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Links Between Stocks and Crude?


...Federal Reserve Board Chairman Alan Greenspan said recently rising energy prices had nicked three-quarters of a point off growth in the U.S. Gross Domestic Product, which still remains in growth mode.

Don't expect recession

This doesn't mean a recession, or a stock crash, should be expected, said Lakshman Achuthan, managing director at the Economic Cycle Research Institute in Manhattan.

"Don't worry, but don't be happy," Achuthan said Wednesday. "We don't see a recession ahead," despite a "bona fide oil shock going on." But neither is the outlook cheery, and growth isn't likely to return to the strong pace of early 2004, he said.

And what about a stock shock? Less likely today than in 1929, because of better controls and an economy less dependent on manufacturing and its cyclical swings, Achuthan said.

But he cautioned, "We have a less volatile economy but an increase in the market's sensitivity to the economy," recalling the Nasdaq's slide in 2000 from around 5,000 down to the 1,300s over more than two years.

"I would never say never," he said.