New York Market: Bears lurk as the money pours in
Sunday 10 January 1999
The Dow Jones Industrial Average closed above 9,600 for the first time, approaching the year-end targets of some of Wall Street's top strategists, as money streamed into retirement accounts and mutual funds. For the week, the average rose 5 per cent. "The amount of pessimism in the market has largely disappeared," said Timothy Ghriskey, manager at Dreyfus Corp. "People are more scared of being left behind, so the money gets thrown into the market."
Even strategists who raised some concerns weren't bearish on the overall market. Goldman Sachs' Abby Joseph Cohen, one of Wall Street's most bullish strategists, said last week that stocks may have risen too fast, and advised clients to trim their shareholdings. Yet she also said the current calm state of interest rates should let the economy grow, giving stocks room to rise.
Byron Wien, Morgan Stanley Dean Witter's director of investment strategy, said the economy's strength could revive inflation in six months, forcing borrowing costs higher - bad news for profits and shares. Still, he said the market "has a long way to go before it gets into real trouble".
So far, investors aren't too concerned. "What is driving this market is a firehose of liquidity," said James Griffin, market strategist at Aeltus Investment Management. Monetary policies aimed at fixing Russia's and Asia's financial woes are spurring "a huge ocean of money for the market, and the potential for that money to keep coming is very strong". In the first five days of 1999, the Dow average rose to a record 9,643.32. The S&P 500 closed at a record 1,275.09, up 3.7 per cent. The Nasdaq soared 6.9 per cent to a record 2,344.41.
Investors are paying less attention to companies' valuations than they should, Mr Ghriskey said, and "that is a long-term concern for the stock market. Eventually, investors have to focus on earnings."
Barton Biggs, strategist at Morgan Stanley, said: "Valuations are just ridiculous, and as the year progresses, earnings are going to disappoint. We're going to have a normal cyclical bear market, which we're overdue for."
Investors' optimism will get a reality test in coming weeks as companies report fourth-quarter earnings. Banks are due to report this week.
Dow Jones Copyright: IOS & Bloomberg
- 1 Forget 'The Dress': Here are five of the biggest news stories you might have missed
- 2 The black and blue dress: Makers considering a white and gold version
- 3 PornHub turns masturbation into energy in bid to save the planet
- 4 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
- 5 Saudi Muslim cleric claims the Earth is 'stationary' and the sun rotates around it
New theory could prove how life began and disprove God
This is what it's like to be dead, according to a guy who died for a bit
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Ukip would cut billions from Scottish budget to fund English tax cuts
Russia's roadmap for annexing eastern Ukraine 'leaked from Vladimir Putin's office'
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...