Desperately Seeking Conviction

September 14, 2000
Daniel Beighley

Despite a round of inflation-friendly economic numbers, stocks sank
sluggishly throughout the session Thursday after a strong open that saw all
three major averages gap higher. By the close, the Dow had lost 0.8%, the
S&P 500 slipped 0.3%, and the Nasdaq managed to eke out a 0.5% gain.

The PPI actually fell 0.2% in August which was less than the 0.1% increase analysts had expected while the PPI core rate increased by 0.1% which was less
than the 0.2% increase analysts anticipated. Retail sales came in with a 0.2%
increase which was lower than the expected 0.3% rise.

While analysts were pleased by the price data, several commented that
concerns about weakening earnings continue to dog the market. Consumer stocks
and retailers saw selling pressure that suggests that market participants may be
factoring in a future recessionary scenario.

Volume was about flat compared to Wednesday’s levels, with 1.0 billion shares
trading on the NYSE and 1.69 billion shares changing hands on the Nasdaq.

"People are still nervous about the pre-earnings season that is upon us,
and I look at the market and just don’t think that we have a tremendous amount
of upside potential right here," said Gregg Parise, General Partner, Dorado
Capital Management.

"I don’t see conviction in the market, and there’s also a lack of
volume. While we’ve had a nice bounce here, it’s been a bounce into resistance,
and I think we are going to pull back and kind of consolidate before what I
think will be a great fourth quarter rally," he added.

According to preliminary numbers, the Dow fell 94.71 to 11,087.47, the Nasdaq
gained 19.90 to 3913.79, and the S&P 500 eased 4.04 to 1480.87.

Looking to Friday, the Consumer Price Index for August will be released at
8:30 AM ET, and Street estimates look for a 0.2% increase in the CPI and a 0.2%
increase in the CPI core rate.

Desperately Seeking Conviction

BUY THE FEAR, SELL THE GREED

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