How goes it from AP

**Mr. Duke** · 05-10-2004, 01:18 AM

NEW YORK (AP) - Higher prices for everything from gas and groceries to industrial commodities and labor have translated into a gigantic ``sell'' signal for Wall Street, and left little doubt that inflation is on its way back.

With the Federal Reserve contemplating when, and how much, to raise interest rates, inflation is an increasingly worrisome factor for stock investors. But analysts say a modest rise in inflation is a necessary part of the economic recovery, and not necessarily something to fear.

``A couple percentage points of inflation is not that big a deal. It just shows the economy is growing,'' said Mitch Zacks, director of research at Zacks Investment Research in Chicago. ``Generally, as the economy grows, prices start to rise. ... It's times of hyper-inflation when things break down.''

It was only a few months ago that the Fed was concerned about deflation, which happens when prices fall too quickly. The core inflation rate now hovers between 1 percent and 2 percent, and is likely to rise further as the Fed tightens rates, perhaps as early as this summer. Economists say this kind of inflation is a healthy side effect of growth, and far different from the damaging pricing pressures of the 1970s and '80s, when inflation was measured in double digits, and mortgage rates were as high as 15 percent.

``The market loves inflation of about 2 to 3 percent,'' said Alfred E. Goldman, chief market strategist with A.G. Edwards & Sons Inc. in St. Louis. ``It means the economy is growing, and corporate America can raise the price of its products, and earnings can rise.''

But Goldman is part of a contrarian market segment that has questioned whether the Fed is actually doing enough to stop more dramatic inflation before it starts. When inflation gets above 5 percent, it tends to be more unsettling to markets, and more difficult for policy makers to control.

The market, which seesawed after the Fed said it would take a ``measured'' approach to lifting rates from their current 46-year lows, might have responded more positively to a stronger statement, Goldman said. A promise of ``vigilance'' on the inflation front might have been more reassuring to investors - even though that further raises the prospects for higher rates, he said.

``The Fed has one main responsibility, and that is to control inflation. It is a killer for everybody,'' Goldman said. ``If you wait until the evidence is right in your face, it's too late. That's why it's the job of the Fed to start tapping on the brakes sooner rather than later. It's preventive medicine. And that's what a modest rate hike would be.''

After 10 quarters of steady corporate growth, and with almost a million jobs created since October, most analysts agree the economy is doing fine. But inflationary pressures have put many on their guard.

Oil topped $40 a barrel on Friday, its highest level since 1990, and prices are rising for other commodities, as well, including copper, tin, steel and lumber. The Institute for Supply Management's monthly survey of purchasing managers showed many are seeing higher prices in the goods they buy. The ISM's purchasing manager's index hit 88 in April, its highest reading since November 1979.

Pricing pressure is reflected in other measures as well. The Labor Department found employment costs rose 1.1 percent in the first quarter, and benefit expenses soared 2.4 percent, the fastest pace in two decades.

Data collected by the Labor Department in March showed prices rising across a broad range of sectors, including energy, food, travel and lodging, medical care and tuition. There's no doubt investors will be closely watching the government's next reading of the Consumer Price Index, due next Friday.

If rates were the only concern, the current situation might not seem so gloomy to investors. But there are a multitude of other factors contributing to the market's unease, including uncertainty over the situation in Iraq, concerns about global events, the potential for terrorist threats and the upcoming presidential race.

``Let's face it, this is a market, an economy, that is coming from out of the cellar. We're just starting to emerge ... and there are still a lot of unknowns,'' said Chris Johnson, manager of quantitative analysis at Schaeffer's Investment Research in Cincinnati.

Inflationary pressures and the prospect of higher rates send a message, Johnson said, which some investors have interpreted as a warning: The bad old days might not be so far behind us.

For the week, the Dow Jones industrials lost 108.23, or 1.1 percent, closing at 10,117.34.

The Nasdaq composite index fell 2.19, or 0.1 percent, during the week, to finish at 1,917.96. The Standard & Poor's 500 lost 8.60, or 0.8 percent, for a weekly close of 1,098.70.

The Russell 2000 index, which tracks smaller company stocks, fell 11.24, or 2 percent, to end the week at 548.56.

And the Wilshire 5000 Total Market Index, which tracks more than 5,000 U.S.-based companies, ended the week at 10,686.04 off 107.62 points from the previous week. A year ago the index was 8,883.34.

05/08/04 21:28 EDT

**Mr. Duke** · 05-10-2004, 01:30 AM

International report

LONDON, May 7 (Reuters) - Here is how major stock markets outside the United States ended on Friday.

LONDON - Britain's leading share index closed above a three-week low, depressed by concerns strong U.S. economic data meant a quick rate hike was on the cards, though water firms rose after they curtailed their spending plans. The FTSE 100 closed at 4,498.4 points, down 17.8 or 0.39 percent, 8.7 points higher on the week.

EUROPE - European shares closed mixed as investors bet that U.S. interest rates will rise next month, after American job creation continued to surge and oil prices at 13-year highs underscored the threat of inflation.

The market's tone was defensive, with healthcare, food and beverage groups and utilities all ending higher as investors sought a cushion from higher borrowing costs, although technology shares also performed well.

