"Investors remain exceptionally skittish, as they balance the good news on the economy and earnings with their concerns about inflation, the war in Iraq and global terrorism. Indicative of this nervousness is the fact that the stock market sold off sharply the day prior to the release of the May consumer price data, before rallying back after the issuance of the generally benign inflation report. This up-and-down market pattern is consistent with our neutral stance on equities at this time."

Selection & Opinion

The Value Line Investment Survey

New York

"From a Dow Theory perspective, the second half of 2004 promises to be interesting. The Dow Industrials and Dow Transports are within striking distance of significant highs, and a 10 percent pullback in the volatile Dow Transports would shift the Dow Theory into the bearish camp. For now, subscribers should watch the averages, look for opportunities on a stock-by-stock basis, and hold 5 percent to 15 percent cash positions. . . . Attractive buys include Manulife Financial (MFC) and Waste Connections (WCN)."

Dow Theory Forecasts

Hammond, Ind.

"So long as investors see the Fed as being ahead of any potential rise in inflation, we expect modest contractions in P/Es to be offset by earnings growth. Still, high U.S. equity valuations mean gains are unlikely to be above the mid-single digits over the next year, and our overweight of equities is due primarily to our bearish outlook on bonds."

The View

Citigroup Private Bank Research

New York

"The period 1997 through 2003 represents a U.S. market cycle with higher peaks and lower valleys than many before it: a tremendous boom and then a historic bust. Compare the performance of the fully diversified portfolio to the S&P 500 over the period. . . . Risk drag cost the S&P 500 a full 2.2 points off its average annual return, leaving it with a 7.6 percent compound return. The fully diversified portfolio -- with a 40 percent allocation to bonds -- actually matched that. But the fully diversified portfolio achieved that return for only about half as much risk: This portfolio never matched the market's 33 percent return in 1997 nor did it suffer anything like the market's 22 percent drop in 2002."

The Bernstein Journal

Bernstein Investment Research

and Management

New York