Market Commentary – Noon

March 27, 2001 - Stocks are climbing and bonds are plunging as March consumer confidence unexpectedly rose to 117.0 from February's 109.2, which was revised upward from 106.8, confirming the recent improved Michigan consumer sentiment survey, which takes the pressure off of the Federal Reserve to cut rates before the next scheduled policy meeting. Many investors, however, are confused about the economy's direction.

The DJIA is up 139 to 9827 as computers, telecoms, and defense issues rise on fund buying. The NASDAQ is up 48 to 1966 as semiconductors rise. NYSE breadth is 15-13 positive; NASDAQ breadth is 18-14 positive. Trading is active. Short term technicals are bullish.

The dollar is up despite 0.2% durable goods orders fall. Oil futures are up.

“We’re almost there,” said Bruce Bent, president of Reserve Funds. Bent thinks the second quarter will be “unhappy,” though not as bad as the first quarter. In the third quarter, Bent expects “a move into global blue chips.” The only dark cloud is the strong U. S. dollar, which could hurt large exporting companies, according to Bent.

Until the third quarter, Bent thinks a weak market “provides investors with an opportunity to purge their portfolios.” Cautious analyst recommendations will lead to more market sell-offs in the second quarter, Bent predicts.

Market Action

S&P 5001171.09 +18.40
NASDAQ Composite1966.19 +47.70
Dow Jones Industrial Average9826.99 +139.46
10-Year Treasury Yield4.99% (previous close, 4.85%)

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