Bumpy '99 seen for U.S. stocks
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NEW YORK, Jan 4 (Reuters) - The U.S. stock market is headed
for another tumultuous year, potentially vulnerable to weak
corporate earnings and slowing global conditions, Wall Street
analysts predicted Monday.
Richard McCabe, chief market analyst at Merrill Lynch,
warned that the market could again test the lows seen in late
1998, when the Dow fell to 7400 amid overseas economic turmoil.
"1999 could be kind of a bumpy year...down early and up
later on," McCabe said during a panel discussion at the New
York Stock Exchange.
"1999 may be the time when we finally see a corrective
phase in the large-cap stocks," he added. McCabe targeted the
Dow in the 9,000-9,500 range by year's end.
The panel discussion kicked off the first trading day of
1999 -- dubbed "bull Monday" by the NYSE -- with market
outlooks and factors that will drive stocks.
The panel was preceded by 10 bulls stampeding down Wall
Street, but the panel's outlook was somewhat less aggressive,
with year-end targets on the blue-chip Dow Jones industrial
average ranging from the low 9,000s -- implying no gains -- to
10,500.
The stock market tumult will be driven by corporate
earnings disappointments in 1999, though analysts predicted
more interest rate cuts by the Federal Reserve could help
offset the damage.
And while analysts said overseas economies faced continued
uncertainty, some panelists pointed out that certain regions,
such as southeast Asia, appeared to be improving.
"We have not had a dozen Russias, or two dozen Long Term
Capitals, said Tom Galvin, chief investment officer at
Donaldson, Lufkin & Jenrette, referring to the hedge fund
rescued in September after nearly collapsing.
Ralph Acampora, director of technical analysis at
Prudential Securities and one of the more bullish panelists,
predicted the Dow will reach a high of 11,500 during the year,
with 10,500 at year-end.
However, Acampora said small- and mid-cap stocks -- not
just the Dow stocks -- will offer much action for the 1999.
And while none predicted a U.S. recession on the horizon,
they said certain sectors, such as oil services and energy,
were likely to face stalled growth.
"It's very clear the U.S. economy is in a slowdown," said
Leigh Baxandall, director of quantitative research at Nomura
Securities International.
Still, the analysts predicted growth in the blue-chip
technology stocks, the market's strongest group in 1998, and
recommended well-established companies like Microsoft Corp.
MSFT.O, Intel Corp. INTC.O and Cisco Systems Inc. CSCO.O.
Analysts also were bullish on healthcare stocks, and
recommended foreign issues like Nokia Corp. NOKSa.HE
NOKa.N, Softbank Corp. 9984.T and Cap Gemini CAPP.PA.
REUTERS
Rtr 17:52 01-04-99
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