JEFF YASTINE: It was the kind of day on Wall Street that investors dread. Events half a world away and right here at home pulled the rug out from under an already nervous market. At the closing bell, the Dow had lost 379 points, closing at its lowest level since March; the NASDAQ fell 93, its lowest point this year. Scott Gurvey looks at the factors behind the fall.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT:The story of the day was Dow 10,000. Not the happy experience of reaching that level for the first time, but rather the trauma of testing the psychological barrier while headed down. The blue chip average closed about 34 points above that level in territory it hasn't visited since March. The reason was an almost overwhelming barrage of bad news from the Middle East where two Israeli soldiers were grabbed from the protective custody of Palestinian police and killed by a Palestinian mob. Israel responded by bombing Palestinian police stations, broadcasting stations, and the headquarters of Yasser Arafat. At the same time, an American destroyer, the USS Cole, came under what the Pentagon is calling, a "terrorist attack," while refueling in Yemen. Five soldiers were killed; dozens are injured or missing; and the ship is severely damaged. Both stories were immediately reflected in the oil trading pits where the spot price of crude jumped nearly 10 percent. The price of oil is once again in the neighborhood of $36 a barrel, the 10-year high it touched a month ago.

TINA VITAL, OIL ANALYST, STANDARD & POOR'S: What's new in the game is the fact that we have very limited excess supply of crude oil worldwide, which is something new to the scene. So any disruption to that would have impacts worldwide.

GURVEY: The threat of higher energy prices is just what investors did not need as they pondered earnings warnings - Dow stock, Home Depot issued one today - as well as other consequences of a slowing economy.

AL GOLDMAN, CHIEF MARKET STRATEGIST, A.G. EDWARDS: There's a panic going on in the marketplace, and I can understand the reasons. But, you know, the marketplace is made up of fellow humans - let's admit it, we're all a little bit nutty. And that means our greed and our fear go to extremes. We can't do anything about that, but we can capitalize on it; and right now, you can capitalize on the extreme fear in the marketplace by doing some selected buying.

GURVEY: Today's sell-off was broad-based. There were few winners among the losers. Many, not surprisingly, among companies specializing in alternative energy sources. Scott Gurvey, 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. © 2001 Community Television Foundation of South Florida, Inc.

10/12/00: The Forecast For Tomorrow's Trading

PAUL KANGAS: To help us evaluate today's broad-based bold bashing sell-off on Wall Street, joining us from Boston is Ned Riley, Chief Investment Strategist, State Street Global Advisers. Welcome back, Ned.

NED RILEY, CHIEF INVESTMENT STRATEGIST, STATE STREET GLOBAL ADVISORS: Good evening, Paul. How are you?

KANGAS: As nasty a downturn as it was, could it be considered a final capitulation, suggesting we've now seen the bottom of this market?

RILEY: Well, I'd like to believe so, Paul, but unfortunately I think there is still more could come. There were some individual stocks that clearly went through that capitulation stage today, Home Depot (HD) and many others. But I look at the market in four cycles and the first cycle is irrational exuberance and we saw that last year with the NASDAQ up 86 percent. The first quarter showed us what I call indifference. The market continued to go up in spite of higher inflation and higher interest rates. The second quarter we saw some fear and panic hit, particularly around April the 4th and May the 24th when the NASDAQ truly got under a lot of pressure.

KANGAS: I recall it well.

RILEY: I think we're in this capitulation stage now. However, I'm not sure we've completed it yet. And that capitulation stage, in my judgment, is really when irrational exuberance means that there's no ceiling to stock prices. Capitulation means that people don't feel like there is any floor and I haven't seen that quite yet.

KANGAS: OK. Fair enough. What does someone like you, with $24 billion under management, do on a day like this?

RILEY: Well, the fortunate part about this, Paul, is we are long-term investors and we always try to tell our clients that the noise that we see around days like today are opportunities for us. We'll go in and we'll look at the companies that we felt were probably overpriced before and hopefully add to positions. These are the kind of opportunities that investors should take advantage of because clearly we are getting some good quality companies at low prices.

KANGAS: What's on your shopping list, Ned?

RILEY: Well, I like health care stocks still. I've liked them all year long, Paul. I like some of the consumer, what I call the consumer staple companies, the Cokes (KO), the P&Gs (PG) and the rest. But I also like to pick off some of these financial stocks that are under pressure simply because there is a lot of talk about big write-offs in this third quarter and clearly they are suffering from some new accounting rules. So, they've come under a lot of pressure as well, almost as much as the technology stocks in the last couple of weeks.

KANGAS: Do you have a level in mind where the Dow might find this bottom?

RILEY: Well, I would like to believe that it would be somewhere between 9,500 and 10,000 level. I think that's pretty reasonable and most of the stocks have actually gone through their bear markets, starting on May the 10th of this year. I should say March the 10th. So I think they've been through it.

