Indexes on the rise
Stock price movements, though mostly higher, were rather modest on a day-by-day basis this first week of 2002. The gains were not equivalent each day - the Nasdaq composite rose more on days in which the Dow posted smaller increases and vice versa. But the year is off to a fairly good start. The economic news that came out was generally in line with expectations, revealing that the pace of contraction had moderated in the month of December. Equity investors continue to believe that the economic and corporate profit recovery will begin by mid-year. If they are disappointed with the economic news going forward, it could spell disaster for the stock market. As long as the economic reports continue to show improvement, then so will the stock market.

Long term interest rates head higher
Bond market players are convinced that the economy is on the verge of recovery. Consequently, every time an indicator declined less than expected, bond prices fell and yields rose - particularly at the long end. Yields are either unchanged or higher since the New Year began as most reports show that the economy was slightly less weak in December than in November.