Analysts see false fears in market

NEW YORK – The stock market seems to be of two minds lately. Money is flowing into equity mutual funds at a depressingly sluggish pace as dread about an economic soft patch paralyzes buyers, yet corporate activity is on the rise, suggesting a brighter attitude on the part of big business.

Despite the swoon in stocks since the start of the year, many analysts remain bullish, saying current pressures are rooted in fear rather than fact. Corporate earnings have been strong, the labor market is in good shape and retail sales show robust consumer spending, despite astronomical energy prices. Still, a laundry list of worries, from higher inflation to recession, has sidelined many investors.

A third of the way into 2005, just $8 billion had flowed into U.S. equity funds, compared to $75 billion at the same point last year, according to TrimTabs Investment Research Inc.

“In my opinion, what we have is avoidance of equities by most investors,” said Charles Biderman, president of TrimTabs, which monitors daily fund flows, stock sales, tax collections and job postings. “At the same time, we’re seeing very heavy buying by companies, particular in tech, in the form of share buybacks, cash takeovers and leveraged buyouts. … They’re saying at these prices, they want to be buyers. So there’s a disconnect.”