KANGAS: How about the NASDAQ Index? Where do you see that might-where it might entice buyers in a big way?

RILEY: That's one is harder because clearly I still think there is some fluff left in this Internet kind of phenomenon out there. The price/earnings ratios are still high. I think the NASDAQ probably has risks down to maybe 2800, 3000, somewhere in that range. But I am afraid of the top 15 in that Index. The top 15 are the 42 percent of the total market cap of the NASDAQ right now and they're still richly priced.

KANGAS: Do you think any company spokesman will ever make an earnings investment again, because we've seen so many disappointments?

RILEY: Well, there are mine fields out there, and that's a great question, Paul. I think in this third quarter what we are going to see more company CFOs and CEOs try to clear the decks for this year, the rest of the year and the beginning of next. This is the opportunity to do it because the SEC has now said full disclosure and you shouldn't say much in the interim period. So even if the companies are having good quarters and spectacular quarters, I would hope they would come out and warn about the possibility of over exuberance in terms of earnings projections and growth rates. Motorola (MOT) did it the other day. They paid the price. It was the old saying you pay me now or you pay me later.

KANGAS: Right.

RILEY: And Motorola got paid off, unfortunately, shorter-term. But Corning (GLW) took the other tactic. They said things look really great. They upped their estimates and I would say that they are maybe setting themselves up for some disappointment, particularly if they don't hit those targets.

KANGAS: That's a very good example. Actually, Corning (GLW) edged up about $1.25 today, which was a triumph. But you think there might be some problems with that estimate down the road?

RILEY: Well, unfortunately the whole sector, and I mean when I say the whole sector, there has been a domino effect in technology and I think eventually things may slow.

KANGAS: Got it. Very good, Ned. Thanks very much for being with us.

RILEY: My pleasure, Paul.

KANGAS: My guest, Ned Riley, Chief Investment Strategist, State Street Global Advisors.

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. © 2001 Community Television Foundation of South Florida, Inc.

10/12/00: The US Airways/United Merger Takes Off With Shareholders

JEFF YASTINE: U.S. Airways (U) shareholders today overwhelmingly approved the proposed merger with United Airlines. With U.S. Airways stock trading in the low 30s, 98 percent of shareholders OKed the $60 a share buyout offer from United. But it must still be cleared by regulators, who have concerns about competition. Analysts put the odds of the deal being cleared at about 30 percent. CEO Stephen Wolf told shareholders and reporters he's committed to the merger.

ALAN MURRAY, CEO, U.S. AIRWAYS: We think this thing brings, you know, an enormous array of consumer benefits for the traveling public and should the Justice Department find something that they think is untoward or needs to be adjusted, we'd be glad to talk to them about that.

YASTINE: Wolf hopes the deal will close by the end of the year. Paul?

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. © 2001 Community Television Foundation of South Florida, Inc.

10/12/00: Road To The White House: Saving Social Security

JEFF YASTINE: Well, with the days ticking down to the presidential election, the rhetoric is heating up, especially when it comes to Social Security. The system is a flash point for both major candidates. But which candidate's plan gives taxpayers a better break? As our road to the White House continues, Darren Gersh looks at whether personal accounts are a better investment for our Social Security dollars.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: For many workers, Governor Bush says there's just one problem with Social Security-it's a bad investment.

GOV. GEORGE W. BUSH (R-TX), PRESIDENTIAL CANDIDATE: Right now Social Security earns only a two percent return on your money. Under my plan, even if a younger worker chooses only the safest investment, inflation indexed U.S. bonds, he or she will receive twice that rate.

GERSH: But experts say it can be misleading to compare the return on Social Security taxes to the money investors make in stocks and bonds. After all, Social Security benefits are automatically adjusted to keep pace with inflation. Stocks, as today's markets show, are not. And as the Gore campaign points out, Social Security is more than an investment. It is also part insurance policy, providing benefits to survivors and even divorced spouses.

LAURA TYSON, GORE ECONOMIC ADVISOR: It's a pay as you go social insurance system. I put in a dollar. Now, some of that dollar right now is being saved, but a lot of that dollar is going right out to the elderly who have put dollars in before.

GERSH: But there is no doubt returns in the private market are higher than in the current system. The Bush campaign estimates a mix of stocks and bonds would yield a 5.5 percent return after inflation. By comparison, an average income couple with one working spouse earns 3.8 percent under the current Social Security system and all workers combined earn about two percent. But that doesn't take into account one big problem.

SYLVESTER SCHIEBER, PENSION ANALYST, WATSON WYATT: We have promised people who live in this society today about $3 trillion more in benefits than we have made provision to collect income to pay for them.

