IRA EPSTEIN & COMPANY
223 West Jackson, 7th Floor, Chicago, Illinois
312-207-1800(March 28, 2000) STOCK INDICES: S&P 500 INDEX--CORRECTION? WHAT CORRECTION?--That will be the unanswered and unspoken question on Wall Street this week as investors reconvene for a week that is widely expected to see stock continue their climb out of the doldrums into record territory.
At the same time, a host of economic reports could potentially rain on Wall Street's parade with more evidence of strong economic growth evidence that would reinforce exceptions Of accelerating inflation and more interest rate increases for the Federal Reserve.
We have a few economic numbers coming up that will probably shed some more light on just how strong the U.S. economy is. The perception is that nothing is slowing the economy down yet especially with the markets going the way they are.
Wall Street thumbed its nose at the almighty Fed last week after it raised short-term interest rates by another quarter point to 6 percent, the fifth increase in six months. The Dow rallied more than 517 points last week in the wake of the rate decision, its third biggest weekly point gain ever, while the tech heavy NASDAQ gained finished off the week just shy of its all-time high. The S&P 500 index also managed to end the week at a record.
So what's behind all the optimism in stocks? For one, inflation, with the exception of oil prices, still remains benign. Excluding food and energy cost, prices rose a tame 0.2 percent last month. For another, market participants generally expect the Fed's five rate rises will work to slow the economy, ensuring inflation remains at bay down the road.
Look to buy the June S&P at 1325 if filled place a protective stop at 1316. Look to take profits at 1356.
Larry Young
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