PX, you are a gentleman, as well as a tech-head. And if you wish to distribute God's blessings, that's fine by me.
***OFF TOPIC***Market correction ahead?
>>>>>>>>>>>>>>>>>
Sunday May 31, 2:03 pm Eastern Time
WALL STREET WEEK AHEAD - Global gloom
By Marjorie Olster
NEW YORK, May 31 (Reuters) - Global gloom could pile more pressure on Wall Street this week.
From Russia to the India-Pakistan border there was no shortage of developments around the world
for investors to fret about.
The weakening of the Japanese yen last week and instability in Indonesia only added to concerns that
Asia's financial crisis will be prolonged and could pose more serious risks for the U.S. economy and
corporate profits in the near future.
Those concerns set the blue-chip Dow Jones industrials back more than 200 points last week. And
some fear the worst is yet to come.
''It's going to be a tough week,'' said Tony Dwyer, chief market strategist at Ladenberg Thalmann.
''We are going to feel the weight of it all.''
Dwyer said he expected the Dow to pull back to the 8,300-8,400 level in the coming week, about a
10 percent correction from its recent record high of 9,261. The Dow closed down 70 points Friday
at 8,899, losing 215 for the week.
Michael Metz, managing director at CIBC Oppenheimer & Corp., said the market is in the process
of ratcheting down earnings expectations for the second half of this year and 1999, partly due to
Asia-related factors.
''The market is underestimating the impact (of Asia) on profit margins, in my opinion,'' Metz said.
''We are in a period of adjusting down for earnings.''
He said stock investors had been largely shrugging off the Asia concerns. Stocks rose Thursday
despite news that Pakistan had conducted tit-for-tat nuclear tests for the first time in response to
India's tests two weeks earlier.
"I think it is a bit of denial," Metz said.
Another explanation was simply that investors remain eager to buy on the dips because of the
enormous liquidity from inflows to increasingly popular mutual funds.
Investors poured $26.6 billion into stock market mutual funds in April, up from $22.9 billion in
March, according to the Investment Company Institute, an industry trade group that tracks the flows.
Also the U.S. dollar, bonds and, to a lesser extent, large-cap blue chips may be benefiting from
flight-to-quality buying by foreign investors fleeing turmoil in Asia, Russia and other wobbly emerging
markets.
Stocks, particularly in the technology sector, will be vulnerable to more earnings warnings and
announcements for the second quarter, which could start trickling out this week.
''The Asian situation is going to exert a significant effect on the American economy but that was
already allowed for,'' said Pierre Ellis, senior economist at Primark Decision Economics. ''People
have become more aware there is a limit to earnings growth.''
On the U.S. economic front, the major news this week will be the May employment report, due out
Friday morning. Non-farm payrolls are expected to have risen by 221,000 in the month versus
262,000 in April.
With the Federal Reserve concerned about tight labor markets and wage inflation, Ellis said, a very
strong number would put pressure on the central bank to raise short-term interest rates. That would
almost certainly upset the bond and stock markets.
However, he added, economic growth is widely expected to moderate in the second quarter from a
torrid 4.8 percent pace in the first.
Another closely-watched indicator, the National Association of Purchasing Management index, is
due for release Monday morning.
Copyright c 1998 Reuters Limited. All rights reserved.
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<
Does the news article above have any value, other than wasting data space?
Personally, I think the article above could be categorized as an example of PX's fluff (what PX would call fluff): the article has a random correlation with next week's stock price movement, but it gives the market gurus a little free publicity.
Of course, if a person hasn't been following the market recently, the article does have the value of relating some of the recent chitchat that's being used to explain the reasons behind the current market price action.
Best wishes,
Larry |
