Dow Jones drops 20 points interest rates increase


Following the bond market downhill, the Dow Jones industrial average fell 19.98 points yesterday, closing at 3,891.68. Interest rates rose, partly because the Treasury's 2-year note received a chilly reception from investors who feared further credit tightening by the Federal Reserve.

LOCAL LINE: "Bethlehem Steel announced it would sell 12 million new shares in a global public offering. Since steel stocks have been strong, the market will have little trouble digesting the offer." (S.& P. Outlook) . . . Procter & Gamble, with two facilities here, is featured in an encouraging article in Fortune, March 7. The stock climbed from $21 a share to $57 since 1989 . . . I will answer your financial questions -- involving anywhere from $100 to $100,000 -- Saturday on the Dan Rodricks' Show, 7a.m. to 8 a.m. on WBAL Radio . . . Wednesday, Security Analysts present Summerfield Johnston, CEO of Coca-Cola Enterprises, at Stouffer's Harborplace at noon . . . Legg Mason's Research Weekly has comments on Delmarva Power & Light ("Earnings will be as expected; we see no near-term dividend growth") and Potomac Electric Power ("Given the 6.5 percent yield and below-average dividend growth estimate, total return is expected to be mediocre.")

NEWSLETTER NOTES: "The top-performing newsletters over the last 10 years, for total return (gain plus income) were, in order: BI Research, The Chartist, Zweig Forecast, Zweig Performance Ratings Report and Systems & Forecasts. Over the past five years, in order: OTC Insight, Oberweis Report, Medical Technology Stock Letter, MPT Review and BI Research. And for the 13 1/2 years for which we have had continuous data, in order: Value Line Investment Survey, The Chartist, Zweig Forecast, Prudent Speculator and Value Line OTC Special Situations Service." (Hulbert Financial Digest.)

WHAT YOU THINK: More of your year-end Dow Jones predictions, from contest postcard entries. "I read you twice a week; I listen every day. Thank you. As a result I'll say Dow Jones 4,308." (David Graham) . . . "I predict 3,728 because with high deficits I can't see the market continuing higher." (Bill Moore) . . . "You picked 3,750 so I'll select 3,749, one tick below. Also, the last three numbers are my month and year of birth." (Adolph Paris Jr.) . . . "I'll say 4,505, and I won two of your runner-up books in the last five years." (Bob Lawrence) . . . "Investment in the future will spur growth; I'll pick 4,473." (Kent Buhl.)

WHAT THEY THINK: "We don't expect a significant stock market correction until short-term interest rates begin showing year-over-year increases and corporate profit growth declines sharply." (Barring ton Research) . . . "We will try to emulate the Fed's uncharacteristically simple language with some of our own -- this is the end for this bull market, but we expect the topping-out to take three to six months." (Gindoff and Freedland's Investment Strategist) . . . "The primary bull trend remains intact. The Fed's move to restrict credit was the first following a long period of ease. Historically, there are at least three separate actions before a bull market ends." (Ladenburg Thalmann's Market & Technical Commentary.)

HOPEFULLY HELPFUL: "Contribute early to retirement plans. If your employer provides a 401(k) savings plan, contribute the maximum amount possible -- this year $9,240 -- or as much as you can afford in 1994. You get the equivalent of a tax deduction for your contribution, plus a tax deferral for investment returns earned in your account. Your contributions are made through payroll deduction, so this is an easy and reliable way to save." (Ernst & Young, tax accountants.)

FEBRUARY FINDINGS: Money magazine, in its March cover story misleadingly headlined, "Eight Top Investments That Never Lose Money," lists Gillette, Hershey, Unilever NV, Dominion Resources, CGM Mutual, Investment Co. of America, Merrill Lynch Capital A and Sentinel Balanced Fund. Careful reading discloses that these securities "never lost money in 14 years," but the headline implies safety of principal. It is regrettable that some magazines will do most anything to boost newsstand sales . . . "In reviewing my less successful 1993 stock picks, I find many are still good buys, namely Apple Computer, Syntex, Bristol-Myers Squibb, American Cyanamid, Edison Brothers, National Medical Enterprises and Philip Morris." (David Dreman in Forbes, Feb. 28) . . . "Dow 5,000 by year end!" (Adviser Mark Leibovit via Dan Dorfman, CNBC News.)

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