SUSIE GHARIB: The Federal Reserve did the expected: it left interest rates, unchanged today. But Wall Street didn't cheer the announcement, worried about a red flag in the Fed's policy statement. The Dow gained only 19 points, after being up triple digits before the news; and the NASDAQ dropped 113. On top of a similar loss yesterday. Here's Suzanne Pratt with the Fed's news, and analysis.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: The Federal Reserve's decision on interest rates came as no surprise to Wall Street. Economists say the Fed likes to keep a low profile before a presidential election. And it was easy to do so because the economy has been showing signs of slowing, and inflation is still well-behaved. As a result, policy makers opted to leave the Federal funds rate at 6.5 percent. That's where it's been since the half -point increase that came on May 16.

WILLIAM SULLIVAN, SR. ECONOMIST, MORGAN STANLEY DEAN WITTER: I think what prompted the Fed to leave policy on hold again for the third meeting in a row, is some evidence of a cooling in overall economic activity.

PRATT: The only real drama surrounding today's decision was whether policy makers would drop the inflation warning, commonly known as the "bias," that has accompanied their directive for the last several months. Not only did the Fed maintain its caution on inflation today, but it added a new twist as well. In its release following the meeting, the Fed said, "the increase in energy prices, though having limited effect on core measures of prices to date, poses a risk of raising inflation expectations."

Some economists say the added caution means the Fed is leaving the door open to future rate hikes, especially if the effects of higher oil prices spread throughout the economy. But other economists simply see the statement as an added worry, rather than an precursor of higher rates.

JOHN RYDING, SR. ECONOMIST, BEAR STEARNS: I view it as being an additional thing they threw in at a time when some people have been speculating, like ourselves, that may be at some point they would take this bias away and go neutral. And I think the Fed is sending a clear message: as long as oil prices are up here, we're going to stay with the stance as a warning.

PRATT: There are two more Fed meetings before the end of the year. But experts say it's likely that policy makers will remain on the sidelines at those meetings as well. Unless, of course, the economy shows signs of overheating, or the labor market gets significantly tighter. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.

Nightly Business Report transcripts are available on-line post-broadcast. The program is transcribed by FDCH. Updates may be posted at a later date.

The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT.

Information presented on Nightly Business Report is not and should not be considered as investment advice.

©2000 Community Television Foundation of South Florida, Inc.


10/03/2000: Incentives Drive Vehicle Sales But Could Stall Earnings

PAUL KANGAS: For the most part, the Big Three automakers turned in solid sales figures for September, including a rise in the sales of the troubled Ford Explorer. Incentives played a key role in luring buyers into the showrooms. But as Diane Eastabrook explains, they're also beginning to impact the bottom line.

DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Neither rising gas prices, nor the Firestone tire controversy, dented Explorer sales at dealerships like Webb Ford last month. The suburban Chicago dealer began September with more than 100 Explorers, and ended the month with around 40.

PETE PANOS, SALES MANAGER, WEBB FORD: We knew it would be good going into this time of the year. But with the extra incentives that Ford added, it really helped our sales even more than we expected.

EASTABROOK: Massive incentives helped Ford sell 37,500 Explorers last month, a 1.1 percent increase over the same period last year. Overall, Ford sales were up too, by 3.4 percent. DaimlerChrysler (DCX) sales were up as well by 5 percent, but GM (GM) sales dropped by 3.5 percent. While the Big Three U.S. automakers are still selling cars and light trucks at a rapid pace, incentives are beginning to erode earnings. Chrysler has already issued a warning about its profits for the third quarter. Today, both Ford and GM increased incentives on some vehicles for the remainder of the year, leaving some industry watchers wondering about their future profits.

MARVIN BEHM, AUTO ANALYST, FITCH: There have been a lot of productivity improvements; a lot of other new products that have really supported margins up to this point. But the incentives have reached a point for some of the automakers, it's really going to turn into a negative comparison.

EASTABROOK: Other fundamentals for the auto industry remain strong. The economy is still robust and consumer confidence is still relatively high. Some analysts believe that will keep vehicles moving off dealer lots, but possibly at a slower pace than past years.

GARY LAPIDUS, AUTO ANALYST, GOLDMAN SACHS: I don't think we've created a situation where we've pulled forward a tremendous amount of volume from the future. And certainly, we've not done that to the degree that we had seen in prior cycles.

EASTABROOK: Most analysts agree this is probably going to be the last year U.S. automakers top sales from the previous year. But they won't predict just how much vehicle sales are likely to fall off next year. Diane Eastabrook, NIGHTLY BUSINESS REPORT, Evergreen Park, Illinois.

