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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: djane who wrote (46780)	5/13/1998 3:23:00 AM
From: Quaddad	Read Replies (2) \| Respond to of 61433

FUND VIEW - Dalton sees techs leading next rally Reuters Story - May 12, 1998 23:23 %BUS %ENT %US %ELC %BNK %FUND %STX %DPR %APL %ELI %INT %TH %ID %FIN %DRU FTU MSFT ASND EMC DELL CSCO INTC AOL V%REUTER P%RTR By Mark Lewis NEW YORK, May 12 (Reuters) - Where some see an overvalued stock market teetering on the edge of a major correction, Stephen Dalton sees a rally in the making -- led by technology, the very sector many bears view as ripe for retrenchment. "We think that the drug (stocks) will start to fade a bit here, and techs will start to take their place," said Dalton, a portfolio manager for First Union Corp.'s First Capital Group. Dalton, based in Philadelphia, was product director for CoreStates' growth equity funds and related accounts, with about $1 billion in assets under management. The funds recently were acquired by First Union along with the rest of CoreStates, but Dalton said the growth-oriented approach will not change. "Everything that's growth is richly valued now, but appropriately so," Dalton said in an interview. He said the valuations would be justified by renewed earnings momentum, especially among technology stocks. "Tech has already weathered the storm (from Asia's economic crisis)," he said. "They're all talking about stronger second halves." The technology sector has languished in the doldrums for several months, and more recently the overall market has been treading water as well, prompting concerns that the bull may finally have run its course. But Dalton said the feared correction already has happened, a subtle, sideways retrenchment "that prepares the ground for the rally." Dalton identified two near-term catalysts for that rally. First, he predicted, Microsoft Corp. and federal regulators will reach an agreement by Monday that allows the Windows 98 computer operating system to debut on schedule. Then on May 19, the Federal Reserve either will leave interest rates alone or will merely nudge them slightly higher, allowing investors to discount fears of significantly higher rates. "That will allow the market to continue to move upward," he said, with technology stocks leading the way. Dalton said his funds had reduced their technology exposure to 18 percent from 35 percent last summer, but are now back up to 25 percent. "We see the pall over the sector being lifted," he said. Among the tech stocks Dalton likes are Ascend Communications Inc. , EMC Corp. and Dell Computer Corp. . "All three companies are experiencing incredibly strong demand for their products," he said. He also mentioned familiar names such as Cisco Systems Inc. , Intel Corp. , Microsoft and America Online Inc. . "AOL is our largest position," he said. Technology is not Dalton's only focus. He also follows the telecommunications, health care, financial services, media and entertainment and consumer growth sectors. While he sees the market "at the beginning stage of the next leg up," Dalton said he is not quite as bullish over the intermediate-term. He cited the next American political election cycle and the possibility of further economic fallout from Asia as contributing to uncertainty over the next year to 18 months. But beyond that, the continued prospects for low U.S. inflation and low interest rates, combined with demographic trends favoring investment, indicate good times ahead for Wall Street, he said. "On a long-term basis, I think the market goes higher," he said.