STOCKBROKERS SEE MARKET REBOUND

Don't panic. Cape Girardeau stockbrokers offered that advice Monday in the wake of a down day on Wall Street.

The stock market experienced a flood of sell orders sparked by a fear of rising interest rates, analysts said. The Dow Jones industrial average finished down more than 40 points.

Monday's fall continued a downward market trend that began last week before Friday's holiday.

But local stockbrokers view the downturn as a short-term fluctuation and caution that investors shouldn't jump ship.

They say the large, institutional investors are the ones selling off stock.

Monday's decline in the stock market was attributed partly to the Federal Reserve's recent moves to raise short-term interest rates in an effort to keep inflation in check.

Joe Domian, an investment representative for Edward D. Jones & Co. at 1749 Independence, said the Fed's actions are a concern to leveraged institutions, which borrow a lot of money.

But that's not a big concern to local investors, he said. "The average investor here in the Cape Girardeau area is not borrowing to buy companies. I think that is why locally we haven't seen any panic selling."

Domian said investors need to keep a proper perspective about the Federal Reserve. "If you consider cheap money like a punch bowl at a party, as soon as everybody starts having a lot of fun, it is the Fed's job to take the punch bowl away."

Said Domian, "The market oftentimes is either drunk with optimism or drunk with pessimism."

Bob Etherton, investment representative for Edward D. Jones & Co. at 215 N. Sprigg, called Monday's decline "a market correction."

"We don't feel there is room for panic right now," he said.

"I think the Fed made two pretty quick interest rate changes. It almost seems like an overreaction to keep inflation from happening," said Etherton.

David Willis, investment broker for A.G. Edwards & Sons, 97 N. Kingshighway, said the market is "oversold."

"The reason why it is oversold is simply for the fact of fear of inflation, not that there is any sign of inflation right now," said Willis.

It's not surprising, he said, that the Federal Reserve would raise interest rates. "The number one enemy the Fed has is inflation, and they are going to do whatever it takes to make sure there is no (inflation) or low inflation," he said.

Domian said the nation's economy is actually in good shape, with inflation running at a mere 2.5 to 3 percent.

He suggested the fear of inflation may be unfounded. "There is much ado potentially about nothing," Domian said. "We see this from time to time where the market dips out of a fear of potential versus anything in reality."

Stocks have been on a slide since March. But Domian said investors need to take stock of the fact that businesses are generally doing well.

"People are forgetting to look at the earnings of companies," he said. In one index of some of the nation's larger companies, 551 businesses raised their dividends for the first quarter of this year.

"Companies don't raise their dividends if they are figuring on going broke," said Domian. "Corporate America is making money."

Domian and other local stockbrokers view the market downturn as an opportunity to buy stocks when they are low.

Etherton said, "The way I look at it is this, if one of the major stores in Cape Girardeau would run a 10 percent special, people would knock their doors down to get in. And basically, we have a 10 percent special in the stock market right now."