Newspaper article The Christian Science Monitor

Wall Street Seers Say Stock Prices Will Rise Again

Newspaper article The Christian Science Monitor

Wall Street Seers Say Stock Prices Will Rise Again

Article excerpt

SINCE United States financial markets were closed Memorial Day, Wall Street will be scrutinizing the pattern of buy-and-sell orders especially carefully today.

Just call the present phase for the US stock market an "interim period," says one longtime market watcher. Or an "intervening recovery," as another analyst calls it. However it is described, there is a growing sense on Wall Street that the market correction of early 1994 may be over. What is unresolved here, is how long the period of a newly expanding market can last before another downturn.

"The {stock} correction ended in late April," says Larry Wachtel, a vice president with Prudential Securities Inc., an investment house. "What we had from the beginning of the year was roughly a 10 percent decline {in market value}. The market is now in a consolidation phase - a base-building phase." The market, as measured by the Dow Jones industrial average, should start to gain ground, Mr. Wachtel says, reaching around 3,900 points later this summer. Unfortunately, it will not stay there. Market technicians for Prudential say they see the Dow slipping to about 3,500 in late fall.

The Dow hit its all-time high of 3,978.36 points on Jan. 31 before tottering up and down in a roller coaster fashion for much of February and March. In late March, the market plunged, dipping below 3,600 points in April. Since then, the market has slowly begun to rise, currently hovering around 3,700 points. Last week was sluggish for stocks, marked on several days by flat-to-light trading. On Friday, the Dow closed at 3,757.14 points.

What are investors buying these days? Apparently, stock mutual funds. During April, investors poured a net $11.3 billion into stock funds, compared with net purchases of $6.6 billion in March, according to the Investment Company Institute, a trade group. By contrast, investors sold off bond mutual funds. In April, investors took a net $4.8 billion out of bond funds, compared with net withdrawals of $7.7 billion in bond funds in March.

Dick McCabe, chief market analyst at investment house Merrill Lynch & Co. …

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