Newspaper article THE JOURNAL RECORD

A New Balance in the Battle of the Haves and Have-Nots

Newspaper article THE JOURNAL RECORD

A New Balance in the Battle of the Haves and Have-Nots

Article excerpt

NEW YORK (NYT) -- The broad stock market indexes have pretty much fizzled this year. So why are many investors smiling?

Because, at long last, a greater number of stocks are rising, rewarding more of their owners. The battle between the haves -- stocks that are gaining -- and the have-nots is finally beginning to even out.

Therefore, despite the paltry performance of the indexes, the stock market is a much more promising place to invest now than it has been in some time.

"Since March, the stock market has become more egalitarian, with an increasing number of stocks rising rather than falling," said A. Marshall Acuff Jr., a market strategist at Salomon Smith Barney. "We're seeing a rational rebalancing of the excesses in the market."

Acuff is referring to the phenomenon of the last two years in which strong performances in the broad indexes were fueled by a small group of stocks, mostly big-name technology companies. Last year, for example, only 31 stocks accounted for the entire 21 percent gain in the Standard & Poor's 500. In 1995, by contrast, 341 stocks were responsible for the index's 37.6 percent climb.

As the indexes ascended in recent years, they masked a fairly sick stock market over all. Now this has begun to reverse. Even though the indexes look weak, the internals of the market are strengthening. In Wall Street parlance, the market's breadth has improved significantly.

"We're still going to have some high-priced stocks," Acuff said. "But there is improving momentum in the value sector."

This turnabout owes something to investors' optimism that the Federal Reserve will not be raising interest rates again anytime soon. But Acuff said there were other powerful catalysts for the democratization of the market.

Consolidation is one driver. Public companies continue to make acquisitions, hoping to capture the value hidden in underappreciated shares. …

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