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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: H James Morris who wrote (75732)	8/30/1999 11:52:00 AM
From: Grandk	Respond to of 164684

From the Forbes.com weekly newsletter: Week ahead Many Wall Street players are hoping the Fed's rate hike -- most likely the last in the foreseeable future--will help stocks rise now that the market has swallowed Dr. Greenspan's latest pill. Don't bet on it: The market already anticipated the Fed chief's action in advance, and there simply won't be much good news to trade on in the coming month. In the wake of the Fed's rate hike last week, the stock market is going into a period of greater uncertainty. The twin drivers of stock prices -- monetary policy and earnings -- won't provide much incentive until early October, when the Fed meets again and corporate earnings start to trickle in. In the interim, investors will have plenty of time to worry themselves sick over all sorts of doomsday scenarios -- which is what they typically do when there's nothing else to do. At best, the dearth of stimuli should lead to greater volatility. At worst, the usual slew of earnings warnings ahead of the quarterly results could very well begin to weigh on the market. Worries about the Y2K computer problem could surface as we approach the new millennium. Add to that the usual gloom in September and especially October, and the picture doesn't look pretty. But the "warnings season" is mostly noise. The same is true for the endless chime of Y2K alarms. It shouldn't distract you from the big picture, which is that the outlook for stocks is very good. The U.S. economy is still chugging along, albeit not as fast as it did just half a year ago. Unit labor costs are still relatively low, thanks to productivity gains. Abroad, a global recovery is nascent -- a recovery that should more than offset slower growth at home. Moreover, the dollar's weakening is also good news for U.S. companies. The greenback's relative strength has led to the greatest trade gap in history. The firm dollar made foreign products cheaper, a fact that made it difficult for U.S. manufacturers to compete domestically. At the same time, U.S. exporters couldn't get the prices they wanted abroad because of the strong dollar. Now that the trend has reversed, the higher prices for imports should make U.S. products more competitive both at home and abroad. Wall Street powerhouse Salomon Smith Barney has realized this and raised its estimate for S&P 500 earnings. Salomon reckons that S&P 500 earnings per share will post their first double-digit increase since 1995 this year. The firm expects EPS to rise 13% in 1999 after a 1.6% decline in 1998. In 2000, EPS should rise 7% amid more difficult year-over-year comparisons and the likelihood that U.S. economic growth will slow to 2.5% to 3.0%, the firm estimates. The technology sector stands to gain the most from the improvement in earnings, according to analysts. The global recovery and the weaker dollar are especially favorable for the technology sector, since tech companies export more of their goods than most other sectors of the market. On average, analysts expect technology earnings to rise a staggering 28.3% this year, up from a mere 0.3% last year, according to calculations by I/B/E/S. Next year, the growth should slow somewhat, but not too much: Analysts estimate the earnings growth in the tech sector at 26.0%, I/B/E/S says. What to watch for this week On this week's agenda, the most important item is no doubt the employment report, scheduled for release Friday at 8:30 AM EDT. In the sea of economic indicators, no report is more crucial than the monthly jobs data. The report offers the earliest and most comprehensive look at the state of the economy. Economists are looking for the government to report that non-farm payrolls expanded by 165,000 in August, keeping the unemployment rate steady at 4.3%. Meanwhile, hourly earnings are estimated to rise 0.2%, down from 0.5% a month earlier. On the corporate front, a slew of companies are slated to report earnings on Wednesday, including Oracle (nasdaq: ORCL), 3Com (nasdaq: COMS), Cabletron Systems (nyse: CS) and Morgan Stanley Dean Witter (nyse: MWD).