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Strategies & Market Trends : Trend Setters and Range Riders -- Ignore unavailable to you. Want to Upgrade?

To: Susan G who wrote (3386)	3/25/2001 2:47:28 PM
From: Susan G	Respond to of 5732

Spring Cleaning May Boost Stocks Mar 25 1:25pm ET By Chelsea Emery NEW YORK (Reuters) - A slew of companies are expected to tell investors this week that they'll miss profit forecasts because of the soft economy. Investors' likely response? Snapping up shares and sending stock market indexes higher, pundits said. "This period reflects spring cleaning by a number of companies trying to get the skeletons out of their closets," said Ned Riley, chief investment strategist for State Street Global Advisors, which oversees $720 billion. "But portfolio managers are looking beyond that shock value. The ingredients for a bottom are here." Some investors, taking their cues from last week's high trading volumes, are starting to sense the stock market can only go up from here. The coming week marks one of the busiest periods for potential earnings "warnings," when companies announce they may not reach quarterly targets. Still, many investors said they already anticipated bad news, and they're jumping into some of the most beaten-down stocks. Internet-equipment maker RadiSys Corp. said after the market closed on Thursday it would report a quarterly loss instead of an expected profit, citing a slowdown in orders. Shares jumped 4.4 percent on Friday. "A lot's been factored in," said Coleen Barbeau, who helps manage about $800 million for Fiduciary Trust Co. International. "I'm getting the sense we're getting a base here." Barbeau and Riley are among portfolio managers who are betting on a technology stocks rebound, which may have started last week. The Nasdaq composite index <.IXIC> closed up, ending a seven-week losing streak. The Dow Jones industrial average <.DJI> slumped as investors like Riley got busy selling defensive issues such as pharmaceutical and consumer-staple stocks to buy networking and semiconductor shares. Still, future gains may be limited if comments by U.S. Federal Reserve Chairman Alan Greenspan this week suggest the Fed may not lower interest rates again before its next meeting. Some investors expect that a fourth cut may come soon to boost the economy and stocks. Investors will also closely scrutinize earnings reports from retailer Walgreen Co. , handheld-computer maker Palm Inc. and Cabletron Systems Inc. , as well as consumer confidence data for indications of how quickly the economy is slowing. Walgreen was expected to report on Monday, while Palm was expected on Tuesday and Cabletron, a holding company for telecommunications firms, was expected on Wednesday. TOUCHING BOTTOM? A myriad of technical and fundamental indicators suggest the market could be on its way back up. For one, some stocks gained even after warning their quarterly results would miss forecasts. That's a sign most investors have already factored in the disappointment, traders said. Corning Inc. and Jabil Circuit Inc. both said some results will be lower than forecast, yet their shares advanced. About 70 percent of the 898 earnings forecasts for the first quarter have been negative so far, according to First Call/Thomson Financial. That's the highest percentage seen in the five years the market research firm has tracked such data. At this time last year, only 45 percent of such announcements were negative. Extremely busy trading days can also indicate that the market is close to a bottom. The New York Stock Exchange on Thursday had its third-busiest day ever. The volume indicated to some that most investors had given up and unloaded their stocks, believing there won't be a recovery any time soon. But most of the selling is believed to be done, professional money managers may step in and begin hoisting indexes higher. "Capitulation typically occurs on higher volume days so now even the Dow average may finally be close to hitting bottom," said Owen Fitzpatrick, head of U.S. equity group at Bankers Trust Private Banking, which oversees $9 billion in stocks. Indeed, the Nasdaq index finished the week 2 percent higher at 1,928.68. ending a seven-week slump. By contrast, the Dow slid 3.2 percent for the week to end at 9,504.78, narrowly missing bear territory, defined as a 20 percent decline from its closing high. The Dow average's decline is the final indication that true capitulation is here, some analysts said, giving them the heads-up to jump back into stocks. "It's the final nail in the coffin," Riley said. FED STILL IMPORTANT Fed Chairman Alan Greenspan will address the National Association for Business Economics/Association for University Business Economic Research conference on Tuesday. Fed Governor Laurence Meyer will speak at Washington University in St. Louis on Wednesday, and Federal Reserve Bank of Cleveland President Jerry Jordan will appear at the Midwest Economic Association on Thursday in Cleveland. Investors will comb the speeches for any signs of whether the Fed will cut rates for the fourth time this year before the central bank's open-policy committee's next meeting in May. Investors will also watch for a report on consumer confidence on Tuesday. Confidence likely ticked down from the month before, showing consumers are feeling less secure about the state of the U.S. economy. Another highlight: Friday's data on growth in personal income and consumption in February, which is expected to slow to 0.3 percent each, from more than 0.6 percent in January. siliconinvestor.com