BULLS STILL SHOWING RESILIENCE.Byline: Chet Currier Associated Press Associated Press: see news agency. Associated Press (AP) Cooperative news agency, the oldest and largest in the U.S. and long the largest in the world. Say whatever else you want about investors in the U.S. stock market, they aren't easily intimidated. Scarcely more than a week later, the Dow Jones industrial average Dow Jones Industrial Average The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. recovered all the ground it lost on Blue Monday a Monday following a Sunday of dissipation, or itself given to dissipation (as the Monday before Lent). - Brande & C. a Monday considered as depressing because it is a workday in contrast to the relaxation of the weekend. See also: Blue Blue , Oct. 27, when it suffered its largest point drop ever. The Dow rose to 7,766 during Wednesday afternoon, up about 77 points from Tuesday's close and more than 600 points higher than its 7,161 reading at the close of business on Blue Monday. The 554-point loss on that tumultuous day had been completely recouped. By market's close, the Dow had faded a bit, but stood at 7,692.57, about 23 points shy of the level it held before last week's plunge. If the markets didn't spend very long transmitting the message of Oct. 27, analysts say that doesn't mean it will be quickly forgotten. In focusing on the problems facing many countries in Asia, the market drop raised the question of how long worldwide economic growth can continue without some significant disruptions. Once confidence falters, the effect can be transmitted to investors the world over with lightning speed. ``I think there's a lot we don't understand yet about recent events in Asia,'' said Greg Smith Greg Smith may refer to:
The way many observers saw it, the October drop accomplished some positive things for the U.S. market by reducing some of the extremes of bull-market enthusiasm and moving stocks out of the accounts of investors with weak conviction into stronger hands. Despite the Dow's speedy recovery from last week's losses and rise of more than 19 percent for the year, it remains 567 points below its Aug. 6 record of 8,259.31. ``We believed some kind of brakes needed to be applied to the market,'' said San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden analysts Michael Moe and Michael Armstrong at NationsBanc Montgomery Securities Inc. in a joint bulletin. ``Too many stocks had gone up too far too fast, and investor sentiment was becoming bubbly.'' By many people's measurements, highly overpriced o·ver·price tr.v. o·ver·priced, o·ver·pric·ing, o·ver·pric·es To put too high a price or value on. overpriced Adjective costing more than it is thought to be worth Adj. stocks became only slightly overpriced - close to fair value - in relation to current and expected corporate earnings. But with its subsequent rally, the market is close to former high levels. ``Over the past few years, the individual investor on Main Street has learned that selling panics by traders on Wall Street are great buying opportunities,'' said Edward Yardeni, chief economist at Deutsche Morgan Grenfell Inc. in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of . ``However, I believe that sometime between right now and Jan. 1, 2000, there will be a significant sell-off, and it won't be a buying opportunity. In this scenario, the brave hearts could succumb to the pressure and belatedly join and exacerbate the selling panic.'' The financial tremors in Asia, Yardeni says, have highlighted the potential for deflation, an unfamiliar threat to a generation used to thinking about inflation. ``In the United States, deflation has been mostly benign and very profitable. But deflation can also be destructive. It can cause a recession if consumers decide to postpone purchases because they expect prices will continue to fall. This is happening today in Japan, the world's second-largest economy. ``Deflation and falling unit sales unit sales Sales measured in terms of physical units rather than dollars. Unit sales data are often used by financial analysts when evaluating the health of a company. depress profits, which in turn causes companies to retrench re·trench v. re·trenched, re·trench·ing, re·trench·es v.tr. 1. To cut down; reduce. 2. To remove, delete, or omit. v.intr. To curtail expenses; economize. by firing workers and reducing capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. . This is the current outlook for Southeast Asian economies and possibly Japan, too.'' In the midst Adv. 1. in the midst - the middle or central part or point; "in the midst of the forest"; "could he walk out in the midst of his piece?" midmost of the stock market's October slide, and through its subsequent recovery as well, analysts have offered the frequent reassurance that the U.S. economy is growing strongly, not troubled by inflation or deflation. Still, as Blue Monday demonstrated, investors anticipate the future, rather than just react to current events. If they sense trouble just over the horizon, they can respond dramatically before it ever comes into plain sight. |
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