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No one's turning handsprings on Wall Street these days. Continued worry about rising interest rates has caused pundits to significantly scale back their enthusiasm for the stock market's prospects in the second half of 1991.

"I'm still more bullish than bearish about the near-term stock market, but I really think that stock valuations are too high," said Norman Fosback, editor of seven investment letters based in Fort Lauderdale, Fla., including the popular Mutual Fund Forecaster."Longer-term, the investor would actually do better in money-market funds."

Fosback's current portfolio mix is 85 percent stocks (down from 100 percent earlier this year) and 15 percent money-market funds. His concern about rates has caused him to recommend a bit of heresy. His favorite alternatives to stocks right now are the much-criticized junk bond funds, which he believes are drastically oversold. The current 18 percent yields of junk bonds beat the yields of long-term Treasuries by 10 percent, Fosback notes. That hefty yield differential offers a lot of leeway for potential default.

Buying funds rather than individual junk bonds is the way to go, since it spreads around risk, he counsels. Also remember junk bonds are finicky creatures, designed only for a speculative portion of an overall portfolio. Rising rates are always hard on the stock market because they make fixed-rate alternatives considerably more attractive.

"I could see interest rates rising 1 to 1.5 percent, which would make it extremely difficult for the stock market to make a big move," said Michael Sherman, portfolio strategist for Shearson Lehman Brothers. "The market is being driven by earnings now, and moving up to the 3500 level when interest rates are rising doesn't seem likely."

A sideways market movement is more likely, Sherman believes. His portfolio mix is 60 percent stocks, 35 percent bonds and 5 percent cash.

A "sloppy" stock market reaction to rising interest rates is expected by Charles Clough, portfolio strategist for Merrill Lynch & Co. "The Federal Reserve is unlikely to ease interest rates again, and I see long-term Treasuries as a good investment deal if rates go up significantly," said Clough. "I urge the stock investor to be cautious short-term, for the market right now is rather frightened."

However, Clough strongly disagrees with Fosback's confidence in the rise of the controversial junk bond market, saying, instead, that "it has already run its course." His current investment mix is 55 percent stocks, 40 percent bonds and 5 percent cash.

As far as specific recommendations, Fosback's favorite "no-load" (no initial sales charge) junk bond funds are Vanguard High Yield Fund, T. Rowe Price High Yield Fund, Northeast Investors Trust, Nicholas Income Fund and Financial High Yield Fund.

Among individual stocks, Fosback recommends highway construction firms Granite Construction and Kasler Corp. In video teleconferencing, a field that is growing rapidly due to the high cost of travel, he likes the stocks of Compression Labs and PictureTel.

Another pick is hiking boot firm Timberland Co. An additional choice, Presidential Life, is an annuity issuer that holds a lot of junk bonds and, as noted earlier, Fosback is bullish on junk bonds.

All these stock picks are sold over the counter, with the exception of Timberland, which is listed on the American Stock Exchange. The best investment buys in stock funds, Fosback believes, are Twentieth Century Ultra Fund, Fidelity Growth Co., Fidelity Magellan, T. Rowe Price Equity Income Fund and Dodge & Cox Balanced Fund.

Meanwhile, Sherman is high on bank stocks. He likes Banc One, BankAmerica, Bankers Trust, Barnett Banks, Chase Manhattan, Chemical Bank, Manufacturers Hanover, J.P. Morgan and SunTrust Banks.

The airline stocks also are favored, with AMR Corp., parent of American Airlines, andDelta Air Lines his top choices.

Among technology stocks, his picks are Adobe Systems, Apple Computer, Autodesk, Hewlett-Packard and Microsoft.

Stock groups that Clough is currently emphasizing include airlines, trucking, truck and auto parts, oil well service and equipment, specialty machinery and technology.

So, with the exception of Fosback's hankering for volatile junk bonds, no one seems too adventuresome in 1991 investment choices.