When the Street Goes "Schizophrenic"

Investors are celebrating good earnings even as they fret over interest rates and terror, says S&P's Joseph Lisanti

A schizophrenic stock market will still end 2004 higher, according to Joseph Lisanti, editor of the Standard & Poor's newsletter, The Outlook. That split personality stems from the conflict between good corporate earnings on one hand and, on the other, the likelihood of interest rate increases and higher tension in the Middle East, Lisanti explains. As a result of these crosscurrents, S&P recently reduced its yearend target for the S&P 500-stock index to 1215, from 1230. "Even so," Lisanti adds, "that represents a 9% appreciation over 2003's close. When the yield is added to that, we come up with a total return of between 10.5% and 11%."

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