A Look Ahead to `93


DESPITE a plunge in consumer confidence, the defeat of an incumbent president, and political turmoil worldwide, 1992 turned into a decent year for the US stock market. And 1993 also looks promising, some market experts predict.

On Dec. 31, 1991, the Dow Jones industrial average closed at 3,168.83 points, a gain of some 535 points during the full year. This week the Dow is in the 3,330 range. That puts the Dow well ahead of 1991 and close to its all-time high of 3,413.21 points recorded on June 1, 1992.

"The equities market is strong and looks good for 1993," says Peggy Farley, chief executive officer of AMAS Securities Inc. "Corporate profits will show decent comparisons to 1992, which will help drive the market."

As personal income climbs, people are more likely to invest greater savings in equities, she argues. Ms. Farley says the Dow could reach 3,600 points in 1993.

Larry Wachtel, of Prudential Securities Inc., last year at this time maintained that equities were about "the only game in town," in terms of investment potential because rates on alternative vehicles such as certificates of deposit and money-market accounts were so low. Stocks continue to be "the only real game" for most investors, Mr. Wachtel says, although he admits being wary about interest rates. An unlikely rate hike by the Federal Reserve could take away some of the competitive edge of stocks, he says. Interest rates are not "working against stocks," says Dennis Jarrett of Kidder, Peabody & Co. Mr. Jarrett anticipates market gains during `93, stemming from economic recovery, increasing savings that may be shifted into equities, high expectations for the Clinton administration, and a "positive feeling about the stock market that is feeding on itself." He says that small- to medium-sized companies should outperform blue-chips next year.

TECHNICIANS such as Jarrett emphasize that assessing the direction of the market is imprecise. Several key stocks such as IBM and The Walt Disney Company have helped to hold the Dow down. IBM has been downsizing operations and shedding thousands of workers. Walt Disney, while scoring at the box office and with its US theme parks, didn't do as well as expected with its new French park.

But other indexes have posted sizable gains. In the past six months, the Standard & Poor's 500, was up 9 percent, compared to around 1 percent for the Dow. The S&P Midcap Index (for medium-sized firms) rose 15 percent; the NASDAQ Composite, which measures over-the-counter stocks, gained almost 20 percent.

Many analysts, while anticipating growth in 1993, are also wary of an impending correction. James Stack, who publishes InvesTech, a market newsletter, worries that the investing "bandwagon" has become too euphoric. Wachtel advises caution. He says that there could be a "nasty shakeout" as early as the spring, perhaps in the 10- to 15-percent range. But the market should then rebound, he says.

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