Investors to Test 2nd-Quarter Qualms
NEW YORK -- Investors put their faith in airline, oil-drilling and bank stocks in the mildly bullish first quarter that ended Friday.</br></br>But their faith in the overall market might be tested as the second quarter begins today.</br></br>Recession fears have flared. Many investors are building cash reserves or turning toward such recession-defensive issues as telephone and electric utilities. Nearly no one is willing to bet on computers, and some blue chips from General Motors to General Electric are sputtering.</br></br>"The next several months, we think, are going to be pretty poor for stocks. We're still quite cautious," says Arnold Kaufman, editor of Standard & Poor's Corp.'s Outlook newsletter.</br></br>Mr. Kaufman predicts that the Dow Jones Industrial Average, up 5.8% in the first quarter, has already done all the rising it will for the year. He says the stock market will probably lose ground from here on. S&P recently doubled its suggested cash allocation to 20% from 10% (with 50% currently in stocks and 30% in bonds).