Fund Managers Love the Data, Fear the Fed - TheStreet

Fund managers were happy to ride this morning's rally, but most were cautious about predicting that it could last.

While today's better-than-expected

employment

figures underpinned the rally, investors still have their eye on looming inflation figures -- the May

Consumer Price Index

will be released in mid-June -- and the question of whether the

Fed will continue to raise interest rates still hangs over the market, said John Jares, who manages the $700 million

Delaware Balanced Fund

.

"Certainly there's a big sigh of relief with today's unemployment numbers," he said. "Job growth was weaker than people were expecting." Unemployment was higher than most Wall Streeters had predicted, rising to 4.1%. Low unemployment tends to spook investors by raising the specter of inflation and, in turn, further interest-rate hikes to cool the economy.

"It's nice to have this rally, but it will take a while to undo the psychological damage that

Greenspan has caused," said Robert Loest, who manages about $500 million in assets in two funds, the

IPS Millennium Fund

and the

IPS New Frontier Fund

, referring to recent interest-rate hikes by the Federal Reserve.

Jares, however, said, "I wouldn't contend that the Fed is done, but we are closer to the end than we thought." Jares is deep in tech and financials, mentioning

Capital One

(COF) - Get Report

,

Bank of New York

(BK) - Get Report

,

Chase Manhattan

(CMB)

,

SBC Communications

(SBC)

and

Nortel Networks

(NT)

as his favorites.

Loest, who said he ignores Fed actions since he is a buy-and-hold investor, said he is loading up on tech stocks, such as chipmakers

Xilinx

(XLNX) - Get Report

and

Broadcom

(BRCM)

.

Skip Wells, a portfolio manager at

Adams Harkness & Hill

in Boston, declined to say what he was buying but did mention

priceline.com

(PCLN)

and

Corning

(GLW) - Get Report

as two favorites.

"You can buy them all," he said. "I think this

rally is for real. My opinion is that Greenspan and the bears will go into hibernation and we won't have to worry about interest rates."

Lately the

Dow was up 129 to 10,781, while the

Nasdaq Composite was up 187 to 3769.