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Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: Mazama who wrote (9506)	1/24/1999 12:44:00 PM
From: Tim Luke	Read Replies (3) \| Respond to of 90042

Sunday January 24, 12:21 pm Eastern Time WALL ST WEEK AHEAD-Brazil,Greenspan,earnings loom By Jennifer Shaw NEW YORK, Jan 24 (Reuters) - Blame it on Rio. Brazil's economic woes may hold the key to whether the U.S. bull market's recent weakness represents a longer-term malady. ''I'm not comfortable with the market here,'' said Ed Nikoski, technical analyst at Piper Jaffray. ''The Brazilian problem is serious. We have more pain to go through.'' Investors are watching Latin America's economies, hoping Brazil's troubles do not spread to neighboring Argentina, Peru and Chile. Last week the market was rife with rumors as well that China could devalue its currency on the heels of Brazil's devaluation of the real. The rumors were denied by China. On Thursday, all eyes will be glued on Fed Chairman Alan Greenspan when he testifies before the U.S. Senate. Greenspan last week sounded a cautious note about U.S. stock prices. Corporate earnings in the large-cap tech sector -- including Compaq Computer Corp., America Online Inc. and budding tech stock AT&T Corp. -- will also direct the market. AT&T is the most widely held U.S. stock. ''What the market will focus on next week is earnings and the currency markets,'' said Hugh Johnson, chief investment officer at First Albany Corp. Wall Street will continue to talk about whether red hot Internet stocks are finally out of fashion. Sentiment at the end of last week was ''The bubble hasn't burst but its been pricked and the air is coming out slowly,'' said Thom Brown, managing director of Rutherford, Brown & Catherwood. Fourth-quarter profit results will be particularly important because earnings reports from International Business Machines Corp. and Lucent Technologies Inc. knocked some of the wind out of the stock market's sails last week. While earnings in both cases were slightly better than expected, investors attention had focused on the high end of analysts' forecasts, in large part because rising stock valuations needed positive surprises to justify them. Analysts say this kind of scrutiny means stocks are overvalued. Market-watchers agree that with stocks overbought portfolio managers will look for excuses to sell equities. ''It's no longer that earnings were above the median or mean estimate, they are now saying they were below the highest estimates,'' said First Albany's Johnson. ''What that's telling me is that there are a lot of managers who want to cash in and shift from large-cap tech stocks.'' Johnson added. According to a report from First Call, which tracks earnings estimates, 171 companies that have reported earnings so far this reporting period are coming in 5.5 percent ahead of expectations. A spate of economic data could also affect stock prices this week. The data culminates in figures on fourth-quarter GDP. Analysts polled by Reuters are expecting GDP growth of 4.4 percent. ''I would expect the GDP numbers to show better than expected growth in the fourth quarter,'' said Barry Hyman, market strategist at Ehrenkrantz, King and Nussbaum. ''I think its important to see better than expected growth. If you don't, how do you justify these valuations?'' Most investors also hope that the impeachment trial in Washington winds down. ''It's one of these annoyances that won't go away,'' Johnson said.