Transcripts

The Dow Ebbs & Flows Toward 11,000

SUSIE GHARIB: The Dow lost ground today while the NASDAQ posted a gain. That`s opposite of how the last few weeks have been going for the two indices and it raises questions about the future direction of stocks. Scott Gurvey looks at where the markets may be headed.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: The Dow Jones Industrial Average spent the day playing hide and seek with the 11,000 mark, a point the technicians say has no significance, but which market watchers say will have a psychological impact. You have to go back to 2001 to find the Dow over 11,000. Its all-time high was a closing at 11,722 in January of the year 2000. The Dow`s recent rally is said to indicate increasing interest on the part of individual investors seeking the relative safety of large cap stocks.

JAMES AWAD, PORTFOLIO MANAGER, AWAD ASSET MANAGEMENT: The market could go up another 500 points, 600 points, between now and the middle of April, as long as there`s no bad news geopolitically or no shots to the system. The line of least resistance, in terms of stock prices right now, is up.

GURVEY: For all the optimism about the Dow, there remains pessimism about the once-high flying NASDAQ. Thursday will be the fifth anniversary of the NASDAQ composite`s record close at 5,048. The bursting of the Internet bubble drove some of the big names in tech down as much as 90 percent. Sun Micro (SUNW), Gateway (GTW), and JDS Uniphase (JDSU) are just a few which have never recovered. Even much stronger companies like Microsoft (MSFT), Cisco (CSCO), and Oracle (ORCL) were battered and remain well below their year 2000 highs. Slower growth rates for the tech giants are a big reason for the slow recovery and a big reason why a return to NASDAQ 5000 is considered a long-term process.

WILLIAM GOURD, CHIEF INVESTMENT STRATEGIST, J.P. MORGAN PRIVATE BANK: We need to see about a 140 percent appreciation from here just to get us back to being whole. That would equate to somewhere in the neighborhood of about a 20 percent compounded rate of return over the next five years. It`s not something that we`re forecasting, but I would say that hopefully in my lifetime, we`ll see it north of 5,000 again.

GURVEY: There is little in the way of economic or earnings reports scheduled for this week. Market watchers say its will be informative to see if the upward momentum continues in the absence of news. Scott Gurvey, NIGHTLY BUSINESS REPORT.