NEW YORK -- Driven by the prospect of higher-than-expected corporate earnings, low inflation, and an upturn in the U.S. economy, the stock market appears to have stabilized from its modest correction last month -- and perhaps stands in a position to post new gains.
Whether it actually roars to new highs, however, is in part contingent on the Japanese stock market and the extent of recovery here.
"We're definitely in a bull market," said Gene Jay Seagle, a vice president with Gruntal & Co., an investment house. "We're seeing some corrections, [but they are] within the confines of a rising market." He said the Dow will hit the 3,600-point range by the November election.
"The economic news out of Washington has been generally positive for the market," said Hildegard Zagorski, a vice president with Prudential Securities Inc.
She predicted trading of 3,200 to 3,360 points, adding, "The jury remains out on the economy."
If long-term interest rates fell and there were definite signs of economic growth, the market could be expected to rise, she said. Otherwise it likely will be marked by more "ups and downs," she said.
The falling Japanese stock market could hurt the U.S. market, said Rao Chalasani, chief investment strategist for Kemper Securities Group Inc. in Chicago. If Japan's Nikkei stock index, now in the mid-17,000 range, fell below 16,000, some Japanese might be forced to sell U.S. holdings to meet financial commitments in Japan, he said.
Mr. Chalasani said he is "modestly cautious" about the U.S. market.