[Newspoetry] (fwd) Your Money: Fear Factors

[Bryan Cribbs]

I've never actually seen Fear Factor....
but in the words of some game show, we must be 
scared.  Don't sweat, our economy is moving 
sideways...

1. What to Watch: Fear Factors
==============================

For yet another week, look beyond the economy for reasons 
why the stock market is moving. Look to the Middle East, 
where violence exploded once again. Look to the border of 
India and Pakistan, where the threat of war continues, 
despite continuing diplomatic efforts to diffuse the 
tensions. Look to American courthouses and Congressional 
committees, as investigations of corporate impropriety 
continue to take center stage in the business world. And, as 
the end of the second quarter draws near, look to companies 
confessing that they may not hit their earnings targets.

Andersen, Tyco, a bus bombing: for investors, it was another 
week of fears and frayed confidence. The situation was then 
made worse by Intel on Thursday when the chip maker warned 
that it would not meet its targets for sales or gross profit 
margin in its second quarter. 

All of this worked together to overshadow increasing 
evidence that while the American economy may not be soaring, 
it is steadily improving. 

The Institute for Supply Management, an industry trade 
group, reported last week that its factory index rose to 
55.7 in May, from 53.9 in April. New orders and production 
increased and factories reported the strongest demand for 
exports since May 2000.

On Tuesday, Alan Greenspan, the chairman of the Federal 
Reserve, told a meeting of bankers in Montreal that economic 
events "look increasingly positive."

Then on Friday, the government reported that the nation's 
unemployment rate in May slid to 5.8 percent from 6 percent, 
and that businesses had added 41,000 jobs to their payrolls 
after putting on 6,000 more positions in April, the first 
back-to-back gains since the recession began in March 2001. 

Nonetheless, by week's end, the Standard and Poor's 500-
stock index had lost 39.61 points, or 3.7 percent, to 
1,027.53, bringing its loss for the year so far to 10.5 
percent.

"The problem still lies in the geopolitical situation," said 
Bryan Piskorowski, market commentator for Prudential 
Securities Inc. "That's what's been leading the sideways-to-
downward action over the last couple of weeks. All said and 
done, I'm hard-pressed to find an upside catalyst, 
especially heading into the month of June."

This week, a number of reports should shed further light on 
the condition of the nation's economy. On Wednesday, the 
Federal Reserve releases its Beige Book report on the state 
of the economy in regions around the country. On Thursday, 
data will be released on retail sales and inflation at the 
producer level in May. 

On Friday, look for three measures of growth in the 
manufacturing sector: business inventories for April and 
factory capacity utilization and industrial production for 
May. Also out will be a preliminary look at consumer 
confidence in June from the University of Michigan. 

The news is expected to be positive in these reports. But it 
might not matter that much on Wall Street, at least not 
right now. 

-- Dan Bigman, Business Editor, NYTimes.com