A SURGING stock market fell into a swoon last week, recovering only slightly on Monday. Investors are discovering that momentum is a dynamic that can tumble as easily as it climbs. The markets' cheery outlook at the end of 1999 has turned grim as high-priced Internet and technology stocks have sunk in recent weeks.
The Nasdaq Composite Index, is down more than 25 percent from its peak on March 10. The Dow Jones Industrial Average has also declined, but not as sharply. Wide price swings -- stocks falling sharply at the beginning of a trading day and recovering by day's end -- have also characterized the past several weeks of trading.
Still, the jittery market has had little impact on the economy's unprecedented nine-year recovery. Even though the consumer price index, a gauge for inflation, jumped more than expected in March (due to rising energy prices), most other economic indicators are positive.
Joblessness remains at record low levels, consumer spending continues strong, industrial production is robust and prices of most goods are flat despite last month's surge in the CPI.
Even with a healthy national economy, some worry that the good times may be ending. The Federal Reserve has raised interest rates five times in the last year and seems intent on raising them again to prevent the economy from overheating, igniting an inflationary cycle.
The volatility of the popular stock market indices reflects uncertainty. Stability will eventually return to the markets. When is anyone's guess.