The Nasdaq's historic rise has convinced some investors that a down move is as likely as a further move up. "It's hard to trust this market, hard to be at ease that there's anything of substance under there with the parabolic moves it's made," said James Griffin, a market strategist at Aeltus Investment Management.
There's certainly enough fuel out there to spark a retreat: investors scared about computer breakdowns associated with the year 2000 may be tempted to pull money out of the market for safety's sake.
Some investors expect 2000 to be the year of the "Big I" - inflation - as the prices of oil and other commodities surge and a tight labour market drives wage costs higher. If they're right, the three quarter- point interest-rate increases by the Federal Reserve this year may not be the last.
This year's losing stocks may drop even more as investors sell them at a loss to offset capital gains taxes on profits they realise from winning shares. "December's generally a volatile month," said Uri Landesman at AFA Management Partners. "But this December is going to be unusual for all these factors."
US unemployment held at a 29-year low in November and wages rose at the slowest pace in three months. Still, "the labour market is tight," said Chris Guinther, a fund manager at Banc One Investment Advisors. "We do expect to see some inflation, and we're watching that carefully."
The government's consumer price report comes out on 16 December. If consumers are paying more for goods than economists expect, it could be a red flag to the Fed. That would drive stocks lower and temporarily slow the gains, even in fast-rising technology stocks.Reuse content