Newspaper article The Christian Science Monitor

Stock Market Calm after Gully Washer Soaks Wall Street

Newspaper article The Christian Science Monitor

Stock Market Calm after Gully Washer Soaks Wall Street

Article excerpt

THE folks on Wall Street are feeling better, thank you, following their drenching in last week's stock-market squall.

A gully washer roared through the canyons of high finance last Tuesday and Wednesday. The market, worried by falling profits in technology stocks, suddenly splashed away more than 2 percent of its value. But by Thursday, the sun had come out, and Friday was a decent trading day, with the Dow Jones industrial average closing unchanged at 4,641.55.

For the week, the Dow lost a total of about 65 points.

The consensus forecast: more sunshine ahead for American stocks.

Still, small investors may want to keep their umbrellas handy. Many analysts say there could be another modest correction ahead.

While the market is expected to post slower growth in share prices during the second half of 1995, the long-term trend, analysts hold, remains upward.

"From time to time these {market downturns} will happen," says Larry Wachtel, a vice president with Prudential Securities Inc., an investment house in New York.

"After all, stock prices have climbed $1 trillion and added 1,000 points to the Dow since November. That's quite a climb. But the fundamentals remain in place: The United States is the low-cost manufacturing producer of the world; productivity is high, and inflation is low. And there's good stock-market rotation. Money may be pulled out of one sector, such as technology, but it is then quickly deposited back into another sector."

Approaching resistance

"When you get up near a record level, such as 5,000 points, you tend to run into resistance," says Gene Jay Seagle, president of Tactics & Technics Consultants, a market-research firm in Weston, Conn. "Despite what happened {last week}, I think we're still in a major uplift for the market. And 5,000 points will come sooner rather than later."

Many sectors look promising, Mr. Seagle says, including semiconductors, computers, retail, and automotives. "Numbers like those released by General Motors can't help but give a psychological lift to the entire market." GM announced last week that its earnings shot up 18 percent in the second quarter to a record $2. …

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