SUSIE GHARIB: Still no decision on the presidential election, but a clear-cut decision from the Federal Reserve today: no change in interest rates. The Fed also came out with a warning: there are still inflationary risks in the economy. Investors were upset that the Fed might still raise rates, and stocks sold off on the news. By the closing bell, the Dow and NASDAQ managed slight gains, about 26 points for each Index. Suzanne Pratt has the news and analysis.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: The Federal Reserve's decision to leave interest rates untouched came as absolutely no surprise to Wall Street. The Fed funds rate, which is the overnight interest, banks charge each other, will remain at 6.5 percent; exactly where it's been since May of this year. Economists say the Central Bank's six rate increases since June 1999 have already slowed the sizzling economy. And with evidence mounting that growth may moderate even more in the coming months, experts say no further increase was warranted.

JOSHUA FEINMAN, CHIEF ECONOMIST, DEUTSCHE ASSET MANAGEMENT: There are increasing signs that overall domestic demand in the economy has definitely cooled off, and I think that's, you know, first and foremost, the reason why the Fed has felt that their tightening is working, and that they don't need to go further right now.

PRATT: Despite the inaction on interest rates, the stock market was somewhat disappointed by the Fed's renewed warning on inflation, a warning that in effect, maintains the Central Bank's so-called "bias" toward raising rates. Explaining their decision to stick with a red flag on inflation, Fed policymakers said the tight labor market and higher energy prices still pose inflation dangers that call for close monitoring. While in theory, the statement leaves the door open to further increases in the coming months, many economists now expect a rate cut sometime in 2001.

ROBERT DICLEMENTE, SR. ECONOMIST, SALOMON SMITH BARNEY: I think there's a growing possibility that their next move will be to cut rates. The markets certainly are sensing that. Forward markets, futures markets, in the fixed income area have already priced in between one and two rate cuts next year.

PRATT: One risk from the Fed, and interest rates is the uncertainty surrounding the election. Economists say, the longer the election remains unsettled, the greater the chance that consumer confidence will falter: consumers will cut spending, and the economy will slow. If that happens, the Fed may be forced to react. 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.



11/15/00: The Fed's Decision, The Presidential Indecision, What's Next For Wall Street?

SUSIE GHARIB: The legal fight for the presidency escalated today. The Florida Supreme Court turned down tonight a Republican backed petition that would have put a stop to the hand recount of ballots. Democrats are hopeful that a hand recount will cut down the 300 vote lead that George W. Bush now has over Vice President Gore in Florida. But the legal battle isn't over yet. A federal appeals court in Atlanta has agreed to hear arguments about the hand counts later this week. The war of words is not over yet, either. Bush legal advisor and former Secretary of State James Baker today said that the Gore camp is unwilling to accept the finality of the results. Meanwhile, Vice President Gore would only say that this is a test of our democracy, a test that we will pass with flying colors. Well, that legal wrangling for the presidency plus worries about the outlook for interest rates are weighing down on the stock market. So what happens next? Here with some thoughts is Brian Finnerty, Market Analyst with Unterberg, Towbin, and he joins us live from his firm's trading floor. Well, you heard the latest now, just more legal wrangling. We also had word from the Fed. What do you make of all of this and its impact on stocks, Brian?

BRIAN FINNERTY, INVESTMENT STRATEGIST, C.E. UNTERBERG, TOWBIN: Well, Susie, I think the whole political situation, you know, we're finished now with day eight of the non-decision 2000. I think it's going to be old hat. And I think the market's moves are becoming more muted as time goes on. So while I do think it had a big impact at first, I think it sort of exacerbated the sell-off, brought the sell-off to a head more quickly than that sell-off probably would have had. So in the long run, that's probably good for us because maybe we've made a bottom in here and now I think going forward we should be OK. The Fed didn't help us today, but they didn't hurt us. So I think we're OK here going forward.

GHARIB: There are a number of market people who've I've been talking to who are saying it still doesn't feel like a healthy market. They would much prefer a big sell-off, get the capitulation, throw in the towel --

FINNERTY: You know, Susie-

GHARIB: -- and then have that V-bottom in a rally. But the way it is now-

FINNERTY: I've got to tell you, we've had about four V-bottoms between the beginning of October and now and we keep retesting. And, you know, the "nay-sayers," oh, they want blood in the streets, you know? They want total absolute panic. I don't know that you need to see that. And I've got to tell you, when you're sitting here in this trading room and things are going as bad as they've been for the last month, it doesn't feel so good sitting here watching these stocks absolutely, you know, get cut in half and get cut in half again, and that's happened to a lot of the, you know, semiconductor and fiber optic stocks out there.

GHARIB: All right, so, Brian, what should investors do? I mean there is the temptation to buy some of those stocks that have been cut in half, like you're saying. But then there's also the fear that maybe they're going to go even lower. What should they do?

FINNERTY: The fears are that they're going to go lower. Susie, I think go with that temptation to buy stocks now. I think valuations have been cut almost in half. Even when you take the technology stocks that are in the S&P 500, those valuations from the highs of March the 12th have been cut just about in half. I think valuations are great out there. Technology is not going away. Fiber optics are here to stay.

