Investors Still Wary of Stock Tumult

Plunging stock prices have sent benchmark indexes tumbling to lows not seen since late September, but don’t expect the bargain cavalry to ride in and lasso beaten-down stocks this week.

Prices may have dropped, but there’s still too much risk to make new long-term bets on stocks, strategists and fund managers say.

“There are geopolitical risks, possibilities of more terrorist attacks and the ongoing concern about corporate skulduggery,” said Tim Woolston, who helps manage $3.5 billion for Boston Advisors Inc. “The market has more to work through at the lower end--Nasdaq, in particular.”

Last week, the Standard & Poor’s 500 index and the Nasdaq composite index declined 2%, while the Dow Jones industrial average fell 1.2%.

Stock prices this week could swing widely as Wall Street scrutinizes the profits of investment banks and the earnings pre-announcements of other companies, reshuffles portfolios as the quarter ends, and factors in the so-called triple witching day, when options, index options and futures contracts expire simultaneously.

Wall Street probably will greet this week’s report on the consumer price index, the broadest gauge of consumer-level inflation, with a yawn.

The overall May CPI is forecast to rise 0.1%, according to economists surveyed by Reuters. In April, the overall CPI gained 0.5%.

This week will bring the first trickle in a flood of quarterly corporate earnings pre-announcements. The ratio of warnings to positive outlooks has shrunk recently, according to market research firm Thomson Financial/First Call. But Wall Street is more willing to sell on bad news than buy on good news these days.

Other economic data due this week:

* Tuesday, the Commerce Department will report on housing starts in May.

* Thursday, the Commerce Department will report on the U.S. trade deficit in April.

The Conference Board will issue its index of leading economic indicators for May.