John J. Edwards Chats on AOL Aug. 21

John J. Edwards III chatted on AOL MarketTalk on Monday, Aug. 21. AOL's MarketTalk is hosted by Sage Online (Keyword: PF Live).

OnlineHost: Live from New York, N.Y., please welcome John Edwards, assistant managing editor, TheStreet.com. John can answer questions about the latest market-moving news.

OnlineHost: John does not offer individual stock commentaries or recommendations.

OnlineHost: VisitKeyword: TheStreet.

SageMoola: Good afternoon and welcome to MarketTalk, Mr. Edwards!

TSCNYJohnE: Thanks for having me. As always, great to be here!

Question: What do you expect the Fed to do in regard to interest rates at their meeting this week?

TSCNYJohnE: There will almost certainly be no hike at tomorrow's meeting, but the Fed is likely to signal in its statement that it remains concerned about potential inflationary pressures.

The Fed will stay out of the way of the election by holding off at the Oct. 3 meeting as well, so it's very likely we won't see a rate hike until Nov. 15, if then.

Question: Can you explain beta and how it effects stock prices

TSCNYJohnE: Beta is a measure of a stock's volatility relative to the overall market. The S&P 500 has a beta of 1; a stock with a higher beta is more volatile than the market, and a stock with a lower beta is less volatile.

Low-beta stocks are best for conservative investors, while higher-beta stocks carry more risk but often more potential reward.

Question: What do you think about the semiconductor group?

TSCNYJohnE: Talk about your high betas! The chip sector has had an extraordinary run, but despite today's late pullback in the group, it could have a bit more left in it.

Analysts are looking for a solid third quarter for the semiconductor makers, as we see most clearly in today's positive note on Intel by Dan Niles of Lehman Brothers.

Question: Do you see DSL stocks coming back?

TSCNYJohnE: I don't think we're necessarily going to see explosive growth there. The buildout of broadband infrastructure is more difficult than many had expected, especially on the consumer level, and so I think some of the lofty expectations in place last year have had to be dialed back.

That said, the sector certainly will be one to watch closely. Just maybe not one to bet your whole portfolio on.

Question: Thoughts on tomorrow's Fed meeting? Will it be a rally or just sell on the news when no rate hike is announced?

TSCNYJohnE: I think we may indeed see a muted to negative reaction. The run-up we've seen in August has pretty well priced in the expected lack of a hike, so traders may use any pop tomorrow to take some gains off the proverbial table.

Question: Which presidential candidate supports putting some of our SS$ into the stock market? If this were to happen, what do you expect to happen to the DOW and NASDAQ??

TSCNYJohnE: Gov. George W. Bush is the one who supports that proposal.

As for Dow and the Nasdaq, it's so far from happening that it's hard to say what other factors would then be in play.

However, as with the influx of investing dollars with the advent of the 401(k) plan, we could generally expect upward pressure on stocks from a large increase in demand.

Question: John, what is it going to take to get the Nas to go above its 200 day mov. av. and break its resistance?

TSCNYJohnE: It's really difficult to pinpoint anything that would be a particular catalyst for more dramatic gains in the Nasdaq.

TSCNYJohnE: The index has certainly put on a powerful recovery from its spring lows, but it's now up more than 45% in the past 12 months, and still quite richly valued.

I think a continued steady but not explosive upward trend is more likely than a decisive breakout.

SageMoola: Thank you very much for joining us today, Mr. Edwards. It's always a pleasure!

TSCNYJohnE: Thanks for having me. Always a pleasure to chat with you. See you at TheStreet.com!

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