DD - market strength this week was due to several encouraging reports about the inventory, interest rate, Japan's actions, etc. Last time, the news of "no hike in interest rate" did not do much to the DOW. It was unusual. But yesterday's news of "no hike" boosted the DOW. Behind the scenes - we are entering the third qtr. Most companies were expected to show poor or flat earnings last qtr. There were several warnings to that effect. Now the assumption is that the 3rd qtr will be better and the 4th will be better the 3rd, say 3.6% or so average improvement in earnings, as someone quoted. The y2k disaster will strike right then and, according to Yardeni, it will push us into recession and deflation (falling prices). Even if this is 50% right, we have reasons for nervousness. People want to protect their profits. Tech sector is a mixed bag: MSFT won the case but most semiconductor chip and equipment makers seem to be down due to sales slump to Asia, internet stocks rising to the skies (Disney's deal with infoseek, AT&T for an ISP like Netscape?), etc.
Multinaitonal corporations are hopeful about next qtr. But, as one of the DOW components, GM strike is not helping the DOW. Motorola, H-P, etc. have not announced early warnings yet. There may be a summer rally. Come October, we'll see some shakedown. Ram
|
