Experts Debate Market Plunge and Recovery

Experts in the both the academic and business communities said they were elated by yesterday's stock market recovery after Friday's drastic plunge, but there were mixed opinions as to the long-term economic significance of the fluctuations.

"Today's development was as many people, including myself, expected," said Lee Professor of Economics Hendrik S. Houthakker, who called Friday's 190-point drop a "freak." Houthakker also said that the Black Monday crash of 1987 was "relatively insignificant" to the economy.

But Steven Faigen, a vice president of public relations at Shearson Lehman Hutton, said the market's movements would have an important effect on the economy.

"Obviously we can't have a fall as drastic as we did on Friday and not have an impact," said Faigen. "Exactly how much of an effect--we will see over the next few trading sessions."

Faigen attributed the 88-point rally to various factors, which "worked together to calm fears and reassure investors that things would not get out of control."

"No matter how they like the market, people want to be assured that the marketplace is running correctly....and that was proven today," Faigen said.

Walburg Professor of Economics Emeritus John Kenneth Galbraith declined to go into specifics about the fall and rebound.

"Nobody should penetrate too deeply the insanity of the stock market," Galbraith said.