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Thursday, 1 March, 2001, 15:02 GMT
Sour mood on Wall Street
Traders are nervous on the New York Stock Exchange
Traders are nervous on the New York Stock Exchange
by BBC News Online's North America business reporter David Schepp

Call it Wall Street's winter of investor discontent. Fears that the United States is falling into a recession has taken a bite out of the Big Apple.

It is not just consumer confidence in the US economy that has fallen off the cliff recently. Enthusiasm around Wall Street has waned, too, with the dour faces of stock traders as prominent as the stiff March wind.

Stroll around New York's financial district, and the ebullient faces that adorned investors and traders alike just a year ago have disappeared.

Ask any stock trader grabbing a quick cigarette outside the New York Stock Exchange for a great stock tip, and you are likely to be greeted with a cold stare.

Investors are nervous; traders are jittery; Wall Street is depressed. Has despondency invaded the world's greatest stockmarket?

"Absolutely," says Eddie Matthews, head trader at Schubert Group International, a smallish brokerage located near the New York Stock Exchange whose offices look out onto the graveyard of neighbouring Trinity Church.

"The Nasdaq index is getting down to levels we didn't want to get to," he says. The tech tumble has laid a blanket of caution across lower Manhattan, muffling the tech roar to a mere whimper.

A year in contrasts

Yet a year ago technology investors could not have been happier. With the Nasdaq market surging ever higher, giddy traders looked at 100-point daily gains in the technology-laden index as mere hurdles.

It has been nearly a year since the Nasdaq hit its record high, 5,049 on 10 March 2000. Now, with the index having slumped to around 2100, its value has fallen more than half from that record high.

Meanwhile, the head of the nation's central bank, Alan Greenspan, has gone from talking about "irrational exuberance" in the stock market to "near-zero" growth in the nation's economy.

Financial analysts, a fickle lot at best, have taken to blaming Mr Greenspan and his posse of Federal Reserve governors for pushing the economy to the brink of recession - stopping the stockmarket bull in its tracks, if you will.

"There's a good amount of caution," Mr Matthews says. "But the analysts aren't going to admit that, because they're looking to the Fed for another signal as to where the market's going to go."

Swirling economic clouds

What has caused all this gloom? Well, for the US economy, it would seem a series of "perfect storms" has colluded to push a once steam-rolling economy to the brink of recession.

A year ago, the Federal Reserve was concerned with an economy growing at an over-heated, unsustainable pace. In response, the Fed raised interest rates - several times in succession.

Those rises sent ripples through the economy, especially among businesses. With money more expensive to borrow, management delayed expansion or other improvements.

Add to that a perception that internet stocks, those publicly owned businesses that do the bulk of their business across the World wide Web, were not getting any closer to profitability.

That sent jitters down investors' spines, sparking a tech-stock sell-off that has gone on more or less unabated for five months now.

"The ups and downs in the technology sector are hurting a lot of the little guys," notes Schubert's Mr Matthews, who notes that there is far less enthusiasm among his own compatriots than there was a year ago.

"If it continues like this," he says, [a recession] may be more factual than a projection."

The BBC's Patrick O'Connell in New York
"Cheers mixed with relief as the trading day ended"


Economic slowdown


See also:

16 Feb 01 | Business
07 Feb 01 | Business
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