Newspaper article The Christian Science Monitor

As Year Winds Down, Analysts See Stocks Moving Up

Newspaper article The Christian Science Monitor

As Year Winds Down, Analysts See Stocks Moving Up

Article excerpt

THE stock market is now entering one of its more important phases: the post-holiday period of early September.

Of course, underlying economic conditions, rather than the calendar, eventually dictate market performance. Still, the Labor Day weekend is a dividing point, says Larry Wachtel, a vice president with Prudential Securities in New York. The weekend separates the summer holiday season from the more serious days of late summer and early fall.

In September, says Mr. Wachtel, companies and financial houses throughout the United States will be holding meetings to prepare new corporate and investment strategies. Plans will be initiated. "That's one of the reasons why October is always so volatile" in terms of market activity, he says.

The summer of 1991 was marked by overall market sluggishness - until the week or so immediately after the failed Soviet coup, when investors poured new money into equities. Wachtel believes the failed coup was important in the sense that one of the worst-case scenarios - the overthrow of President Mikhail Gorbachev - didn't last. Despite everything that's occurred in the Soviet Union, says Wachtel, the underlying challenges for the US and global economies have not altered much. "You've still got the equilibrium between high valuation levels (for equities) and low institutional cash positions, versus huge amounts of private cash sitting in certificates of deposit."

"We've had six months of market consolidation and a narrow stock trading range," says Gene Jay Seagle, an analyst for Gruntal & Co. in New York. Then, the Soviet coup momentarily interrupted the sluggishness.

Mr. Seagle says the improved breadth of the market - with more issues posting gains than showing declines - suggests that a rebound is under way. He says the market is forecasting a better economy.

Seagle concedes that he worries about the "slowness" of the Federal Reserve Board to expand the money supply. Seagle would like to see the Fed lower interest rates even more. …

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