Nightly Business Report transcripts are available on-line post-broadcast. The program is transcribed by FDCH. Updates may be posted at a later date.

The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT.

Information presented on Nightly Business Report is not and should not be considered as investment advice.

©2000 Community Television Foundation of South Florida, Inc.

10/03/2000: Road To The White House: Bush & Gore Budget Plans Open For Debate

SUSIE GHARIB: It sounds like a cliche, but it's still true that tonight's presidential debate could be the most important moment on the road to the White House this year. The candidates have spent the last few days sharpening their campaign strategies and reviewing all the numbers in their budget plan. So tonight, as we continue our look at the road to the White House, Washington Bureau Chief Darren Gersh gets us ready for the economic debate.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The candidates will no doubt throw out a lot of economic numbers tonight, so let's begin our debate prep there.

CAROL COX WAIT, PRES. COMMITTEE FOR A RESPONSIBLE FEDERAL BUDGET: All of the numbers you're going to hear tonight are wrong. You're talking about an economy of $10 trillion growing to $12 trillion, a budget that spends two trillion, that's with a T, dollars a year. Nobody can possibly project within half a trillion dollars what these numbers are going to be in the aggregate over 10 years.

GERSH: For the record, the official estimate of the non-Social Security budget surplus is $2.174 trillion over 10 years. And whoever wins this race is expected to spend all of that money: Bush, mostly on tax cuts; Gore, mostly on expanded government spending. Which means tonight's debate presents voters with clear differences.

WAIT: At one level you might just ask yourself, do I want the federal government to spend all that money or do I want all or most of that money back in tax cuts?

GERSH: Both candidates commit sins of budgetary omission. Bush doesn't include the price of the national missile defense he wants to build and the governor uses rosier economic assumptions than government scorekeepers. Experts expect Gore's plan for prescription drugs will cost far more than the Vice President says it will, as will his plan for retirement savings accounts. But that doesn't mean the candidates are lying.

WAIT: It's just that one, the numbers are off, and two, candidates tend to minimize the costs of their proposals when they're running for office and who blames them? That's what we want to hear.

GERSH: Lehman Brothers Political Analyst Kim Wallace says investors should also pay special attention to studying the faces of the candidates. Do they look like they are telling the truth? Do they really seem to understand their own programs?

KIM WALLACE, POLITICAL ANALYST, LEHMAN BROTHERS: Anyone can study numbers and appear in front of you and rattle off numbers that have been put on a page. You should be able to discern from looking at them as to whether or not they truly understand the concepts behind the numbers by the way in which it's presented.

GERSH: Robert Reischauer was director of the Congressional Budget Office. He offers this final piece of advice. Keep in mind that many of the programs you'll hear the candidates talk about tonight will be phased in over many years.

ROBERT REISCHAUER, PRESIDENT, THE URBAN INSTITUTE: They aren't going to be unwrapped all at once and one can fit almost any set of promises into a 10 year period if one introduces them very gradually over time.

GERSH: Which means that if the next president gets his way, 10 years from now, the nation is likely to have another set of budget issues to debate. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.

Nightly Business Report transcripts are available on-line post-broadcast. The program is transcribed by FDCH. Updates may be posted at a later date.

The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT.

Information presented on Nightly Business Report is not and should not be considered as investment advice.

©2000 Community Television Foundation of South Florida, Inc.


10/03/2000: 3rd Qtr. Mutual Fund Report: John Rekenthaler, Director Of Research, Morningstar

PAUL KANGAS: Speaking of the third quarter, it wasn't exactly a rip roaring period for stocks. So how did the various mutual funds fare? To help us sort out the field, joining us now from Chicago is John Rekenthaler, Director of Research for Morningstar. John, welcome back to NIGHTLY BUSINESS REPORT.

JOHN REKENTHALER, DIRECTOR OF RESEARCH, MORNINGSTAR: Thank you, Paul.

KANGAS: Let's begin by looking at which fund categories did best in the third quarter. And it's interesting that the leading sectors were areas that until now had been considered kind of stodgy. Isn't that true?

REKENTHALER: Absolutely. It was a mild victory for the old economy companies, the old economy mutual funds in this quarter.

KANGAS: Well, turning to individual funds, you usually don't buy utility funds for short term appreciation but Galaxy II Utility Index proved the exception with a gain of almost 33 percent. How did that happen, John?

REKENTHALER: Well, utility funds aren't your father's utility fund anymore. These utility companies have deregulated. They now have a lot of energy exposure. They've been buying up power businesses and basically they benefited from the rise in energy, natural resources prices. So they, these companies have a lot more economic exposure than they used to.

