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To: Jenne who wrote (48851)	4/4/1999 1:16:00 PM
From: H James Morris	Respond to of 164684

>>Analysts are predicting another pattern of volatile trading next week on Wall Street, fueled by lingering concerns over how long this bull market can last. That's exactly why I think hedging some stocks is smart. Just try to pick out the volatile ones. I believe it was Michelle that told us she is in a hedge fund and she loves its return. >>BLOOMBERG NEWS April 4, 1999 NEW YORK -- The Internet and a select group of big, fast-growing companies spurred U.S. stocks higher in the first quarter, and there's no sign the leadership will change anytime soon. For the first quarter, the Standard & Poor's 500 index returned 4.9 percent. If stocks continue that pace, the benchmark index would end 1999 with a 22 percent gain, giving investors a fifth straight year of gains of 20 percent or more. Investors who look far afield in hopes of capturing bigger gains do so at their peril, however. "For the moment, the game has not changed," says Marshall Front, managing director of Trees Front Associates in Chicago. "We're going to see a continued migration of money to companies that are able to demonstrate superior growth." Superior growth doesn't necessarily mean profits. Most of the Internet companies that led the rally so far this year earn little or post outright losses. Still, investors are enamored of the potential profits from the Internet and the prospects for mergers in the industry. Value stocks and small stocks will languish, says Front, who owns Intel and Microsoft and recently added to his holdings of Medtronic, the world's largest pacemaker company. This past week, the Dow Jones industrial average added just 9.99 points, after closing Monday above 10,000 for the first time. The Standard & Poor's 500 index rose 0.9 percent, and the Nasdaq composite index gained 3 percent, its best showing since late January. The Russell 2000 index of small stocks gained 1.2 percent, its first weekly increase in three weeks. Still, it's down 5.5 percent for the year. The market was closed on Good Friday. Stocks could get a boost this week from the initial trickle of first-quarter earnings. Alcoa, the world's largest aluminum producer, on Wednesday will be the first of the 30 stocks in the Dow industrials to report. Analysts expect 55 cents a share, down from 62 cents in the 1998 quarter. Also on Wednesday, Yahoo! is expected to report a profit of 8 cents a share, up from 2 cents a year ago. The No. 1 Internet directory agreed last week to buy Broadcast.com, the Internet broadcaster. That pushed Broadcast.com shares up 16 percent. Yahoo! rose 4.9 percent for the week and now sells for 473 times this year's estimated earnings of 38 cents a share. Analysts expect companies in the S&P 500 to report 6.7 percent growth in earnings from operations for the quarter, according to First Call. Companies typically exceed expectations, so the actual results should show 8 percent growth, First Call says. Meanwhile, the number of companies warning that earnings will be disappointing is well below the level of recent quarters, First Call says. So far 161 companies have pre-announced first-quarter results, down from more than 1,000 in the fourth quarter. In about 66 percent of the announcements, companies have warned they won't meet expectations. This week will be one of the busiest weeks for first-quarter earnings warnings. Trouble ahead? Investors expect more mergers to boost Internet stocks in coming months. One problem lurking in the online world: A potential slew of initial public stock sales as companies and their financial advisers rush to take advantage of the high valuations being accorded online companies. "The investment bankers will flood the market with Internet stocks and the bubble will collapse," says Robert Natale, a money manager for Bear Stearns Asset Management. "I give it three to six months." There are 211 initial public offerings in the pipeline, and 65 of those are Internet companies, according to Commscan, a research firm in New York. Natale last week bought shares of Sprint PCS, the best-performing S&P 500 stock of the first quarter, as well as shares of Outback Steakhouse and BankAmerica for his $400 million S&P Stars Portfolio. The fund returned 40 percent last year vs. 29 percent for the S&P 500 and is beating the index again this year.<<