Strategist Sees Signs of More Losses Ahead
The U.S. stock market could drop 10% to 15% from here before it becomes attractive, PaineWebber Inc.’s chief strategist, Edward M. Kerschner, said Monday.
Concern that the Federal Reserve will raise interest rates at its next meeting Aug. 24 is likely to weigh on stocks, said the strategist at the New York-based brokerage.
For the record:
12:00 a.m. Aug. 11, 1999 For the Record
Los Angeles Times Wednesday August 11, 1999 Home Edition Business Part C Page 3 Financial Desk 1 inches; 30 words Type of Material: Correction
Index targets--In Tuesday’s Savvy Confidential, the stock market index projections by PaineWebber Inc.’s chief strategist, Edward M. Kerschner, were for the end of 2000. An incorrect target date was reported.
“With one Fed tightening already done and another looking imminent, the outlook for the stock market is becoming more problematic,” Kerschner said in a report to clients.
Since reaching record highs July 16, the major stock indexes have slumped. The Standard & Poor’s 500 has fallen about 9%, while the Dow industrials are off more than 4% and the Nasdaq composite is down more than 11%.
“Even with the various indices down from their recent highs, this market is still not cheap,” Kerschner said.
He recommends that investors now hold 53% of their assets in stocks, 35% in bonds and 12% in cash. He expects the S&P; 500 to end the year at 1,400 and the Dow to finish at 11,500.
