To: Mazman who wrote (75810 ) 10/30/1998 10:32:00 AM From: Mohan Marette Respond to of 176387
'Positive Trends'- Mazman, Well we just might..here is an interesting take on interest rate cut and resulting effect on the market. ===================================Source:philadelphia Inaquirer/Online Positive trends for stock market -------------------------------------------------------------------------------- MONEY & BUSINESS: More business news -------------------------------------------------------------------------------- Recent interest rate cuts by the Federal Reserve have helped stocks begin to recover from the big decline during the summer. What are the odds those cuts will be followed by a further rise in stock prices? Pretty good, according to Standard & Poor's, the securities firm known for its S&P 500 stock index. "Since 1960, there were 11 instances of a . . . rate cut after a period of flat or higher rates," S&P reported yesterday in its weekly newsletter, The Outlook."Three months after these initial cuts, the S&P 500 was higher by an average of 9.1 percent. Twelve months after the cuts, the average gain for the 500 was 16.2 percent." The Fed's two recent cuts have helped the S&P 500 rise about 11 percent from its low on Aug. 31. S&P also noted some other positive features of the current market: Shareholders didn't panic and dump stocks wholesale during the downturn; many stocks are now reasonably priced for the first time in years according to such standards as price-to-earnings ratios; recent corporate earnings have been a little better than expected; and mergers and acquisitions, which often entail bidding wars that push prices up, have been picking up after a lull. Finally, says S&P, the third year of the presidential term will begin shortly. Historically, that has been the best part of a presidential term for stocks, with the S&P 500 gaining an average of 13.7 percent in the third years since 1929, compared with 4 percent in first years, 3.8 percent the second, and 8.3 percent the fourth. Stocks haven't declined in the third year since 1939. S&P expects stocks to finish 1998 about where they are now, then rise about 7 percent in the first half of 1999. Unfortunately, that would leave the index slightly below the high it reached July 17.....phillynews.com