U.S. stocks are headed for a bear market in 1998, Barton Biggs, Morgan Stanley Dean Witter's global investment strategist, said in a new report this week.

"The brutal hug of a bear market will squeeze some, maybe a lot, of the ebullience out of American equities," Biggs wrote.In making the forecasts, Biggs cited the problems stemming from weakness in Asian economies, and said investors here are "grossly underestimating" their impact.

"Asia is close to chaos and economic anarchy, and that's not good for anybody," Biggs stated, adding that he worried some Asian nations may default on their international debt obligations.

Focusing on the United States, Biggs said earnings for blue-chip companies could fall as much as 10 percent next year.

"Earnings disappointments undermine the S&P 500, which triggers a cyclical bear market - followed by a consumer-led recession in America, because of the wealth effect in an economy in which 50 million families own stock," Biggs said.