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Not a creature was stirring
and it made Wall Street happy
NEW YORK >> Sometimes one of the biggest factors in stock market trading is literally a non-event, something that isn't happening.
In the past few weeks, companies have not been warning investors that fourth-quarter profits will be disappointing, and analysts say the dearth of bad earnings news has contributed to Wall Street's year-end advance. It is a marked change from what the market experienced during the lean years of 2000 to 2002.
"During the bear market, we were getting a lot of warnings in the last two to three weeks before the end of the quarter," said Gary Kaltbaum, president of Kaltbaum & Associates, a money management firm in Orlando, Fla.
Kaltbaum does expect some warnings to be issued, during the first week of January, but "I see no trouble really on the horizon."
Some companies have actually issued upbeat outlooks, including cereal maker Kellogg Co. and Monsanto Co., whose business is now focused on agricultural biotechnology. And steelmakers said they expect to be able to raise their prices in 2004, a move that could help the struggling companies in their turnaround efforts.
But as Wall Street moves toward its first year of advances following three years of declines, it is the lack of earnings warnings that might be the most important indicator for investors. Few or no warnings make it easier for them to shake off disquieting news such as this past week's heightened terror alert and the first reported case of mad cow disease in the United States.
Although stocks of meat processors and some restaurant chains fell in response to the mad cow news, the overall market advanced, with the Dow Jones industrials up 0.5 percent during the week, the Nasdaq composite gaining 1.1 percent and the Standard & Poor's 500 index rising 0.7 percent.
Still, analysts don't believe investors are overconfident about fourth-quarter results.
"Expectations aren't that great," said Kaltbaum, who said investors may already be factoring solid earnings numbers into stock prices.
Bob Dickey, managing director of technical analysis at RBC Dain Rauscher in Minneapolis, agreed. "I'm not talking to people who are overly optimistic," he said.
But Wall Street does have the tendency to get ahead of itself, and so the market is likely to see in January some of the volatility typical of earnings seasons. No matter what level of expectations investors have going in, it only takes a few solid reports by high-profile companies to get prices climbing -- and only one company's muddled forecast to send them falling again.
That was the case this past October, when third-quarter results were released. The major indexes ratcheted up and down in choppy trading as investors agonized over reports that, in the end, turned out to be pretty good.
Dickey said he expects the coming month to be equally erratic as reports are released, but, given the forecasts he's seen so far, "I think once again the market's going to be happy with what it sees coming out here in a couple of weeks."
Yet Dickey anticipates some declines.
"I would expect to see corrections next month -- I would call them pullbacks rather than corrections," Dickey said. "We're in a normal choppy but growing market."
The Dow ended the last full week of 2003 up 46.45 at 10,324.67. It was the blue chips' fifth straight weekly advance.
The S&P 500 index also had its fifth consecutive weekly gain, picking up 7.23 to close at 1,095.89.
The Nasdaq, which rose after a decline the previous week, closed at 1,973.14, up 22.12.
The Russell index advanced 8.02, or 1.5 percent during the week, closing at 554.90.
The Wilshire 5000 Total Market Index, which tracks more than 5,700 U.S.-based companies, ended the week at 10,659.44, up 80.02 from the previous week. A year ago, the index stood at 8,305.45.
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