NEW YORK (AP) A year and a half ago, the markets seemed invincible at their lofty heights.

Paul Wong
A trader checks the boards at the New York Stock Exchange Friday. The Dow closed up 165.79 to give Wall Street a solid one-week rebound from the losses that followed the terrorist attacks on the World Trade Center and the Pentagon.<br><br>AP PHOTO

The Dow Jones industrials had soared above 11,700 points and the Nasdaq composite index hovered near 5,000. Now even more modest targets of 10,000 on the Dow and 2,000 on the Nasdaq are questionable in the short term, say experts who study how the markets move.

Five analysts and former Securities and Exchange Commission Chairman Arthur Levitt recently discussed the markets with The Associated Press.

Here”s what they had to say:

n Ralph Acampora, director of technical research, Prudential Securities:

“We might see 10,000 over the next month, but the big question is whether we”ve seen the bottom. … Would we have had as dramatic a drop without the terrorist attacks? No, but we were already rolling over. … We started to see signs of potential recession before this happened. And what we got with terrorists is a guaranteed recession. …

“I think sometime next year, we”re going to make the final bottom.”

n Al Goldman, chief market strategist, A.G. Edwards & Sons Inc.:

“The market is as deeply oversold as I”ve seen in my 40 years. But I can”t tell you when we”re going to go over 10,000. … I think the market is about 20 percent undervalued here I”m using the Dow. If we got up 20 percent we”d be at 10,560 … and I”m looking for that this year. …

“For the Nasdaq to get back to 2,000 this year would be a pretty hefty move. It could happen, but do I project it? No.”

n Arthur Levitt, former Securities and Exchange Commission chairman:

“What we”re seeing today is overdone pessimism rather than irrational exuberance. (Investors should) look at the market intellectually rather than emotionally and be patient. I don”t try to predict the direction of the market, where it”s going to go and when it”s going to go. But no, I”m not concerned. I believe the market has acted very well.”

n Jeffrey Applegate, chief investment strategist at Lehman Brothers:

“We changed our predictions for the Dow after the terrorist attack. For 2002, we now have a target of 10,000 for the Dow, before we were expecting 11,500. …

“Until we have evidence of the success of the anti-terrorist campaign, of which I”m absolutely certain we”ll have eventually, I think the equity risk premium will be higher. We”re also in a recession so profits are going to be lower.

“Our projections for the Dow are conservative. I think 11,000 would be a stretch for next year. It”s more likely that you could maybe get back to that number in 2003.”

– Hugh Johnson, chief investment officer at First Albany Corp.:

“I certainly wouldn”t be surprised to see the Dow at 10,000 this year and that”s because the stock market … is as undervalued as I”ve seen it in my work. …

“But if there”s another shock that”s anywhere near what we saw Sept. 11, the market will trade down and trade down sharply. At the same time, shifting from peacetime to wartime footing is ordinarily good news for stocks and the economy. Historically that shift has led to increased spending on defense, a stronger economy and stronger earnings, particularly for defense companies.”

– A. Marshall Acuff Jr., retired equity strategist for Salomon Smith Barney:

“The Nasdaq is probably still going to lag … largely because of its makeup. To the extent the market does better, it”s going to be in a diverse set of stocks and the Nasdaq is pretty much dominated by technology and I think tech is still going to have a tough time.

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