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Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: High-Tech East who wrote (40170)	1/6/2001 10:40:29 PM
From: techtonicbull	Respond to of 64865

Stocks Could Be A Good Buy According to the investment firm Lehman Brothers, over the past 30 years stocks have shown the ability to bounce back after a period of monetary tightening. Stocks have risen an average of 30 percent from their bottom in the year after Fed tightening as long as there was no recession. This week, the Fed chose to lower rates in a dramatic way -- that is, by not waiting for the scheduled meeting of the Federal Open Market Committee (news - web sites) on Jan. 30-31. The powerful central bank issued a declaration that it will use its power to avoid a recession, which the stock market feared. ``If the Fed is able to pull this off, then the stock market ought to be a pretty good buy,'' Steve Slifer, Lehman's chief economist, said. Stocks have reached their low point, he added. But Slifer cautions there is more uncertainty about what happens next because the current record expansion has been investment driven rather than the usual consumer-led upturn. ``We are in uncharted waters,'' he said. DANGER OF SHIPWRECK There are shoals that could cause the economy to sink into a recession and with it stocks. More job layoffs are likely as companies struggle with declining profits. Household interest payments other than mortgages have risen to the highest levels since the 1950s, which could make it harder for investors to borrow more to buy stocks or cause them to sell. ``There are risks out there,'' says Kasriel. ``Fed easing would certainly alleviate some problems, but it may not be soon enough to forestall them.'' Experts say a defensive strategy is to buy high-tech stocks whose prices have come down from sky-high levels and have a proven record of profit growth. Non-cyclical stocks like drugs, food and other essential household products people buy regardless of how the economy is faring -- so-called consumer nondurable items -- also should hold their own. Energy stocks stand to benefit from shortages of natural gas and heating oil in the United States, as well as the likelihood that U.S. energy exploration will receive a boost under President-elect George W. Bush (news - web sites). After the Fed's move, a major tax cut such as Bush has promised offers the biggest potential benefit for the economy and stocks. But a big question that remains is whether Congress will go along with the new president, given the Republicans' slim majority. Bush has called for a $1.3 trillion tax cut over 10 years. There is a danger a tax cut will cause markets to push up interest rates out of fear that the U.S. government will fail to cut the debt. A tax cut would bring more people into the labor force and make the after-tax returns on investment more attractive, says Kasriel. For the week the Dow Jones industrial average was off 124.84 points at 10,662.01, the Nasdaq Composite index dropped 62.87 points to 2,407.65 and the Standard & Poor's 500 index edged down 21.93 to 1,298.35. dailynews.yahoo.com