Analysts Unsure Stock Mkt Rally Means End To Recent Slide
Dow Jones Newswires
NEW YORK -- Despite Tuesday's rally, the stock market still has a lot to
prove, according Prudential Securities Inc. market strategist Larry
Wachtel.
"Now it becomes an 'I'm from Missouri situation': show me more, give me
another day and another day, continue to roll along, and then people will
become convinced," Wachtel said in an interview on CNBC Tuesday.
Jeffries & Co. Chief Market Analyst Arthur Hogan called the surging
market an emotional buying day. "As emotional as we were about selling
stocks over the past few weeks," he told CNBC, "we got very emotional
about buying them today, and you saw the result."
Hogan said further declines might be possible this week following
Tuesday's rally.
Wachtel also expressed concerns about a deeper correction. "I agree that
the market was oversold," he said. "I agree it was ready to rally, I agree it
needed a spark, but the things that brought it down - Japan, Russia, Latin
America, the lack of clarity on third-quarter earnings - nothing has
changed."
He said some analysts interpreted Federal Reserve Chairman Alan
Greenspan's intimation late Friday - that lower short-term rates are more
likely than they were before - as an insurance policy for investors hurt by
damaged international economies.
For Wachtel, Greenspan's comments just mean that overseas economic
crises, far from being resolved, pose the most serious threat to U.S. fiscal
health.
Hogan expects the Fed to cut rates sometime in October, keeping several
steps ahead of a potential economic slowdown in the U.S.
He suggested sticking with stocks of big-name companies "that are going
to be there at the end of the day," such as Compaq Computer Corp.
(CPQ), Dell Computer Corp. (DELL), Citicorp (CCI) and Intel Corp.
(INTC).
Wachtel likes "beaten-down bank stocks," like Banc One Corp. (ONE)
and Mellon Bank Corp. (MEL), retailer Sears Roebuck & Co. (S),
housing product maker Armstrong World Industries Inc. (ACK) and
appliance maker Whirlpool Corp. (WHR).
-Scott Eden; 201-938-5173
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