U.S. stocks seek stability

U.S. stocks seek stability
The first three months were rocky but good times are coming, say analysts
By Staff Writer Catherine Tymkiw
March 30, 2001: 9:01 a.m. ET


NEW YORK (CNNfn) - For those still recovering from the U.S. stock market's first-quarter roller coaster ride, keep your seatbelts fastened -- the turbulence may be steadying, but don't throw caution to the wind.

January brought two interest rate cuts by the Federal Reserve, one of them a surprise move between Fed meetings that sparked a rally on Wall Street. But the surge lost steam quickly and it's been downhill ever since.

At its March 20 policy meeting, the Fed cut rates yet again, bringing the total to 1-1/2 percentage points in just three months.

Investors took little comfort from the Fed's action, signaling some disappointment that the Fed wasn't acting more aggressively. But "a Fed that is too aggressive leaves people thinking things are worse," countered Charles Crane, market strategist with Spears Benzak Salomon & Farrell.

The Fed is a forward-looking machine, while the markets act in anticipation of what the Fed may do next. Analysts say the Fed is acting as it should.

"The Fed knows more than we do about the economy -- they can look around the corner and see the economy turning around," said Art Hogan, chief market analyst with Jefferies & Co.

Before you strap on your doom-and-gloom hat, analysts say the churning in the quarter was actually good for the market. And be assured, better times are coming.

"I think we'll see the stock market trying to price that (rate cuts) in the second quarter," said Hogan.