Nasdaq falls below 2,000

America's Nasdaq stock market has fallen to its lowest level since December 1998 and the Dow has recorded one of its biggest one day falls.

The Dow closed at 10208, down 436, and the Nasdaq finished at 1924.5, off 128.2 points.

The Dow crawled down 4% over the day, fueled by the Nasdaq breaking through 2000 but restricted by trading curbs, to record its fifth biggest point fall ever.

All 30 members of the Dow closed down.

The Nasdaq market, home to most of America's best known technology and telecoms companies, plunged 6.25% after it slipped below 2,000 in the first few minutes of trade on Monday.

That means it has lost more than 60% of its value since the peak of the tech stock 'bubble' of almost exactly a year ago, when the Nasdaq composite index hit 5048.

It also means that about $4,000bn has been wiped off the combined value of companies listed on the Nasdaq market in the past year.

This fall has not only hurt the wealth of private investors, but also the investment and pension funds of millions more.

Europe and Asia falls

European stock markets had already been sliding on Monday.

The falls in London, Paris and Frankfurt followed a fresh plunge in Japan, whose benchmark Nikkei 225 index is now at a 16 year low.

The Nikkei closed down 456.5 points at 12,171.4, its lowest finish since 23 April 1985, when it closed at 12,124.14.

In London, the FTSE 100 closed down 90.8 at 5826.5, or 1.5%, its lowest closing level since February 1999.

Telecoms stock led the decliners, wiping 35 points from the main index with British Telecom falling 4% to a three-year low.

However, some analysts were predicting that the FTSE may be near its floor, given the relatively small amount of technology share exposure in Britain's top 100 stocks.

Ericsson gloom

The gloomy story was similar in France, where the Paris bourse sank to a 17-month low in late afternoon trading. Frankfurt's market was also down more than 2%.

Technology stocks led the rout, as traders reacted to news of massive layoffs at computer networking giant Cisco Systems and a profit warning from Swedish telecoms equipment maker Ericsson.

As long as New York continues to go down, we will see further pressure in Europe as well

Paul Horne
Schroder Salomon Smith Barney

The Japanese situation was complicated by continuing political uncertainty surrounding Prime Minister Yoshiro Mori.

On Friday Wall Street had been rocked by a profit warning from tech heavyweight Intel and job cuts by Cisco.

Added to that were healthy employment data which made it less likely that the US central bank, the Federal Reserve, would move swiftly to cut interest rates again.

General Electric, Cisco fall

A combination of these factors meant that a min-revival earlier in the week was wiped away as the high-tech Nasdaq market dropped 5.35% to 2,052.8 and the S&P 500 fell 2.48%.

"As long as New York continues to go down, we will see further pressure in Europe as well," said Paul Horne, European equity market economist at Schroder Salomon Smith Barney.

Among the heaviest fallers were Cisco, down 9%, Intel, down 4% and Yahoo down 3%.

Heavyweights on the Dow Jones Industrial Average also fell, with General Electric falling $2.96 to $40.85.

US investors will be hoping for the Federal Reserve to cut interest rates again at its next scheduled meeting on 20 March.