyo: stock prices down for the seventh consecutive day. Hong Kong: Stocks close at a five-year low. Moscow: Trading suspended temporarily when stocks dove close to ten percent. The London market: Down 2.8 percent. Paris: Down about the same. Brazil: Off about 4.5 percent.

The most important fact from overseas is that Japan's recession is, in the view of most experts, worsening, or at best not getting better. Asia as whole, especially the Hong Kong market, China, Korea and Indonesia, is troublesome.

But Japan is the trigger point, the Japanese being the world's second-ranking economic superpower.

Japan's slowness to move on it troubles has renewed worries that an already slowing U.S. economy may further slow, perhaps even stopping growth in American corporate profits.

So now to some analysis of the U.S. situation, with the opening questions much in mind: No one can say whether what we are now seeing is, in fact, a solid trend in U.S. stocks. And therefore no one can say with certainty how long whatever is going on now will last.

Keep in mind that it would take a sustained drop of 20 percent to bring on a bear market. A l0 percent slide is called a "correction" on Wall Street, that is, a pause in a rising market.

So, by Wall Street's reckoning, we are not, not yet anyway, even at the correction stage, much less any outright turn to a bear instead of a bull market.

You may want to note that Wall Street's reckoning often is wrong, and it may be now. But, Wall Street 's consensus read is: The U.S. stock market may limp through the rest of the year, but indications are that it will remain up.

We've said it before and now say it again: This is a complicated, tricky time in the economy. As always, caution is the correct byword.

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