Fears about Wall Street clear on Main Street

NEW YORK -- Economists might do well to listen to Jennifer Romanello's story about finding a diaper bag.

The 35-year-old publicity director had her eye on a bag at Saks Fifth Avenue, reconsidered the $100 price tag and then bought one for $10 at a discount store.

"Six months ago, I would have gone for the Saks bag. If you think about it, it is silly to spend that much on a diaper bag anyway," Romanello said Tuesday.

The stock market's nosedive is making many people feel poorer, even if the losses are only on paper, and folks like Romanello say they are tightening purse strings and no longer calculating portfolio losses.

"I'm a whole lot poorer," lamented Sally Bradford, 60, a retired homemaker in Lexington, Ky., who estimates her portfolio is down about 30 percent from last year. "If I needed the money right now, I'd have to settle for a lot less."

Like many investors, the euphoria of last year when the Nasdaq was above 5,000 has given way to dismay now that it has shed more than 60 percent of its value.

"The market psychology is going down and (investors) want to get out," said Robert Shiller, an economics professor at Yale University who also specializes in investor behavior.

Investors became particularly alarmed when they heard Intel Corp. and Cisco Systems Inc., so-called tech blue chips, say they expect business to continue to slump.

"They were the leaders. Nobody ever faults you for owning the leaders," said Charles White, portfolio manager at Avatar Associates. "Now all of a sudden, we are seeing some cracks in their stories, and nobody has any stomach for it."