Market Insights: October 1999

Strategic Insights -

The equity markets experienced a period of volatility in October 1999, driven by various factors, including the Federal Reserve's decision and corporate mergers. Standard & Poor's analysts offer insights into the market's prospects, advising investors to remain bullish despite ongoing selling. The possibility of short-term volatility following the Fed's announcement and the largest corporate merger in history between MCI WorldCom and Sprint Corp. are also discussed.

Key Takeaways:

  • The market has bent without cracking over and over again in recent years, making selling into weakness a mistake. (Source: "Market Deserves Benefit of the Doubt")
  • Recent selling has brought valuations more in line with prospects, particularly for prominent blue chips. (Source: "Market Deserves Benefit of the Doubt")
  • The possibility of FOMC-related selling exists, but the downside appears limited. (Source: "FOMC-Related Selling Possible, but Downside Appears Limited")
  • MCI WorldCom and Sprint Corp. agreed to merge, creating the largest corporate merger in history, with WorldCom being the newly formed company. (Source: "MCI WorldCom, Sprint Connect in Biggest-Ever Corporate Merger?")
  • Holders of Sprint PCS will receive one share of new WorldCom PCS tracking stock and 0.1547 WCOM shares for each PCS share. (Source: "MCI WorldCom, Sprint Connect in Biggest-Ever Corporate Merger?")
  • Analysts recommend a bullish investment approach, advising investors to stay with their existing strategy. (Source: "Market Deserves Benefit of the Doubt")
  • Personalized portfolio recommendations, buy, sell, and hold alerts, free real-time quotes, and live market commentary are features of S&P Personal Wealth. (Source: S&P Personal Wealth website)

Statistics:

  • 76 shares of WCOM stock are to be received by FON shareholders. (Source: "MCI WorldCom, Sprint Connect in Biggest-Ever Corporate Merger?")
  • 0.1547 WCOM shares will be received by PCS holders. (Source: "MCI WorldCom, Sprint Connect in Biggest-Ever Corporate Merger?")
  • $76 is the value of WCOM shares to be received by FON shareholders per FON share. (Source: "MCI WorldCom, Sprint Connect in Biggest-Ever Corporate Merger?")
  • October 1999: The Fed is expected to switch from a neutral to a tightening bias, but no change in interest rates is anticipated. (Source: "FOMC-Related Selling Possible, but Downside Appears Limited")
  • Tuesday, unknown time (approximately 2:00 p.m. ET): The FOMC announcement is expected to be made. (Source: "FOMC-Related Selling Possible, but Downside Appears Limited")

Sources:

  • "Market Deserves Benefit of the Doubt" (http://www.personalwealth.com/prn11)
  • "FOMC-Related Selling Possible, but Downside Appears Limited" (http://www.personalwealth.com/prn02)
  • "MCI WorldCom, Sprint Connect in Biggest-Ever Corporate Merger?" (http://www.personalwealth.com/prn03)
  • S&P Personal Wealth website (www.personalwealth.com)