INTERNATIONAL MARKETS: NEW YORK: Wall Street rides the storm

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The Independent Online
US STOCKS may rise this week as earnings reports show limited damage from Asia's economic crisis. The most convincing evidence could come in the profit reports expected from some of the biggest US banks, which have big trading and investment banking businesses abroad.

"You've got to look at the Citibanks, the Chases, Bankers Trust and see what they're going to do," said Ronald Stribley, chief investment officer at Freedom Capital Management in Boston. "It's going to be volatile, but I don't see anything on the horizon that's going to be a problem."

Citicorp, JP Morgan, Chase Manhattan, Banc One Corp and Wells Fargo are among the companies scheduled to report earnings on Tuesday, which is the first trading day of the week. The New York Stock Exchange is closed on Monday for Martin Luther King Day.

Rising overseas markets on Friday, after a week that began with an 8.7 per cent plunge in Hong Kong's benchmark stock index, eased concern that Asia's economic slowdown will lessen demand for stocks.

Companies, however, are warning investors to scale back their profit expectations because of Asia. Already, early in the earnings season, there have been 473 pre-announcements by companies saying their results wouldn't come in as expected. Of those, 251 warned of shortfalls, and there is still a month left in which companies might tell investors that bad news is ahead.

The Dow Jones Industrial Average rose 2.3 per cent last week, recovering from the previous week's 4.8 per cent drop.

In the bond market, some of the biggest money managers say US Treasuries maturing in five to 10 years are the best bet until there is concrete evidence that Asia's financial crisis is slowing the US economy. Treasury bonds have surged since October, pushing the yield on the benchmark 30- year bond to a record low of 5.66 per cent last Monday, as investors moved to government securities as a safe haven. Now investors are saying that it's time to step back to see where you get the most reward with the least risk, and many favour Treasuries maturing in five to 10 years rather than the 30-year bond. That's because they can get almost the same yield - without as much risk of losses if rates rise.

On Friday the Federal Reserve said output at factories, mines and utilities rose 0.5 per cent last month, while the plant-use rate rose slightly to 83.4 per cent, the highest since September 1995. "The US economy, at least in the fourth quarter, was still humming along at a pretty good rate, said Hugh Whelan, bond manager at Aeltus Investment Management.

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