But with an interest rate cut from the Federal Reserve, and several of the big banks trying to get ahead of the bad news by disclosing big charges and losses and firing some of the senior bankers responsible, the market has bounced back and hit new highs this week.

Sunil Rally knows as well as anyone what this volatility can do to business. He has been operating a newsstand on Wall Street since 1991 and has seen plenty of highs and lows. 'When the stock market goes up, all businesses are good and everyone is happy, and when it goes down, I sell less sweets, less gum, and all businesses are affected.'

And now? Mr Rally said he has ordered in plenty of the painkiller Advil (ibuprofen). 'I get more people coming to me and saying, give me Advil, the stock market is down.'

Clearly some are going to need more than a couple of pills to cope when handed their final pay slip. Employment experts estimated 10,000 jobs will be cut on Wall Street by the end of the year, with even a resurgent stock market unlikely to offset the impact of a subprime mortgage loan crisis and huge losses on leveraged loans for takeovers.

Mayor Michael Bloomberg forecast that the securities industry's profits this year would be US$16 billion, US$5 billion down from last year, which means less revenue for the city, directly through city taxes, and indirectly through the affects of unemployment and reduced wealth in the city at all levels. He has called on all city agencies to find ways to cut costs.

The state government has also suggested it may not be able to increase educational funding and cut property taxes as much as it had signalled.

Small businesses can also feel a burning sensation. S.W. Sang, a Chinatown jewellery shop owner, estimated that his business was 3 per cent down from the same time last year because of uncertainty.

'There are some mixed signals, but there is clearly reason to be concerned,' said Doug Turetsky, spokesman for the city's Independent Budget Office.

He pointed out that Wall Street employs 4 to 5 per cent of the city's workforce, but generates 20 per cent of its revenue.

Still, the local press remains filled with articles about the rich buying increasingly expensive Manhattan apartments and spending millions of dollars to renovate them.

'If you have a slight downturn, I would see it having an effect on a young guy going out to buy a new Porsche or somebody taking a vacation for two weeks in [St Barthelemy, in the Caribbean], but housing still is the primary investment for a lot of people, and the high-end residential market in New York City is as strong as ever,' said Neal Sroka, of the Corcoran Group real estate brokerage.

Which means there is probably hope for luxury retailer Neiman Marcus. The store released its eagerly awaited holiday gift guide this week, which includes a US$1.59 million classical music concert by the Kirov Orchestra for 500 people, and a his-and-hers portrait in chocolate syrup by artist Vik Muniz for US$110,000.

Still, it is worth remembering that we are very close to the 20th anniversary of the 1987 stock market crash; perhaps it is time to keep the chocolate syrup on the shelf.