Stocks surge as rates fall

The Ticker

May 02, 1991|By Julius Westheimer

The Dow Jones average surged 42 points yesterday, closing at 2,930.20. Most observers attributed the run up to banks' lowering prime-interest rates following the Federal Reserve reduction of its discount rate to member banks. Lower rates stimulate business and offer less competition to stocks.

RECESSION REVIEW: A Baltimore paper goods distributor told me, "For the first time in 15 years my banker actually left his desk, came to my office, thanked me for my business and asked what more his bank could do for me. Banks must really be hurting." . . . On the "MacNeil-Lehrer NewsHour" Tuesday, after the Federal Reserve lowered the discount rate, two economists thought the recession would end this summer or fall, one predicted the summer of 1992 and one said, "It won't end until the government does something for the common man, not just big corporations." . . . Our Daily Bread soup kitchen, 200 W. Franklin St., now feeding more people than ever, needs sugar (lots of it), spaghetti sauce, salt, jelly, paper lunch bags, disposable razors and money.

LOCAL LINE: The Rothschild Co., for institutional funds under management, gained 9.1 percent in this year's first quarter vs. the Standard & Poor's 500-stock index 14.6 percent advance. But since its 1973 inception, Rothschild is ahead 813 percent -- a lot for 18 years; did you do as well? -- vs. the 640 percent S&P gain. The firm (539-4660) will mail details, charts, graphs, etc. In those 18 years, long-term government bonds gained 369 percent, 91-day T-bills were up 342 percent. All figures are "total return," gain plus income . . . Legg Mason will mail its latest Research Weekly, with a good story on Loyola Capital . . . .I will answer your money questions Saturday, noon to 1:20 p.m., on WBAL Radio . . . USF&G stock is written up under "Attractive Special Situations" in S&P Outlook, April 24. ("Has attraction for takeover-turnaround potential.")

WALL STREET WATCH: "Despite recent corrections, we're still in a bull market." (Frank Cappiello) . . . "The Dow Jones average will rally to 3,050 by mid-May, decline to 2,850 by end of July, then rally till yearend toward a 3,250 objective." (The Oracle) . . . "The DJ should rise to a minor peak of 3,436 in this year's third quarter, followed by a correction to 2,787 ending 1992's first quarter, then rise to major peak of 4,047 in third quarter of 1993." (Morrow's High Tech Forecaster) . . . "Never invest in the stock market as such; invest in strong businesses like Cabot Medical, with 'overnight surgery' equipment, and Grundal Co., which makes linings for landfills." (Foster Friess, guest on "Wall Street Week with Louis Rukeyser.") . . . "Successful investing is anticipating the anticipations of others." (John Maynard Keynes.)

MAY FLOWERS: My dentist, Dr. Jeffrey Schein, says that his computer shows four-year college tuitions in 17 years running at $148,000, with only 5 percent inflation . . . Did you realize that from 1961 to mid-1982, the Dow Jones average gained a measly 40 points, meandering from 737 to 777? . . . Ten years ago, the Federal Reserve discount rate was 14 percent vs. 5.5 percent today . . . "NYSE members are selling and selling short at highest level in 3 1/2 years as DJ neared 3,000. Corporate insider selling exceeds buying by over 2.2 to 1." (Vickers Stock Research) . . . For information and details about the 1990 census, what is available, how to order, etc., phone 301-763-4100 . . . If you plan to retire at age 65, ask your local Social Security office about new regulations which may require early filing for benefits . . . "Wall Street Week" tomorrow night hosts Stan Weinstein, editor, Professional Tape Reader . . . "Watch the Fed Lower Rates and Panic the Bears; It's Unwise to Stay Short in Pre-Election Years." (Smart Money, April 24) . . . Railfone will come to conventional Amtrak trains between Baltimore and New York this spring or summer.

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