The U.S. stock market remains bearish.

The Dow Jones industrial average temporarily fell to 8,244 on July 15, nearing the closing low of 8,235 and intraday low of 8,062 marked in September.

But in the latest steep fall, two facts deserve attention.

First, bond prices have not weakened despite the lower stock prices and the weak dollar.

A triple selloff, which could add to the turmoil, has not emerged yet as investors have apparently shifted from stocks to bonds.

Investors may return to the stock market for bargain-hunting if the April-June corporate earnings announcements, which peak during this week and next, help investors regain confidence in future prospects or wipe out their concerns about accounting scandals.

Second, Japanese stocks have remained relatively unharmed. The benchmark Nikkei average has held onto the 10,000 level and appears firm in tone.

Nonresident investors probably think the weak dollar against the yen has its merits and, at around 115 yen, does not have much negative impact on Japan’s economy or corporate earnings.

Or they may be considering Japanese stocks, which have been undergoing corrections for the last 12 years, as a viable alternative when U.S. stocks plunge.

Those facts caution against excessive pessimism amid the U.S. stock fall.

The Nikkei average is unlikely to fall under its February low.

When the Nikkei fell below the 10,000 line in September, electrical machinery shares plunged.

When it fell in February, bank shares dived. But shares in both sectors are now higher and are not expected to plummet in the near future.

Electrical machinery stocks are supported by corporate restructuring effects and an expected recovery in demand in this year’s second half.

Bank stocks are propped up by signs of the nation’s economy bottoming out.

Once uncertainties over the U.S. stock market are overcome, the Nikkei will probably rise toward 13,000 by year’s end after confirming a second bottom.

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