By Clyde Noel
Stock Report
Investors who came back from the July 4th break pushed up share prices on the Nasdaq and the Dow because rumors of terrorist dirty tricks did not happen. Last Friday was the Dow’s 10th best day in history.
There’s no way to tell if Friday’s rally was for real because Monday morning stocks were falling again. Some stocks are becoming undervalued and with a little positive research they could be purchased. i.e. PEs.
The accounting scandal at WorldCom Inc. will have a big impact in Silicon Valley because telecommunications equipment suppliers will receive fewer requests since many WorldCom Inc. orders were filled here.
The accounting troubles from WorldCom Inc. will cause CalPERS to lose more than $565 million. The state teachers retirement fund will take a $263 million hit, and the University of California, $353 million. And that’s just from one company.
Many people think the private sector was allowed to run rampant in the 1990s. Big business became too big and everyone was paying attention to Wall Street. Now, those people are beginning to have second guesses. Entrepreneurs (CEOs) were given too much respect and government regulation too little. The Russians call them capitalist swine.
We have ourselves to blame, while we talked about our increasing stock portfolios at cocktail parties, all the greed and perfidy exposed by corporations have made us pessimistic and hesitant to stay in the market.
What is important, as serious as things are with all the chicanery, our system is running and the economy hardly dented. While the dollar is weaker and stocks sagging, other indicators, such as home sales, personal income and even manufacturing production are up.
Somewhere along the line, maybe this week, will be the beginning for investors to realize the economy is improving and the earnings outlook better; and that will restore confidence. Most analysts don’t expect it to happen this summer, but after third quarter results are in, look for an improving stock market in most issues except technology.
For the week, the Dow rose 136.24 points, or 1.5 percent after surging 324,53 points to 9379 on Friday. The Nasdaq had a weekly loss of 14.85 points or 1.0 percent.
The Town Crier index was basically flat gaining only 5 points for the shortened week. For the year the Town Crier index is down 20.70 percent.
Intel Corp., the world’s biggest semiconductor maker, jumped $1.79 to $19.54. Its shares have fallen 38 percent this year. Veritas, of Mountain View, increased 11 percent for the week, but is still down 51 percent for the year.
The mood right now is still a look-see attitude but as long as there are no more accounting blow-ups we can stabilize our thinking and start to cherry pick valued issues.
When profits rise, so will the stock market. In the short run, stock prices move according to investor sentiment.
