- The Washington Times - Monday, April 17, 2000

Treasury Secretary Lawrence H. Summers isn't about to advise nervous investors whether to buy or sell today, but he discounted fears of sharply higher inflation that contributed to widespread stock selling on Friday.
In an interview yesterday on "Fox News Sunday," Mr. Summers was repeatedly pressed as to whether he sees a continuing rise in consumer prices that could burst the nation's economic bubble. The 0.7 percent rise in the consumer price index in March was the biggest one-month jump in 11 months.
The core Consumer Price Index, which excludes volatile food and energy prices, rose 0.4 percent in March its biggest gain in more than five years.
"We always worry about inflation, because being vigilant about inflation is part of how we kept inflation under control over all those years," Mr. Summers said.
But asked whether he foresees a "serious uptick in inflation in the months ahead," he replied: "No, I don't."
All eyes will be on Wall Street today as traders try to pick up the pieces after Friday's market collapse, which capped off a a week in which U.S. stocks lost an estimated $2 trillion in value.
The effects are being felt around the world. In Tokyo, stocks quickly fell more than 4 percent in early trading today, as the benchmark Nikkei average fell 871.47 points to 19,563.21 in the first 15 minutes after the market opened.
On Friday, blue-chip Dow Jones industrials plunged 617.78 points, or 5.66 percent, history's largest single-day point loss. The technology-heavy Nasdaq index declined a record 355.49 points, a loss of 9.67 percent for the day.
"It's not over yet. The selling pressure is still there," Michael Lehmann, an economics professor at the University of San Francisco, told the San Francisco Examiner. "We've drunk a bottle of tequila; now it's time for the hangover."
Wall Street analysts who talked to Reuters agreed. They said they believe stocks could fall further today and tomorrow before bottoming out at midweek.
However, market analyst Joseph Battipaglia of Gruntal & Co. predicted a swift market rebound. "I think what we have here is a market event, not an economic event," Mr. Battipaglia said on ABC's "This Week."
"The market reached its top on March 10th, so we've been correcting since that time. I believe we're just about finished. The first hour [today] will be the market's worst. Then we'll build a progression from there, where [today] actually will turn up and end on a positive note," he said.
Mr. Summers, who also appeared on ABC's "This Week," declined to predict whether the Federal Reserve Board is likely to raise interest rates. "No one forecasts the economy perfectly. But the basic fundamentals of our economy do look very sound," he said, predicting continued economic expansion.
"With the progress we've made in bringing down debt, running budget surpluses, raising the level of investment, creating millions of jobs, we've got very strong fundamentals in place," Mr. Summers said on ABC.
"There will be fluctuations in markets. Rate of growth of the economy invariably changes from quarter to quarter, but the prospects for this economy are very good for job creation, for income growth, and our expansion has a long way to run."

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