Features

NEW YORK — After languishing through the dog days of August, the stock market finally perked up Friday with the Dow industrials enjoying a 194-point gain. 

But that stellar performance notwithstanding, analysts say investors won’t deviate long from their recent strategy, which has been to trade lightly and cautiously. 

And they’ll keep making short-term decisions that have caused the market to fluctuate – in the end, to stagnate. 

Investors have reason to be careful as summer ends and many companies are expected to reduce their earnings outlooks for the third quarter. 

“One of the most important changes in the market’s performance has been the lack of positive mood, momentum and money flow that characterized the markets of the last four or five years when rallies followed rallies,” said Alan Ackerman, executive vice president of Fahnestock & Co. 

“This market is much more selective,” Ackerman added.  

“It swings to extremes. Traders are quick on the trigger.” 

Investors certainly haven’t maintained any of their enthusiasm for long, and this past week proved that as the Dow alternated between winning and losing days.  

Friday’s advance was an example of the upward extremes the market has enjoyed recently as technology companies – in this case Cisco Systems – have said that business is stabilizing. 

Most analysts believe the market, which has been giving back such gains almost immediately, won’t become strong enough to hold on to them anytime soon. 

“We’ve have just heard that stuff before. How many times have we heard that the worst is behind us in semiconductors?,” said Richard A. Dickson, a technical analyst at Hilliard Lyons in Louisville, Ky.  

“That is all well and good, but we need more than anecdotal things. We need consistent results that things are getting better.” 

However, positive results, and therefore any upward momentum in the stock market, are likely a ways off. 

A steady stream of companies across an array of sectors have already issued profit and revenue warnings for the third quarter and the remainder of the year. 

Analysts who had expected earnings and the economy to turn around in the first half of 2001 now say results won’t show that business has improved until at least the first half of next year. 

“We need to see better revenues and top-line growth. And, it is awfully hard to see when that is going to come,” said Jon Brorson, director of equities at Northern Trust in Chicago. 

Meanwhile, stock traders are having a tough time forming a sound strategy.  

It’s not enough to stay away from riskier tech shares – retailing and auto stocks have been suffering.  

Even safer, defensive issues, namely drug and financial stocks, have been foundering. 

One approach investors have taken this summer has been to keep their commitments small on Wall Street.  

Such trepidation has been apparent in lighter-than-normal trading volume.  

Daily consolidated volume for the New York Stock Exchange this month has mostly been just over 1 billion shares, rather than the more-typical 1.5 billion. And not all of the decline can be attributed to traders being away on vacation. 

Analysts say investors have also been buying and selling at a quicker pace, showing a lack of confidence in the overall market. 

“Few sectors have done well, and stock selectivity appears to be more in vogue for now,” Ackerman said. “It’s tough to find a safe haven.” 

The market’s major indexes posted weekly gains on Friday. 

The Dow Jones industrial average finished the week up 182.39, or 1.8 percent, at 10,423.17, after climbing 194.02 Friday. 

The Nasdaq composite index rose 49.79, or 2.7 percent, to 1,916.80 for the week after advancing 73.83 Friday. 

For the week, the Standard & Poor’s 500 index gained 22.96, a rise of nearly 2 percent, to 1,184.93. The index rose 22.84 on Friday. 

The Russell 2000 index, the barometer of smaller company stocks, advanced 5.16, or 1.1 percent, to 480.81 for the week after rising 7.39 Friday. 

The Wilshire Associates Equity Index, the market value of New York Stock Exchange, American Stock Exchange and Nasdaq issues, was $10.948 trillion Friday, up $196.330 billion from the previous week. A year ago the index as $14.096 trillion.