GERSH: Figure in the tax increases needed to bridge that $3 trillion funding gap and the expected return under the current Social Security system falls to 1 1/2 percent. But any plan to create personal Social Security accounts must also bridge the funding gap. The Gore campaign says that would mean deep cuts in guaranteed benefits.

TYSON: And would the person make it up through the private accounts? No, not in the next 35 years, they actually would not. Not even if the rate of return on private accounts ends up being as high as has averaged over the past 25 years. So this is not something that works.

GERSH: But Bush economic adviser Lawrence Lindsey argues market returns will compound over time, providing taxpayers with a far better return than under the current system.

LAWRENCE LINDSEY, BUSH ECONOMIC ADVISOR: At least we solve the $3 trillion hole. The alternatives, cutting benefits or raising taxes, are much less appealing. We ought to at least put some faith in the private markets here because they have done so well and they offer the best chance we have of making Social Security strong and secure forever.

GERSH: The challenge of moving to personal accounts for Social Security is essentially this, one generation must figure out how to cover the existing obligation for their parents' retirement while at the same time funding their own retirement so their children don't have to. 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. © 2001 Community Television Foundation of South Florida, Inc.

10/12/00: Commentary: How The Presidential Hopefuls Are Going To Impact The Economy

JEFF YASTINE: With less than a month now until the presidential election the question on investors' minds is how each of the candidates might impact the economy. That's on the mind of tonight's commentator, too. Here's Alan Murray, Washington Bureau Chief of the "Wall Street Journal."

ALAN MURRAY, "WALL STREET JOURNAL": Which presidential candidate would be better for the new economy? That's a question I've been asked repeatedly since my book on the new economy, "The Wealth of Choices," came out this summer, and I always stumble on the response. That's partly because as a journalist involved in the coverage of the elections I don't want to take sides. But it's also because I'm torn and judging from the way they split their campaign contributions between the two parties, many technology executives are torn too. Here's the problem. Al Gore deserves credit for the good economy of the last eight years. He was a strong advocate inside the administration for deficit reduction. And while he may not have invented the Internet, he really understands the language and the logic and the power of that new technology. But the new economy isn't just about the transforming power of technology. It's also about the transforming power of markets. The last two decades have seen market forces extend their reach into ever more aspects of our lives. George Bush proposes to extend that trend, bringing market forces to bear on the last great vestiges of command and control government dominance-Medicare, Social Security, public education. Al Gore opposes those changes, defending the status quo. So what's a voter to do? Well, we can hope that whoever wins the election will work to restore the atmosphere of civility here in Washington so the American people can benefit from the best both parties have to offer. I'm Alan Murray.

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. © 2001 Community Television Foundation of South Florida, Inc.

10/12/00: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: It was a Wall Street bear's dream come true this morning as the MidEastern flare-up sent oil prices soaring, while that earnings warning from Home Depot sent the stock plunging some 14 points at the outset. That accounted for about 80 points of a 247-point loss in the Dow Industrial Average at 10:00 a.m. The NASDAQ Index fell 56 points after an early 20-point advance. Downside momentum picked up steadily in the blue chip sector throughout the rest of the morning, with the retail and financial stocks taking a beating; while the energy sector showed strength. The tech-laden NASDAQ market, which has already taken some hard bumps, contained its losses quite well. At 1:00 p.m., the Industrial Average fell to a hefty deficit of 346 points, with about 200 of that due to losses in just five stocks: Home Depot, Citigroup ©, Boeing (BA), J.P. Morgan (JPM) and IBM (IBM). The NASDAQ Index was down just 49 points. Once again, buyers were conspicuous by their absence, causing the market to continue its free fall. The Dow Jones Industrial Average finally closed with a loss of 379.21 points, or 3.6 percent and now stands at 10,034.58. This is the fifth largest point size drop ever in one day. In today's wide 437-point trading range, the Dow closed down 426 points from the best level of the session. The NASDAQ Composite tumbled 93.81 points at 3074.68. In its 178-point trading range, the Composite Index settled 174 points below its best level of the day. Big board volume heavy, 1.37 billion shares. Although that was down about 14 million from yesterday.

But here's the proof that buyers were on vacation or boycotting the market: up volume only 336.4 million shares, and down volume just over a billion shares. I don't believe I've ever seen down volume in one day of over a billion.

Transports down 66 1/3 points.

Utility Index off exactly 4 1/2 points.

The Closing Tick just mildly bullish at +97.

Standard & Poor's 500 off over 34 3/4.

The 100 down 20 1/3.

MidCap 400 dropped 11 1/3 points.

And the Bridge Futures Price Index up 1.79.

New York Stock Exchange Composite off over 16 1/4.

Nearly a 9-point drop in the Value Line.

Russell2000 Small Cap off just over 11 3/4 points.

