Improved market conditions are predicted for 2002 and the US recession may end as early as January or February, according to the latest newsletter from US credit rating industry Standard & Poors.
In its
Outlook
newsletter, the company believes the renewed economic expansion will be fuelled by the pool of cash available after a year of aggressive interest rate cuts.
It also points out that American household reserves are substantial, with individuals holding a record $4 trillion-plus in money market funds and savings deposits.
According to Standard & Poor's chief economist, Mr David Wyss investment markets, on average, tend to rise four months before the end of the last nine postwar recessions.
Recovery in technology will lag behind the rest of the economy, making overall profit improvement next year modest.
Even so, the Outlooksays that Standard & Poor's internal Investment Policy Committee forecasts that the S&P 500 will reach 1255 by mid-2002 - a gain of 10 per cent and 1315 or 15 per cent by the end of 2002. Similar gains are predicted for Nasdaq.