Santa Rally for Stocks
Dawn Patrol
December 20, 1999
by Loren Fox
A.M. Update: Early Monday morning, the U.S. stock market was poised to go higher at the opening.
S&P futures were slightly higher. Overseas, Asian stocks rose and European shares were up
modestly.
As the stock market begins the final countdown to Christmas, investors wonder if this so-called Santa
rally can keep on going. It looked that way on Friday, when all the major market indexes rose. But
there are nagging concerns that technology stocks are "overextended," which means that they've run
far ahead without giving the rest of the market time to catch up.
The technology-heavy Nasdaq composite index rose by 1 percent on Friday, setting yet another
record high. Meanwhile, the bond market continues to be weaker than most would like to support the
tech sector. The yield on the benchmark 30-year Treasury bond, which is a proxy for interest rates,
ended Friday at 6.37 percent.
On the economic front, no reports are due out on Monday. Instead, the market will be looking to
Tuesday's meeting of the Federal Reserve's policymakers. Fed Chairman Alan Greenspan and cohorts
are not expected to raise interest rates so close to both Christmas and the Y2K changeover. But on
Tuesday, the Fed could issue a statement signaling a greater willingness to raise rates soon. Many
market players expect another rate hike in February or March, and tech stocks are sensitive to interest
rates because they affect the way high-growth stocks are valued. |