KANGAS: Well, looking at the other leading funds for the quarter, it seems that financial funds predominated. Haven't they been laggards until recently?

REKENTHALER: They were laggards but then in the third quarter with the pressure on the Fed raising interest rates easing off and again, the Fed didn't raise rates today, that helped financial funds. Plus, there was a lot of merger activity in the quarter, as well. And merger and acquisition activity generally juices up a sector.

KANGAS: All right, now looking at the one-year winner, it's the Dresner RCM Biotechnology Fund. Have these funds in the biotech area been maintaining their momentum lately?

REKENTHALER: Absolutely. Biotechnology has been the one sector that just hasn't wavered over the past 12 months. We've see the e-tailers and business to business Internet companies and a lot of the other hot sectors grow cold, but not biotechnology. It's just been zooming straight up.

KANGAS: Now, for the five-year period, the top fund was, again, PBHG Technology & Communications (PBTCX). But over the short term, wasn't it a pretty rough quarter for high-tech and telecom funds?

REKENTHALER: Yes. Telecommunications and technology, the sectors that were the strongest over the five-year period as well as, of course, in 1999, as you'll recall many funds made over 100 percent, had a little bit of an off quarter in the third quarter, just as they had in the second. They've been in about a six month downturn.

KANGAS: Well, let's take a look at the five biggest funds in terms of assets. How do they do over these past three months?

REKENTHALER: Dull, dull, dull.

KANGAS: I see that.

REKENTHALER: Yeah. None of them lost as much as one percent or made as much as one percent. But on the other hand, the large funds are made to be fairly dull, really. I mean you don't want anything too dramatic in their performances. They're made to give steady gains and a couple of them fell a little short this quarter. But they're made, you know, they're big ships and they don't move much with the waves.

KANGAS: I guess it just proves that bigger isn't necessarily better.

REKENTHALER: Bigger was not better in this quarter.

KANGAS: Right.

REKENTHALER: In fact, about 75 percent of actively run mutual funds beat the index fund this quarter.

KANGAS: We just have a few seconds left, John. But we should note that some of the biggest losers among the mutual funds during the quarter were those specializing in Asia and emerging markets. Have those gains pretty well wiped out or have they wiped out the gains that they had in previous months?

REKENTHALER: The emerging markets funds are up a little bit when you look at the two-year period. But over the trailing one-year period they're actually down. We had a nice little move but a disappointment.

KANGAS: John, thanks very much.

REKENTHALER: Thank you, Paul.

KANGAS: My guest, John Rekenthaler, Director of Research for Morningstar.

Nightly Business Report transcripts are available on-line post-broadcast. The program is transcribed by FDCH. Updates may be posted at a later date.

The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT.

Information presented on Nightly Business Report is not and should not be considered as investment advice.

©2000 Community Television Foundation of South Florida, Inc.



10/03/2000: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: Although the Fed's decision to hold rates steady was still almost five hours away, the stock market opened moderately higher in anticipation that that would be the case. Building upon yesterday's 49 point closing advance, the Dow Industrial Average gained another 53 points by 10:00 a.m. while the NASDAQ Index recouped almost 46 points of Monday's 103 point loss. Weakness in bond prices cooled the early rally in stocks by mid-morning, but the technology sector began to improve after analyst Abby Joseph Cohen of Goldman Sachs said that she felt that tech stocks had been beaten down to more reasonable valuations, and that they might be poised for a comeback. The ensuing rally lifted the Dow to a 119 point gain by noontime when the NASDAQ index was up 26 points. Some solid buying in big blue chips, like ALCOA , DuPont and United Technologies lifted the Dow to nearly a 150 point gain just before the Fed's rate announcement this afternoon. After that though, selling hit the high-techs hard, and that soon weighed heavily upon the blue chip Dow Industrial Average whose closing gain was slashed to only 19.61 points putting it at 10,719.74. In today's 148 point trading range, the Dow closed down 138 points from the best level of the session. The NASDAQ Composite plunged 113.07 ending at 3455.83. In its 185 point trading range, the Composite Index settled 184 points below its best level of the day. In other words, just about at the bottom.

Big board volume moved up a little bit from yesterday to nearly 1.1 billion shares. Down volume exceeded up volume by about a 5 to 4 margin.

The Dow Transport Index up 33 3/4 points.

Utilities, however, down 8.15. Little profit taking there.

The Closing Tick slightly bullish at +136.

Standard & Poor's 500 down 9 3/4 points.

Nearly a 5 1/4 point drop on the 100.

The MidCap 400 fell just about 8 1/2 points.

And the Bridge Futures Price Index moved up .76.

New York Stock Exchange Composite down exactly 1 3/4 points.

