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PNC ANALYSTS: MARKET AVERAGES UNLIKELY TO GO HIGHER

 PNC ANALYSTS: MARKET AVERAGES UNLIKELY TO GO HIGHER
 PHILADELPHIA, May 29 /PRNewswire/ -- The major stock market averages


are unlikely to increase substantially over the 12 months, making stock selection critical for investors seeking above-average returns, investment analysts at PNC Financial Corp said today.
 "The high tide that raises all stocks has come in and may stay in for some time," the analysts said in PNC's Investment Policy Statement for June.
 One reason for their view, the analysts said, is that short-term interest rates are expected to rise as the economy improves. What's more, as 1992 progresses, the market will discount the higher corporate earnings per share (EPS) and dividend payouts that are forecast for 1993.
 "To expect above-average returns in the aggregate equity market averages over the next 12 months one must make assumptions that probably cannot hold together," the policy statement said. "We say this because with substantially higher EPS and dividend growth, valuation levels would likely be compressed by substantially higher interest rates. On the other hand, substantially higher valuation measures would have to be supported by lower interest rates, which would require subdued EPS and dividend growth."
 The analysts said they believe the average stock will outperform the market averages, which are capitalization weighted. "The stocks with better-than-average EPS prospects and unextended valuations will likely prosper" in the months ahead. The "plateauing" of the aggregate market means "stock selection continues to prove critical."
 The analysts also predicted economic growth of 1.5 to 2 percent this year and an inflation rate of 3 to 3.5 percent. They noted that since World War II, the first year of each economic rebound has produced only modest inflation.
 PNC Financial Corp, headquartered in Pittsburgh, is the nation's 14th-largest bank holding company, with assets of $43.8 billion. It operates approximately 500 community banking offices in Pennsylvania, Kentucky, Ohio, Indiana and Delaware and conducts business through additional offices in 16 states.
 PNC's principal banking affiliates include: Pittsburgh National Bank, Pittsburgh; Provident National Bank, Philadelphia; Citizens Fidelity Bank, Louisville, Ky.; Central Trust, Cincinnati; Bank of Delaware, Wilmington, Del.; Northeastern Bank, Scranton, Pa.; Marine Bank, Erie, Pa.; PNC National Bank, Wilmington, Del.; Hershey Bank, Hershey, Pa.; and The First Bank and Trust Company, Mechanicsburg, Pa.
 /delval/
 -0- 5/29/92
 /CONTACT: Linda Wolohan of Provident National Bank, 215-585-5453/
 (PNC) CO: PNC Financial Corp ST: Pennsylvania IN: FIN SU: ECO


JS-CC -- PH043 -- 5338 05/29/92 16:53 EDT
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Publication:PR Newswire
Date:May 29, 1992
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