Interest rumors spook Wall Street

The Ticker

May 05, 1994|By Julius Westheimer

Giving back more than Tuesday's 13-point gain, the Dow Jones industrial average slipped 16.66 points yesterday to close at 3,697.75. Investors appeared frightened by rumors of another interest rate rise. Also, buyers remained on the sidelines as they nervously awaited tomorrow's unemployment report. Last month's encouraging job figures sent Wall Street into a tailspin.

AND NOW WHERE? "Though it's gotten more dangerous, there's still life left in this bull market. Our scenario of moderate growth and low inflation shows that stocks are not overvalued." (Donoghue's Moneyletter) . . . "The stock market is too high. Generally, if the market doesn't decline in the first year of a new president's term, which it didn't in 1993, it gets crunched in the second year (1994)." (Overpriced Stock Service) . . . "In all likelihood, the bond and stock markets are at, or very close to, their lows. I see very important support in the Dow Jones industrials around 3,550." (Wall Street Generalist) . . . "The first 10 percent drop is just the beginning. The fact that there is no panic in the streets proves it. The sellers to date are the professionals." (Cabot Market Letter)

MARYLAND MEMOS: Alpha 1 Biomedicals, Bethesda, is listed under "The 100 Fastest-Growing Companies" in Inc. magazine's cover story, May issue. The firm develops pharmaceutical products, and its sales have grown 835 (!) percent be

tween 1989 and 1993. But the stock plummeted last week after disappointing clinical trials for one of its drugs . . . Hechinger and Martek Biosciences stocks reached 12-month highs recently; Duty Free International sank to a yearly low . . . Bell Atlantic stock is listed under "Above-Average Dividend Yields" in S&P Outlook, April 27. The stock yields about 5 percent . . . On Tuesday, May 17, the Baltimore Security Analysts Society presents William E. Foster, president and CEO of Stratus Computer, at the Hyatt Regency Inner Harbor, at noon.

GOOD NEWS: Here's happy news for savers: U.S. Savings Bond interest has finally risen. The Treasury Department says, "The market-based variable rate for Series EE bonds will be an annualized 4.70 percent through October vs. 4.25 percent for the past six months." The Savings Bond rate has been falling since May 1991 . . . "Dream Jobs All Over," reads the title of an encouraging article in Business Week, April 4. Most libraries have copies. The article says, in part, "One result of the boom: Even laid-off executives are suddenly finding it far easier to come up with an offer." . . . "When shopping, don't be afraid to ask if an item will be put on sale in the near future. The worst that can happen is the salesclerk will say 'No.' On the other hand, the answer might be 'Yes' -- or better yet, the clerk may reduce the price for an immediate sale." (Living Cheap News)

UNHAPPY NEWS: "When projecting how much you must save to reach family goals, remember that inflation erodes savings every year. If inflation continues at 3.5 percent annually, it will double your living costs in 20 years. So if you anticipate needing $30,000 (in current dollars) 20 years from now to pay tuition costs or your retirement expenses, you'll have to save $60,000. Inflation also reduces real yields earned on investments. With 3.5 percent inflation, a 3.5 percent yield really pays you nothing." (Jonathan Pond, President, Financial Planning Information Inc.) . . .

NOTES & QUOTES: Here are one-year results of a $10,000 investment made one year ago: In foreign stocks $12,210; gold $10,652; U.S. stocks $10,604; Treasury bonds $10,371, money market fund $10,203. (Data from Business Week, May 9) . . . "It's too soon to tell which businesses and estates were hit hardest by IRS audits, but 1992 results indicate that things get hot once a company grows to about $5 million in annual revenues." (Inc., May) . . . Regarding audits, Randy Bruce Blaustein, tax accountant, says, "Filing an amended return does not have to trigger an IRS audit. Generally, you have three years from the due date of your original return to file an amended return."

ENDPAPERS: "Of the 1.6 million temporary workers in the U.S.A., 28 percent are men, up from 20 percent in 1989, according to National Temporary Services Association in Alexandria., Va." (USA Today) . . . In response to many requests, here is the new phone number for Bankcard Holders of America, Salem, Va.: (703) 389-5445. For a small fee, this nonprofit organization will provide you with a list of the lowest credit-card rates in the country. . . . "The rich people of 2004 are buying, not selling, stocks in 1994." (Louis Rukeyser)

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