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To: ct who wrote (16453)	5/31/1998 6:54:00 PM
From: blankmind	Read Replies (1) \| Respond to of 45548

WALL STREET WEEK AHEAD - Global gloom Sunday May 31, 2:03 pm Eastern Time 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.