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Stocks set to challenge March highs Confidence, softer rate-hike hopes to fuel buying
By Leslie Wines, MarketWatch Last Update: 12:30 AM ET June 18, 2005
NEW YORK (MarketWatch) -- The market next week is poised to retest its March highs after managing a recent bull run, despite oil prices and declining industrial productivity.
On Friday, the Dow Jones Industrial Average ($INDU news chart profile) closed up 0.4% at 10,623.07, gaining 1.1% on the week. The Nasdaq Composite Index ($COMPQ news chart profile) gained about 0.1% to 2,090.11, rising 1.3% on the week.
The S&P 500 ($SPXnews chart profile) closed up 0.1% at 1,216.96, up 1.6% on the week, leaving it within striking distance of its high for the year of 1,229 reached on March 7.
Joe Liro, equity strategist at Stone & McCarthy Research Associates, predicted that investors will manage to push prices above the 1,229 mark on the S&P 500 and extend the rally. The Dow industrials and Nasdaq composite also are expected to retest their March highs, he said.
"Volume hasn't been great and the magnitude of the gains has not been spectacular, but they have been consistent," Liro said. "And this rally has happened within the context of higher oil and declining productivity, both of which squeeze profits."
According to Liro, the market is being boosted by investor perception that the Federal Reserve will hike short-term interest rates another quarter-point at its policy meeting at the end of the month then take a hiatus from raising rates.
However, Liro said this perception probably is misguided. His institution expects another percentage point in rate increases in coming months.
Al Goldman, A.G. Edwards chief equity strategist, also expects the bull run to carry over into next week and credits the rally to rising investor confidence in the economy
"There has been a renewed interest in heavy cyclical stocks such as steels, chemicals and paper stocks," he said.
"It is unusual for economy-sensitive stocks to rally in the fourth year of a recovery," Goldman said. "They usually only rally in the beginning of a recovery. That would indicate that folks feel pretty good about the economy."
Next week will be light on Fedspeak as it falls in the blackout period prior to the Fed's monetary policy meeting on June 29 and 30. However, Richmond Fed President Jeffrey Lacker is scheduled to speak at a banking conference on Monday.
Data also will be sparse. "Next week we will get a breather before the next data assault the following week," said Lehman Brothers economist Drew Matus. He noted that in two weeks the market will get a steady rain of data, including inflation numbers, manufacturing data, auto sales and a final revision to first-quarter gross domestic product.
On Monday the Conference Board will release leading economic indicators for May. Lehman Brothers is expecting a reading of -0.3 for the headline figure.
Thursday will bring weekly initial jobless claims and existing-home sales figures for May. Lehman expects home sales to rise to 7.20 million units from 7.18 million units in April.
On Friday the market will view durable-goods data for May, new-home sales for last month and another University of Michigan consumer-sentiment reading. Lehman forecasts that new-home sales will increase to 1.35 million in May from 1.316 million in April
Although second-quarter earnings reports season will not begin in earnest for a few weeks, next week sees profit news from some closely-watched names.
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Leslie Wines is a reporter for MarketWatch in New York. see attached for more info
Stocks set to challenge March highs Confidence, softer rate-hike hopes to fuel buying
By Leslie Wines, MarketWatch Last Update: 12:30 AM ET June 18, 2005
NEW YORK (MarketWatch) -- The market next week is poised to retest its March highs after managing a recent bull run, despite oil prices and declining industrial productivity.
On Friday, the Dow Jones Industrial Average ($INDU news chart profile) closed up 0.4% at 10,623.07, gaining 1.1% on the week. The Nasdaq Composite Index ($COMPQ news chart profile) gained about 0.1% to 2,090.11, rising 1.3% on the week.
The S&P 500 ($SPXnews chart profile) closed up 0.1% at 1,216.96, up 1.6% on the week, leaving it within striking distance of its high for the year of 1,229 reached on March 7.
Joe Liro, equity strategist at Stone & McCarthy Research Associates, predicted that investors will manage to push prices above the 1,229 mark on the S&P 500 and extend the rally. The Dow industrials and Nasdaq composite also are expected to retest their March highs, he said.
"Volume hasn't been great and the magnitude of the gains has not been spectacular, but they have been consistent," Liro said. "And this rally has happened within the context of higher oil and declining productivity, both of which squeeze profits."
According to Liro, the market is being boosted by investor perception that the Federal Reserve will hike short-term interest rates another quarter-point at its policy meeting at the end of the month then take a hiatus from raising rates.
However, Liro said this perception probably is misguided. His institution expects another percentage point in rate increases in coming months.
Al Goldman, A.G. Edwards chief equity strategist, also expects the bull run to carry over into next week and credits the rally to rising investor confidence in the economy
"There has been a renewed interest in heavy cyclical stocks such as steels, chemicals and paper stocks," he said.
"It is unusual for economy-sensitive stocks to rally in the fourth year of a recovery," Goldman said. "They usually only rally in the beginning of a recovery. That would indicate that folks feel pretty good about the economy."
Next week will be light on Fedspeak as it falls in the blackout period prior to the Fed's monetary policy meeting on June 29 and 30. However, Richmond Fed President Jeffrey Lacker is scheduled to speak at a banking conference on Monday.
Data also will be sparse. "Next week we will get a breather before the next data assault the following week," said Lehman Brothers economist Drew Matus. He noted that in two weeks the market will get a steady rain of data, including inflation numbers, manufacturing data, auto sales and a final revision to first-quarter gross domestic product.
On Monday the Conference Board will release leading economic indicators for May. Lehman Brothers is expecting a reading of -0.3 for the headline figure.
Thursday will bring weekly initial jobless claims and existing-home sales figures for May. Lehman expects home sales to rise to 7.20 million units from 7.18 million units in April.
On Friday the market will view durable-goods data for May, new-home sales for last month and another University of Michigan consumer-sentiment reading. Lehman forecasts that new-home sales will increase to 1.35 million in May from 1.316 million in April
Although second-quarter earnings reports season will not begin in earnest for a few weeks, next week sees profit news from some closely-watched names.
………………………………………………..
Leslie Wines is a reporter for MarketWatch in New York. see attached for more info
What did the market do after that. Down for like six weeks in a row or something. 
(I was short).
When you say market that means DOW. Unless they are saying the DOW is going up 300 points next week 