And the Wilshire 5000 dropped 344.84. Not as bad a percentage drop as the Dow, incidentally.

After the market closed, the Federal Reserve reported in the week ending October 2, the M-2 money supply rose $14.1 billion. Once again, the bond market benefited from the sharp sell-off in stocks triggered by those heightened MidEast tensions and Home Depot's earnings warning. Frightened investors sought safe haven in secured debt instruments, especially short-term U.S. Treasury obligations. There was little else to account for. 1/8 to 3/8-point closing gains in tax free and corporate issues.

And even better results in short-term Treasuries.

5-year notes up 15/32, bringing the yield all the way down to 5.70 percent.

10-year notes up 16/32, with the yield at 5.71.

And the 30-year bond up 6/32.

And finally, the Lehman Brothers Long-Term Treasury Bond Index rose 4.33 points.

as you well know by now, down 379 points or 3.6 percent on the Dow, 787 issues up, but 2,140 down. Only 38 new highs for the year, 240 new lows.

Home Depot (HD) topped the active list on a massive 51.4 million shares, down $14.06. That's nearly 29 percent, all due to that earnings warning.

Lucent Technologies (LU) had the earnings warning out yesterday and dropped $10, or 32 percent, and it managed to edge back only $0.25.

Citigroup in that weak financial sector down $2.69.

Motorola (MOT) lost $1.25. Now, later today Merl Gilmore, the head of the company's communications enterprise unit, which accounts for 70 percent of Motorola's business, resigned effective immediately.

Nokia (NOK) down $4 at $29.06, fifth in volume.

Nortel Networks (NT) lost $1.25.

Wal*Mart (WMT) in the weak retailing sector off $1.19.

Compaq (CPQ) down $1.66.

AT & T (T) lost $1.38 to hit a new low for the year.

And General Electric (GE) off $1.63 despite yesterday's 20 percent rise in earnings for the third quarter.

Corning (GLW), there you see it, up $1.25. The company sees third quarter earnings at $0.34 to $0.35 and increased its own 2000 year estimate from $1.15 to $1.17. Standard & Poor's issued a "buy" on the stock.

Best Buy (BBY) plunging $6.19 in reaction to Home Depot's warning.

General Motors (GM) lost $1.13. Third quarter earnings came in at $1.55, up from last year's $1.33. That was a penny above estimates but that was thanks mostly to a big stock buy back, which actually decreased the number of shares outstanding and sales were flat for GM.

IBM (IBM) down $8.94. That was the Dow's third biggest point loser.

Johnson & Johnson (JNJ) edged up $1.13. A lot of investors looking for refuge in the drug stocks today.

J.P. Morgan (JPM) down $10.81, the second biggest point loser next to Home Depot in the Dow.

Three-Five Systems (TFS), now there's a percentage gain on a day like this you wouldn't expect, but it did very well. The company in with third quarter earnings, $0.19, up from $0.14 last year, and that was $0.04 above the Street estimate.

Triton Energy Limited (OIL) up $3.13. The oil driller got a "outperform" rating from Morgan Stanley who started covering the stock today.

Newmont Mining (NEM), the gold producer, down-or I mean up $1.25. Colmex (ph) December gold was up $5.80 to $278.80 an ounce, a big move for gold.

Fletcher Challenge Energy (FEG) plunging $7.13. The country of New Zealand regulators have halted the company's takeover by

Royal Dutch (RD) an Apache Petroleum. The New Zealand dollar, incidentally, on that news went to a record low today. That merger was considered to be supportive of their currency.

Hasbro (HAS) down $1.56. The company sees lower than expected earnings for the third quarter of $0.06 to $0.10. The Street was expecting $0.32.

Albany International (AIN) down $1.31. The company sees third quarter earnings at $0.30. That would be down from $0.35 a year ago.

NASDAQ trading, a loss of nearly 94 points, but not as bad a percentage drop as the Dow, volume heavy, 2.1 billion, but down from yesterday. Only 11 stocks up for every 29 lower.

Cisco Systems (CSCO) topped the active list, down $1.38.

Intel (INTC), look at that move, up $1.75. That was the Dow Industrial Average's best point gainer.

Juniper Networks (JNPR) down $6.39. After the close, Juniper had third quarter earnings out, $0.17, nearly double the Street estimate of $0.08 to $0.09. In after hours trading, Juniper's stock was up around the $207 per share level.

Sun Microsystems (SUNW) off $3.94.

Applied Micro Circuits (AMCC) off $3.73.

Microsoft (MSFT) fell $1.38.

JDS Uniphase (JDSU) moved up $0.44.

CIENA (CIEN) up $1.45.

And then Yahoo! (YHOO) down $8.75.

PMC-Sierra (PMCS), 10th in volume, was up $