Newspaper article THE JOURNAL RECORD

Caution Takes over Predictions on Wobbly Wall Street/buying Opportunities Exist, Say Analysts, Though Market Is Not Cheap

Newspaper article THE JOURNAL RECORD

Caution Takes over Predictions on Wobbly Wall Street/buying Opportunities Exist, Say Analysts, Though Market Is Not Cheap

Article excerpt

Wobbly. Suspended. The honeymoon's over.

Those worrisome forecasts for the stock market the rest of this year are offered up by top Wall Street prognosticators who were quite bullish not so long ago.

Recently, their cautious nature has taken over in their predictions:

The Dow Jones industrial average will feature ``wobbly action,'' with a 2400 to 2500 range on the upside and a 2100 to 2200 range on the downside, according to Elaine Garzarelli, executive vice president at Shearson Lehman Brothers.

``The market is much more risky than it has been the last three years, and I don't think the average investor should be making any big moves right now,'' she advised, adding that rising interest rates would definitely hurt. ``If interest rates stay about where they are now and the Dow somehow reaches 2700, I'd definitely suggest that investors sell into the rally.''

We'll be in a ``suspended'' bull market the next several months, with stocks overvalued in comparison to interest rates and no improvement likely until rates move a bit lower the second half of the year, said Steven Einhorn, co-chairman of the investment policy committee of Goldman Sachs & Co.

``This is not a time for the investor to be fully invested in the stock market,'' explained Einhorn. ``Because of persistent concern that interest rates could instead move higher in the second half, this will be a very choppy market.''

With last year's low inflation a ``honeymoon'' and the recent rise in interest rates ``throwing everyone a curve,'' it's likely the Dow will be stuck in a trading range of 2100 to 2500 through September or yearend, said Stanley Salvigsen, chairman of the New York-based Comstock Partners investment advisory firm.

``There are buying opportunities, but the stock market is not cheap right now,'' he said. ``This overextended market could give back earlier gains suddenly, so an investor should be carrying a reasonable amount of cash. …

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