Standouts included French oil group Total, which reported a smaller-than-expected fall in first-quarter profit and confirmed its interest in buying a stake in Russian peer Sibneft.

FRANKFURT - The DAX index ended at 3,895.64 points, down 13.82 or 0.35 percent, down 89.57 points from last Friday.

PARIS - The CAC-40 index closed at 3,653.18 points, down 1.96 or 0.05 percent, a drop of 21.1 points from seven days ago.

ZURICH - The Swiss market index closed at 5,827.7 points, down 4.7 or 0.08 percent, falling 53.3 points since last week.

MILAN - The All Share Mibtel index closed at 20,740 points, down 32 or 0.15 percent, a loss of 270 points since April 30.

TOKYO - Stocks fell for a fifth straight session, with the Nikkei average marking a six-week closing low as investors worried about the prospect of higher U.S. interest rates. The Nikkei fell 132.52 or 1.15 percent to 11,438.82 -- the lowest close since March 24 and a fall on the week of 322.97.

HONG KONG - The Hang Seng Indes fell to its lowest close since November 2003, but rising global oil prices lent support to energy stocks such as Chinese oil major PetroChina. The blue chip Hang Seng Index dropped 0.83 percent, or 99.55 points lower, to 11,910.76, its lowest close since November 24 and a loss on the week of 32.2 points.

SYDNEY - Stocks ended marginally lower after a late rebound in News Corp shares and strength in National Australia Bank failed to offset weakness in the broader market. The benchmark S&P/ASX 200 index shed 6.3 points or 0.18 percent to 3,393.2. The stock market gauge is down 7.6 points for the week.

JOHANNESBURG - South African mining stocks were hammered as gold prices tumbled, but other stocks such as conglomerate Barloworld, due to post healthy results next week, shot to multi-year peaks.

JOHANNESBURG - The All-share index closed at 10,407.9 points, down 5.6 or 0.05 percent. The index gained 22.1 points over the week. The All Gold index closed at 1,834.87 points, down 62.38 or 3.29 percent, a fall of 13.65 points since last Friday, while the Industrial index closed at 7,419.68 points, up 14.73 or 0.20 percent, up a mere 0.59 points on the week.

05/07/04 13:03 ET

Greenspud !!!!!!!!!!!!!! JUST DO THE RATE HIKE AND GET IT OVER!!!!!!!!!!!!!!!!

**puertorico** · 05-10-2004, 03:12 PM

so,what in the menu for tuesday ?:shock:

**smine** · 05-10-2004, 03:15 PM

PR, did you see the charts for today? Just when it dropped in the toilet it's going even lower Monday!!!!

:v

May as well stay where we are now. Seems like if we bailed it leaves us down and out even more???

**tsptalk** · 05-10-2004, 03:27 PM

What scares me the most is that I'm not too worried. It must beshock. Ikeep expecting to look at the quotes and seeing a rebound started. It just hasn't happened yet.

Things (economically) are just not that bad. This is the blow off selling that I would have like to have missed but it's too late to get out for me. I have to ride it out at this point.

If you are out already you may want to nibble with 25% or 30%, or even more if we see evidence ofsome buying before the noon deadline.

Good luck out there.
Tom

**puertorico** · 05-10-2004, 03:28 PM

It's the bottom yet ?

I'm desperate to get any rebound ]a least a penny]

smine -u are right thestock is getting hammered ugly & nasty.:?

**puertorico** · 05-10-2004, 03:53 PM

Tom

I'm looking forward for a come-back

possible on wednesday,looking-for a rebount,

little rally.

not shure yet.

:shock:scare:shock:fear:shock:

**tsptalk** · 05-10-2004, 04:29 PM

EAFE (I fund) is down over 3% so far today :shock:

**TSP-roulette** · 05-10-2004, 04:34 PM

Tom, We are getting a real beating, I hoped for positive numbers today, after last week's beating there was no way but up, so I thought. Are these trends beginnin to look like 2001-02's?, I hope not. Anyone jumping ship to "G"? :v

**thinks** · 05-10-2004, 05:22 PM

I agree, I think I'm shocked too each time I look.

I was in the I fund on Thursday then put in on Th. to get out. I'm still in the S, C, G and hoping to make a move soon.

05-10-2004, 05:28 PM

I took an additional 15% position in equities this morning. Increase 5% in C/S/and I. Trying to do a little dollar cost averaging since a buying opportunity. Just hope market bottoms soon. Otherwise, I will continue to increase my position another 15% tomorrow if situation warrants--market on a down swing.

**Mr. Duke** · 05-10-2004, 10:57 PM

Checked EAFE site.... to the best of my figuring the" I" lost 49 cents today.....

I am staying 100% G............not looking to catch an up day.... Until rate hikes occur or some major positive news I feel we will continue to have more (many more) bad days as opposed to good days....Odds of hitting a good day and getting back out before getting slammed again will be slim.... Reminds me of the bubble burst....don't want to get out because of tax liabilities on gains (not a factor with TSP) and waiting for things to recover a little to get back some money.....If I were in (equities) I believe I would stay put and just quit lookingat the market. Truely feel for the ones that are hooked currently....It will recover though....question is .....if you preserve some capital now youcould end up buying more shares later..... Decisions... Decisions.

I will update charts when I get home.....