New York Market: Investors look optimistic
Sunday 25 October 1998
The Federal Reserve cut the key US interest rate twice since 29 September. What's more, stocks are benefiting from Japan's attempt to throw off its recession. And they say the market decline that cut 19 per cent off the benchmark S&P 500 Index in six summer weeks discounted a US recession, not just slower economic growth. "If we do go into recession, it will be very shallow and very brief," said Timothy Ghriskey a money manager at Dreyfus.
Based on what these investment managers say, 1998, for all its volatility, is beginning to look like just another average year for the stock market. The S&P 500 is up about 10 per cent so far this year. The average return for the benchmark indicator in the last 20 years is just below 13 per cent.
Still, these investors don't expect a quick return to the pace of the market that pushed the S&P 500 to gains of more than 20 per cent a year in the past three years. "We may have seen the bottom, but it is not up and away from here," said Jeff Erickson, a money manager at Advantus Capital Management.
The S&P 500 gained 1.3 per cent last week, the Dow Jones was little changed, and the Nasdaq Composite was up 4.6 per cent.
Computer-related stocks may gain after companies such as Compaq, Intel and EMC all reported earnings that surpassed forecasts. IBM's third-quarter earnings rose a better than expected 10 per cent.
Investors also are buying banks, but regional US banks, not those heavily exposed to suspect loans and securities overseas. "With the Fed lowering rates, regional banks should have decent earnings," said Edgar Larsen, at AIM Capital Management.
Overall, third-quarter earnings reports support the worst-is-over scenario. Three-quarters of the companies in the S&P 500 that have reported met or surpassed expectations and only 25 per cent did worse.
US bonds fell, rounding out a week of declines, as the turmoil that gripped financial markets in recent months began to abate and investors moved away from the refuge of Treasury securities.
- 1 The black and blue dress: Makers considering a white and gold version
- 2 Husband and wife die holding hands within hours of each other after 67 years of marriage
- 3 What color is The Dress, white and gold or blue and black? An eyewitness gives a definitive answer
- 4 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
- 5 Madonna claims jokes about her age tantamount to racism: 'No one would dare to say a degrading remark about being black'
Husband and wife die holding hands within hours of each other after 67 years of marriage
Mohammed Emwazi: Nine things we know about Isis militant 'Jihadi John'
What color is The Dress, white and gold or blue and black? An eyewitness gives a definitive answer
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Madonna claims jokes about her age tantamount to racism: 'No one would dare to say a degrading remark about being black'
Oscars 2015: Birdman beats Boyhood as Eddie Redmayne and Patricia Arquette win big - as it happened
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
This is what it's like to be dead, according to a guy who died for a bit
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
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...