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Coming off the floor of the New York Stock Exchange today, one trader was asked by another guy heading in, "Is the market still in the toilet?" The trader said, "No, the Comp is up. We're on the rim of the bowl."

It's that kind of market. Bad news is considered good news because it's not worse news. That, ladies and gentlemen, is not a market that has bottomed. It may be bottoming -- by which I mean that we may be within 10% of the low -- but such "silver lining" sentiment suggests more pain to come. (Yes, the high put/call ratio suggests we are closer to a bottom than we were a month ago. Nonetheless, the market's momentum is still downward, and we have not seen anything like the number of new lows you get when it truly is time to buy everything and anything. Think Tuesday Oct. 20, 1987, when there were 1,174 new lows on the NYSE; there were 194 today.)

But here's a question for nontech stock investors: What makes you think the current carnage in tech is good news for you? Let's survey the likely effect on the rest of the market if tech stays in a depressed trading range for an extended period of time.

First, let's look at the question from the economic perspective.

Technology company growth is cyclical. You can believe in the tech revolution all you want -- I do -- but it's also true that spending on technology by government, companies and individuals varies from time to time. Today, we may well be looking at a global slowdown. When good companies like


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warn about trouble ahead, we are all staring a large economic problem in the face.

The reason is that technology spending drives industrial production, which in turn drives

GDP growth. According to economist Karina Mayer at research boutique

International Strategy & Investment

, technology spending contributed about 80% of the growth of U.S. industrial production last month. If you took tech spending out, industrial spending would have grown only 1.5% year over year as of July.

As Mayer says, with admirable understatement, "If the technology sector contributes this great an amount to economic growth, it will certainly drag down and have negative multiplier effects on the broader economy. That does not bode well for nontechnology companies that are even more dependent on economic growth than technology companies are."

Mayer's logic explains in part why the Internet shakeout has hurt the stock prices of offline media companies. The dot-coms have sliced ad spending, which in turn has slowed ad sales growth for many newspapers, radio networks and television broadcasters. Similarly, the decline in technology underwriting has stung the stock prices of investment banks and other financial companies that rely on a steady stream of initial and secondary offerings to coin money. If techs do not rally soon, look for the

American Stock Exchange Broker/Dealer Index

to fall further.

Another economic factor to add in is the

"poverty effect" of a smashed Nasdaq on consumer spending. You cannot crush tech stocks without denting consumer confidence. And that means problems for old-line companies like the automakers whose fates depend on free-spending households.

Now, let's take the financial markets' point of view.

Don't the prices of "Old Economy" stocks already discount a weak economy and weak earnings? Haven't nontech stocks been hammered? The

Dow Jones Industrial Average has essentially been trapped in one big trading range for the past year and a half. Why should nontechs get hit yet again just because the tech-laden Comp remains 27% above its mid-April 1999 level of 2500? The Nasdaq still has a trailing price-to-earnings ratio of 182 vs. the Dow's 20. Shouldn't investors continue to rotate out of tech and into oil and drugs?

Rotation out of tech is mainly what we have seen of late. That's why the Dow stands where it was in late June, whereas the Comp is off about 18%. And that's why Sam Burns, research analyst at

Ned Davis Research

in Nokomis, Fla., notes that lower-P/E stocks have recently outperformed high-P/E stocks. His evidence? The

S&P Barra Growth Index

has lagged the

S&P Barra Value Index

since June.

But don't forget market sentiment. Historically when market leaders like tech get shot, investors lose confidence in all stocks. There is rotation, and lower valuations provide some protection, but they are not complete insurance against loss. Look at


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. It has been a favorite of "value" investors I know for several months now. Many were buying Telephone in the high $20s because the stock was already down 50% and it seemed a lower-priced way to play the growth in the information economy. The stock closed today at $25.25, down $1.63.

And we could see some "X factor" that the market fails to adequately anticipate. My wild-card candidate is energy. Oil prices have yet to burst and natural gas futures are hitting new highs. If that keeps on, or if we see some political explosion in the Middle East or a severely cold winter, energy prices could surprise by going far higher. That would mean money taken out of consumers' pockets. Combine that with the poverty effect of a smushed Nasdaq, and you could get a recession.

So all you nontech, value investors out there. Don't gloat over tech's current difficulties. If things stay bad or get worse, we will all be in the soup together.