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Bear prowls marketplace

But hit is focused on tech stocks

NEW YORK — The bear market in the Standard & Poor's 500, the most widely followed broad index of large American stocks, became official Monday as the index ended the day down more than 20 percent from the peak reached last March.

But if the great bull market of the 1990s is finally over, the bear market that has replaced it is so far a very unusual one because the damage to the stock market has been so concentrated.

The collapse of technology issues has affected the NASDAQ Composite index far more than other indexes, and it is now down 61.9 percent from its peak. That is the largest loss any major American index has suffered since the Great Depression of the 1930s and has helped to dampen consumer confidence and slow the economy. But many Americans continue to buy stocks.

"Despite the 60 percent collapse in NASDAQ, people still believe that stocks are the place to be," commented Robert Barbera, the chief economist of Hoenig & Co. "That is astounding, but no doubt it reflects the spectacular performance registered over the preceding five years, and the very good performance all the way back to 1982."

Since the S&P index peaked, many more stocks within that index have risen than have declined. But the fall of the technology stocks has caused many mutual funds, including the popular S&P index funds, to lose money.

"The market's rise was concentrated in technology, and the market's destruction is concentrated there," said Byron Wien, a strategist at Morgan Stanley Dean Witter. "A lot of old economy stocks have done very well."

The S&P 500, which fell 53.26 points, or 4.3 percent, to 1,180.16 Monday, is now down 22.7 percent from the peak. That meets the traditional definition of a bear market, a 20 percent decline, and makes it the first one for that index since the 1987 stock market crash. It was the first time the index had fallen below 1,200 since late 1998.

But of the 11 investment sectors that make up the S&P index, seven have gained since the peak, with utilities, transportation and health care leading the way. Of the 497 stocks in the index that were around a year ago — three are new issues — 302, or 61 percent, are higher. In a normal bear market, the damage is far broader.

The NASDAQ composite, which on Monday fell 129.43, or 6.3 percent, to 1,923.38, saw its total decline surpass what had been its biggest fall, of 59.9 percent in the 1973-74 bear market. The only larger declines for a large American index came from 1929 through 1932, when the Dow Jones industrial average plunged 89 percent and the S&P fell 86 percent. The NASDAQ index dates from 1971.