Almost a 2 1/2 point drop in the Value Line.

And the Russell2000 Small Cap off exactly 7 points.

And the Wilshire 5000 down nearly 157 1/2 points.

The bond market got some support early today from the report that August's leading economic indicators fell 0.1 percent, and that August new home sales dipped 3 percent. The market was also cheered by the Fed's holding interest rates steady. The big negative was the warning that inflation is still a risk. In light of recent signs of cooling in the economy, investors were expecting a more neutral stance.

As a result, tax free and corporates ended down 1/8s and 1/4s on average. And that was about what the Treasury market did.

5-year notes off 6/32.

10-year notes down 8/32.

And the 30-year bond dropped 8/32 as well.

The Lehman Brothers Long-Term Treasury Bond Index fell nearly 3 1/10 points.

It was a rough one this afternoon. But the Dow Jones Industrial Average survived in the plus column, up only 19.61, though, after being up nearly 150 points. The broader market lower by about a 15 to 14 margin; 112 new yearly highs, 85 new lows.

Xerox (XRX) topped the active list on 29 3/4 million shares, down $4.06, traded as low as $10.94. Of course, after the close yesterday, as we reported, the company expects to have a $0.15 to $0.20 third quarter loss. The Street was looking for earnings of $0.12. Some analysts today, however, said that the stock may be getting low enough to attract potential buyers.

AT & T Liberty Media (LMGA) down $0.31.

Nortel Networks (NT) up $0.06. First Boston brokerage repeated a "strong buy" on that today.

Lucent Technologies (LU) down $0.75.

AT & T (T) edged up $0.13, fifth in big board volume.

Wal-Mart (WMT) lost $0.13.

Citigroup (C) doing all right, up $1.38.

Compaq Computer (CPQ) fell $0.84.

And General Electric (GE) a $0.69 gain.

IBM (IBM) was 10th in volume, down $7.25, a little profit taking from over a 5 point gain yesterday. And also, there are some fears the company may be the next to preannounce lower than expected earnings, just rumors, though.

ALCOA (AA), there's one of those big blue chips that did well today, up $2.44, certainly helping the Dow.

Allergan (AGN), however, down $7.69 after First Boston brokerage downgraded it from "strong buy" to just a "buy" on valuation.

DuPont (DD), another strong blue chip, doing well, up $3. Looking for some bottom fishing there today.

Gateway (GTW) was up $1.03, helped along by an upgrade from Merrill Lynch from "accumulate" to "near term buy."

International Paper (IP) rose $1.63. The company's going to sell its masonite business to Premdor Incorporated (PI) for $523 million.

And Schering-Plough (SGP) rose $1.19. The company said it sees 2000 full year earnings at around $1.64. That's pretty much in line with most Wall Street estimates.

Innogy Holdings PLC (IOG) one of the best percentage gainers. This stock was spun off from International Power PLC late yesterday. The stock then closed at 25 so it was up 3.25 from that close today.

Equifax (EFX) up $3.25. Bear Stearns upgraded it from "attractive" to "buy."

Encompass Services (ESR), no question of the direction of that stock today, down 2.31. The company sees third quarter earnings of $0.32 to $0.36 and the Street estimate was $0.42.

Comdisco (CDO) fell $4.06. The company's Prism Communications unit is going to have a significant cutback in operations, saying that it's not a viable standalone business anymore.

Biovail (BVF) tumbling $19.44. Bank America downgraded the stock from "buy" to just "market perform." There is concern that the company's hypertension drug tiazac is about to get some tough generic competition from Andrx Corporation.

And Playtex Products (PYX) down $1.94. The company sees third quarter earnings at $0.05 to $0.07. The Street was looking for $0.14. The company says its third quarter sales will be flat and fourth quarter earnings could be down slightly from last year.

NASDAQ trading, a loss of 113 points in the Index. That's a 3.2 percent fall. Trading volume moved up on that selloff, about 15 stocks higher for every 25 lower.

Cisco Systems (CSCO) topped the active list, moving up $0.75.

Oracle (ORCL) down $9.25 despite management's upbeat outlook for the company. But the business to business software sector today was hit by aggressive selling.

Intel (INTC) edged up $0.19.

Juniper Networks (JNPR) losing $4.69.

Sun Microsystems (SUNW) fell $5.19, fifth in volume.

JDS Uniphase (JDSU) down $2.31.

A similar loss in Microsoft (MSFT).

And i2 Technologies (ITWO), that's another B to B business software, down nearly $18 a share.

SDL (SDLI) down $2.

And Ariba (ARBA), another B to B software stock, hard hit, off $14.50.

Corel (CORL) was up $2.09. The company's in a strategic alli