Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.banks From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: banks Wed, Jul 1 1992 Date: Wed, 1 Jul 92 05:20:57 EDT Message-ID: 07-01 0000 DECISIONLINE: Banking & Economy USA TODAY Update July 1, 1992 Source: USA TODAY:Gannett National Information Network ELECTION COULD IMPACT MARKET: The race for the White House could have as big an impact on the stock market in the third quarter as the economy and corporate earnings, experts say. While the election isn't until November, experts say the best scenario would be for President Bush to pull ahead in polls and seem a shoo-in for re-election. That would clear away uncertainties that could cause problems for U.S. markets. (For more, see special Election package below.) LEADING INDICATORS UP A BIT: Index of Leading Economic Indicators, the government's main economic barometer, advanced 0.6% in May, the Commerce Department said Tuesday. It was the fifth straight monthly rise in the index, but the 0.6% increase suggests continued but less-than-robust growth later this year. The index is designed to forecast activity six to nine months ahead. CONFIDENCE UNCHANGED IN JUNE: Consumer confidence stagnated in June after three months of gains, underscoring the recovery's modest pace, the Conference Board reported Tuesday. The business research group's Consumer Confidence Index, which charts consumer levels of financial security, registered 71.7 in June, barely changed from the 71.9 reading in May. The index is calculated on a 1985 base of 100. MARKET WAITING FOR FED MOVE: Stocks went nowhere Tuesday as investors waited to see whether the Federal Reserve will cut interest rates. The Dow Jones industrial average slipped 1.34 points to 3318.52. Broader indexes finished mixed. Winners outnumbered losers 1,004 to 727 on the New York Stock Exchange. The Fed's policy-setting Federal Open Market Committee met Tuesday and meets again on Wednesday. INVESTORS ALSO AWAIT EARNINGS: Investors also sat on the sidelines Tuesday ahead of second-quarter corporate earnings, which will begin to trickle out next week. Second-quarter earnings are "looming over the market like an ax," says Gregory Drahuschak, an analyst at Wheat First. Given the uncertainty about earnings, the economy and a possible rate cut, Drahuschak says it's encouraging stocks didn't fall further. WORLD MARKETS TROUBLED: Stock markets of industrialized nations are bottoming. The Morgan Stanley Capital International index of 20 markets is down 8% for the year. "We're getting close to the bottom," says Michael Gerding, manager of Founder's Worldwide Growth Fund. Dragging down the pack: Japan, down 31% this year; Denmark, down 10%; and Canada, down 9%. The best performers are from the developing world. SMALL BIZ MIXED ON RATE CUT: Small-business owners are divided on whether cutting interest rates again would revive an economy which they agree is struggling. Some say lower rates won't encourage worried consumers to spend. Others say the psychological effects of a rate cut could help. To try to stimulate the economy, the Fed has lowered short-term rates 22 times in the past three years. Rates are now at 20-year lows. FUND MANAGERS HIGHEST PAID: Wall Street fat cats got only slightly fatter last year, according to Financial World magazine's seventh annual survey of the 100 highest-paid Wall Streeters, due on newsstands July 8. The median earnings of the top 100 in 1991: $9 million each. Four years ago, the height of the go-go '80s, the median was $15 million. Fund managers took the first six spots in the rankings. OIL FUTURES PRICES PLUMMET: Oil prices fell sharply Tuesday as futures speculators staged a panicky sell-off on the New York Mercantile Exchange. But prices began recovering in after-hours cash trading. While futures markets were in business, light sweet crude oil for delivery in August fell 64 cents a barrel, to $21.60. There was no news moving the market, traders said. Oil's early lows made speculators nervous. GOLD DOWN, SILVER PRICES UP: Gold fell domestically, and silver was up Tuesday. On the Commodity Exchange, gold bullion for current delivery settled at $343.10 a troy ounce, off 60 cents. Republic National Bank said gold lost 45 cents to $343.00. The metal advanced in Europe and Asia. On the Comex, silver bullion settled at $4.028, up from $4.008. In London the metal rose to $4.03 from $3.98. SPECIAL PACKAGE ON ELECTION: THREE-WAY TOSS UP NOT GOOD: Experts say a victory by President Bush in the fall elections would be best for U.s. markets. Polls now show a tight race among Bush, Democrat Bill Clinton and undeclared candidate Ross Perot. That's exactly what some market watchers don't want to see. "Any sense there will be a three-way toss up is a worry and bad for the market," says Richard Hoey, chief economist at Dreyfus. PEROT SCARES INVESTORS: Hugh Johnson, investment strategist at First Albany, says Perot poses a danger if he gains popularity after the Democratic and Republican presidential conventions in July and August, respectively. Perot scares many investors because they're unsure what he plans to do with the economy and taxes. JAPANESE MARKET A CONCERN: The Tokyo Stock Exchange, where the Nikkei average is at a six-year low, is also a concern. If Japanese stocks continue to slide, some analysts fear it would spur selling in U.S. stocks, though that hasn't happened so far. Says Johnson: "If Japan's market falls aparts, it won't be isolated to them." As for the economy, Hoey says investors will closely watch sales of autos and homes. (End of package.) DOW JONES OPENS ON DOWNSWING: The Dow Jones average of 30 industrials opens Wednesday at 3318.52 after closing down 1.34 Tuesday. The New York Stock Exchange composite opens at 224.33, down 0.11. The American Stock Exchange market value opens at 379.28, up 2.18. The NASDAQ OTC composite opens at 563.60, up 4.80. DOLLAR OPENS UP OVERSEAS: The dollar opens up on Wednesday. It opens at 0.5260 British pounds, up from 0.5243; 5.1265 French francs, up from 5.0940; 1.5243 German marks, up from 1.5151; and 125.77 Japanese yen, up from 125.30. (As of 3 p.m. Tuesday. Source: First American Bank of New York.) 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Banking & Economy Editor: William Snoddy. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution purposes violates federal law. 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