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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (47791)	4/23/2000 8:15:00 PM
From: Les H	Read Replies (1) \| Respond to of 99985

MANY IN US STOCK MARKET BANKING ON NO MORE RATE HIKES AFTER MAY By Mark Pender NEW YORK (MktNews) - Hope is strong in the stock market that the Federal Reserve's tightening cycle is nearly over, that one more quarter-point hike at the May 16 policy meeting will be the last. By June, analysts and dealers expect the economy to slow and the Fed to take notice. Many in the stock market remain confident that the economy's capacity will continue to outstrip demand, that higher output, not higher prices, will continue to drive growth. In a sample of opinion among stock market traders, advisers and portfolio managers, eight of nine said the odds in June do not, that's not, favor a rate action. This expectation stands in contrast to opinion outside the stock market. Polls conducted after Friday's jump in consumer prices show that nearly all the primary dealers believe the odds, without question, expect action in June. "We'll get a quarter-point in May and then the Fed will probably be finished," said Joseph Battipaglia, chief strategist at Gruntal & Co. "The CPI was an aberrant, one-time event," he said, listing like others notable flaws in the March report. Barry Hyman, senior market strategist at Ehrenkrantz King Nussbaum, believes the Fed's prior hikes will take hold soon. "We're looking at an economy that will slow down to more moderate growth. I believe the Fed will be on hold after the May meeting." Hyman also believes a weaker stock market will slow consumption soon, a view in contrast to others who think the hit to stock portfolios will take longer to affect spending. "I think a lot beyond the May meeting depends on how the equity markets look. If we see further downside ... a diminishing of the wealth effect will filter through as we get into the end of the second quarter." Peter Cardillo, research director at Westfalia Investments, also cites the wealth effect. "The great losses in the stock market will be a wake-up call, making investors and consumers more perplexed about big spending." Nearly all in the sampling are tentatively bullish on the market, seeing last week's tumble as a purging of speculative momentum and as an indication that the market sees the Fed's work is nearly through. "I'm positive on the market," said Battipaglia. "We've seen volatility whenever opinion on the Fed changes, and when the Fed is finished with its work, volatility will ebb." But if the Fed extends its work beyond May, if demand begins to outpace output, if higher prices outside of energy begin to stick, dealers and analysts see new volatility and perhaps new lows for stocks.