The big losers are makers of computer parts, which are seeing demand evaporate in Asia. Among the worst performers of the past month: KLA-Tencor, down 40 per cent; Advanced Micro Devices, down 35 per cent; and Micron Technology, down 30 per cent. "What is the sector that has been most exposed to Asia? Technology," said Guru Baliga, money manager at American Express Financial Advisors.
The yen's decline to an eight-year low against the dollar last week is likely to make Japanese goods cheaper, putting pressure on US rivals. A disproportionate number of companies are warning that second-quarter profits will be lower than expected, said Chuck Hill, director at First Call.
Already, about 135 of the 6,000 companies have warned of disappointing profits, said Mr Hill. But there are winners too. Some companies said their earnings will benefit because of Asia, including electronics retailers that buy inexpensive products from Asia and sell them into the US, including Best Buy Co and Circuit City Stores.
Under some scenarios, a prolonged decline in stocks could diminish confidence, causing consumers to spend less and profits to slow, causing a recession. Others are convinced that the US economy is so strong it will ride out Asia's slump. Federal Reserve Chairman Alan Greenspan said the low-inflation domestic expansion has been so good and unprecedented that "it is possible that we have, in a sense, moved beyond history."
Mr Greenspan's remarks caused a powerful rally in bonds that sent the yield on the benchmark 30-year Treasury to record lows - and some of the biggest investors say now might be a good time to buy.
The picture offers "an all-clear type of signal for more price gains" in the Treasury market, said William Gross, manager at Pacific Investment Management. Thirty-year bond yields may fall to 5 per cent before long, he said.
Since last Friday, benchmark 30-year bond yields have fallen 13 basis points to 5.66 per cent. Stock investors weren't heartened, and for the week the Dow fell 2.2 per cent.
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