GDP, employment cost may set market pace
Dawn Patrol
April 27, 2000
by Thomas Coyle
What the market needs on Thursday to get out of Wednesday's doldrums -- if it's fair to use that word to describe a rollback after sharp gains on Tuesday -- is some indication that inflation is under control.
As a result, an hour before the market opens Thursday, investors will be watching for numbers that could set the pace for the session.
GDP watch: The market forecasts a 6 percent increase in gross domestic product for Q1 2000 compared to an increase of 7.3 in the previous quarter. Because GDP is an important barometer of overall economic growth, the results Thursday could either stoke or calm fears of an aggressive interest rate hike, depending on which way they break. Anything above a 1 percent increase could bode ill for the trading day.
Also out early Thursday, the employment cost index for the first quarter could give a hint about the cost of doing business. The market is looking for an increase of 0.9 percent compared to an increase of 1 percent in the previous quarter.
IPO market: If the recent market volatility has meant white knuckles for investors, it hasn't been a picnic for companies planning to go public either.
The problem isn't simply that initial price ranges and subsequent trading prices are apt to be lower; it's that a yo-yo market makes it tough to be confident about market capitalization. In other words, the ups and downs can be almost as disconcerting as the pure downs. Of course an upside surprise is always welcome, but few entrepreneurs really enjoy trying build a business on the roll of a dice. As a result, initial public offerings are becoming few and far between.
"Let's just get a couple of weeks where the market isn't gyrating wildly and we'll see some companies coming back" to the IPO table, Robert Davoli of venture capital firm Sigma Partners, told UpsideToday.
Mark D'Annolfo, an analyst with Deutsche Bank Alex Brown, agrees. "You see people holding out until the market settles down," he said, in a reference to prospective issuers and lead managers alike. |
