Transcripts

Experts Express Optimism About The 2nd Half Despite A Disappointing 2nd Quarter

PAUL KANGAS: On Wall Street today, investors bid good riddance to the second quarter. All the major indexes ended the quarter on a down note today, reflecting the uncertainty of the markets over the past three months. Suzanne Pratt looks at how the markets fared for the first six months of 2006.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Stocks investors can breathe a sigh of relief now that the first half of 2006 is over. While the Dow and Standard & Poor`s 500 ultimately ended the first six months of trading in positive territory, the path to that achievement was a rough one. ART HOGAN, CHIEF MARKET ANALYST, JEFFERIES & CO.: Certainly the last six weeks have been the most volatile we`ve seen in years. I think that some of the volatility comes from the fact that there`s a great deal of uncertainty as to what it is that we should be concerned about in the marketplace.

PRATT: 2006 got off to a nice start as double-digit profit growth throughout corporate America helped push stocks higher in the first four months. But the Federal Reserve brought the party to an abrupt end in early May when it raised interest rates for the 16th straight time and also raised uncertainty about the outlook for monetary policy. As a result, stocks took a major tumble in May and June. By mid-June, the Dow had lost about 1,000 points, trading as low as 10,700.

MICHAEL METZ, CHIEF INVESTMENT STRATEGIST, OPPENHEIMER & CO.: When you had that big decline in May and June, almost every asset class was hit, stocks in America, foreign stocks, emerging markets, commodities, currencies. It really was sort of a margin call among big, hot hedge fund money managers.

PRATT: But in the last few weeks, things have been looking up, and the blue chip average is now comfortably above 11,000. Thanks to dovish statements from the Fed yesterday, which accompanied its 17th straight rate hike, investors are beginning to feel more positive about the stock market.

HOGAN: I don`t know if we can work our way into the second half and say, yeah, the mood has shifted, but I would say we`re getting pretty darn close. And I say that because even the language of the Fed has gotten more dovish, much less hawkish on interest rates.

PRATT: Most experts believe the market`s recent volatility will continue into the second half of 2006. Nevertheless, they expect stocks will have a better second half and end the year on an up note. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.