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What the experts think
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September 17, 1998: 2:02 p.m. ET
Analyst expects further market drops; strategists see need for rate cut
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NEW YORK (CNNfn) - The Dow Jones industrial average dropped 200 points by mid-morning Thursday following sell-offs in world markets, including Asia, Europe, and Latin America.
The sell-offs came a day after Federal Reserve Chief Alan Greenspan's congressional testimony, in which he said that no coordinated interest-rate cuts among the G-7 were planned.
The statement from Greenspan came as a blow to many investors, who were hoping for a rate cut to rescue the world's troubled financial markets.
A panel of experts takes a look at what's behind the sell off.
Kathy Jones, director of futures research at Prudential Securities, disagreed with Federal Reserve Chief Alan Greenspan's decision to keep interest rates where they are.
Although Jones recognizes that lowering interest rates won't send money back to Russia, she said an easing of rates could "send a good signal" and increase liquidity in world financial markets.
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Erich Heinemann of Heinemann Economic Research said he thinks the U.S. Federal Reserve policy of pursuing a very restrictive monetary policy is a mistake at this point in time.
He said fears of a recession on the heels of a too tightly wound monetary policy will lead to an overdue and excessive easing of that policy, thereby raising inflationary risks five years from now.
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Rick Berry, director of equity research at J.P. Turner & Co., said despite recent drops, the stock market is still overvalued.
Berry also said he expects the market to fall further, perhaps retesting the October lows of 6800 to 7000.
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