Financial markets should get a positive, if brief, bounce Friday from President Bush`s acceptance speech Thursday night, although Bush said little that was new, several investment strategists said.
”There doesn`t seem to be any intent to buy votes at the expense of the economy,” said Wayne Stevens, president of Duff & Phelps in Chicago.
Last week, rumors that Bush would push tax cuts without regard for the deficit sent the bond market reeling.
Mark Grant, managing director for capital markets at Rodman & Renshaw in Chicago, said bonds, after slipping in New York trading, rallied in Tokyo during the president`s speech. ”The question now is his electability,” he said.
In general, Wall Street is in the Bush camp out of fear a Democratic White House and Congress would be bad for business and bad for the federal deficit.
Grant said Bush`s speech, plus the prior remarks Thursday by Vice President Dan Quayle and Sen. Bob Dole (R-Kan.), will help the GOP`s polling momentum.
Rao Chalasani, investment strategist for Kemper Securities, said an upbeat turn in the Japanese markets, which began earlier this week, also will bolster U.S. markets for the next several days. Stocks in Tokyo were advancing sharply in early trading Friday.
In addition, Chalasani said that he believes stock prices in the United States are poised for a rebound.
Fred Leiner, market strategist at Continental Bank, said he continues to worry about the lack of a credible economic plan from either presidential candidate. He expects little reaction to Bush`s speech by investors and traders Friday.
”Unfortunately, it didn`t answer many questions for me in regard to fiscal policy.”
Thursday`s market
In advance of Bush`s speech, stock prices closed virtually unchanged in moderately active New York Stock Exchange trading, with the Dow Jones industrial average down 2.17 points to 3304.89. The broader Standard & Poor`s 500 index rose 0.08 of a point to 418.26. Bond prices were off slightly.
Some bank stocks recovered somewhat from Wednesday`s sell-off. In an instance of deja vu, Bristol Meyers Squibb dropped $2.12 on heavy volume to $66.87 after a negative report by an analyst. That`s the same closing price it dropped to June 2, when a slide in big-name pharmaceutical stocks helped push the Dow average off its June 1 peak of 3413.21-still the record high.
The Mexico stock market, which also peaked June 1 after a six-month rally, dived again Thursday, with the bolsa index dropping 2.4 percent to 1,439.03. The recent slide, which puts the index about where it started the year, was blamed on high interest rates and weak economic growth in Mexico.
The dollar sank again against the German mark in New York trading, as currency traders decided there was nothing Bush could say to rally the dollar in the face of high German interest rates. The greenback hit 1.4470 marks, down from 1.4535 Wednesday and close to its all-time low of 1.4430, set in February 1991.
Short interest record
Short-selling on the New York Stock Exchange continues to set records. As of Aug. 15, a record 907.12 million shares were on the books off investors who sell borrowed stock in the hope the price will fall. That`s up from the previous record, 882.6 million shares in mid-July.
In addition, the Big Board`s short interest ratio-representing the number of trading days at current average volume it would take to buy back the month`s short position-climbed to 4.89 days from 4.53 days in July.
A lot of stock is being bet in the belief stock prices will fall. On the bullish side, short-sellers frequently prove to be wrong in guessing market trends, and short interest represents eventual buying.
The largest short interest positions on the NYSE in August were in Tenneco Inc., Walt Disney Co., Unisys Corp., Blockbuster Entertainment and Chrysler Corp., according to Bloomberg Business News.