GHARIB: You have a lot of faith in technology. I mean, name one or two stocks that you think might be-

FINNERTY: Well, I'll give you a couple of quick picks. I mean, I love Applied Microcircuits, symbol AMCC. I like New Focus. That's a fiber optic maker, symbol NUFO. But, Susie, I'll give you a good one, what I think is a cheap easy way to play the whole move back up the NASDAQ.

GHARIB: I've got my pencil ready. What is it?

FINNERTY: OK, you ready? It's the NASDAQ 100 Trust, symbol QQQ. They trade like water. It's a proxy for the NASDAQ 100. That's the most volatile sector but that's the sector that I think has bottomed out and it's not going to be easy going straight back up. It's going to be a saw-toothed pattern. But it's bottomed out and it is going higher. So I think it's a good way to play.

GHARIB: What about for people who want to sleep a little better at night and don't want that volatility? What, outside of tech sector, would you recommend?

FINNERTY: Well, you've got to diversify a little bit. I mean I think the drug stocks have been acting very well lately in the pharmaceutical area. I like Pfizer (PFE) and Merck (MRK) very much. You know, those stocks have done well with a Bush victory in sight and, of course, all of a sudden when you get the other side of the coin they sell-off. They're very reactive to who is going to be in the White House. But I think overall you want to own those two key stocks in the drug sector.

GHARIB: And in a word or two, the biggest risk facing this market?

FINNERTY: The biggest risk is probably are we going to have another quarter of confessions. In other words, are companies going to come out and preannounce further disasters. I think most of the damage has been done here. I think the Fed has done their job in slowing the economy with the six rate hikes. I think the Fed is not going to go any further there and I think the next move will be for the Fed to cut rates, not at the December 19th meeting, but probably one or two meetings after that.

GHARIB: That would be welcome news, I'm sure, for investors.

FINNERTY: We'd love it.

GHARIB: Thank you so much, Brian.

FINNERTY: My pleasure, Susie.

GHARIB: My guest tonight, Brian Finnerty of Unterberg, Towbin.

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.



11/15/00: The SEC's New Rules For Keeping Accounting Firms Accountable To Clients

PAUL KANGAS: As investors know all too well, the financial numbers that companies report can make a big difference in how they are treated on Wall Street. The Securities and Exchange Commission today put in place new rules to make sure the accountants who inspect the books are independent of the companies who hire them. As Stephanie Woods reports, it was a hard fought change.

STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Worried that auditors can't be independent watchdogs while advising clients and collecting big consulting fees, the SEC today unanimously agreed to restrict services accounting firms can offer clients.

ARTHUR LEVITT, CHAIRMAN, SECURITIES & EXCHANGE COMMISSION: It's essential that investors know whether their auditor may have a motive for not being as strict and as independent with the numbers as if he had no conflict.

WOODS: The new rules require accounting firms to disclose the consulting fees they get from clients and it sets conditions on auditors who sell information technology systems to clients. The SEC initially proposed banning this type of consulting work, but was hard fought by the industry. Consulting fees now make up 70 percent of revenues at the big five auditing firms.

BILL EZZELL, GOVERNMENT RELATIONS, DELOITTE & TOUCHE: We feel like the more we know about a client and the amount we learn through those kinds of services help us to do a better audit. And we were greatly concerned that the elimination of those services to audit clients could, in fact, result in a diminution of audit quality.

WOODS: The accounting industry gave more than $10 million in political contributions during this year's election cycle. The big five, Arthur Anderson, Deloitte & Touche, Ernst & Young, PricewaterhouseCoopers and KPMG gave more than $5 million, and $45,000 just to Congressman Mike Oxley, who helped broker the compromise between the SEC and the industry.

REP. MICHAEL OXLEY, CHAIRMAN, FINANCE SUBCOMMITTEE: We had some good pressure points here in the Congress on a bipartisan basis to say to the SEC look, understand this is a value profession. We want to make certain that we don't snuff out the capability of these folks to not only make a living, but provide valued services both on the side of consulting as well as auditing.

WOODS: The accounting industry says the new rules won't change the way it does business and that it already maintains strict standards on auditor independence. The SEC says having to disclose the consulting relationships will also reassure investors. Stephanie Woods, 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.



11/15/00: Analysis of Commodities Activities

PAUL KANGAS: Well, there is no doubt that the Federal Reserve factored in commodity price levels as a part of its decision to hold interest rates steady. And here to review what the major commodities have been doing so far this year is Kevin Pendley, Chicago Bureau Chief for BridgeNews, and welcome back, Kevin.

KEVIN PENDLEY, CHICAGO BUREAU CHIEF, BRIDGENEWS: Good evening, Paul.

KANGAS: We have a chart showing this year's action so far with the major commodities and it's no surprise that energy costs have risen the most. We have the chart up. Do you think that we've seen the top for energy here?

PENDLEY: I don't think we've seen the top. I think there's plenty of upside potential in the energy market. We're into a really combustible situation right now where we have tight stocks and we have cold weather sweeping through the Midwest. One of the big components in that energy run-up that we've seen recently is the natural gas market, which set all time highs today. We've got cold weather in the forecast. The gas association stocks that came out after the close today did show a little bit of a surprising draw down, which we wouldn't have expected, and it's only going to continue to draw down from here.

KANGAS: That doesn't sound like good news in the offing here at all.

PENDLEY: No, I think consumers are going to, after having a summer of price shock at the gas pump, we're probably going to have a winter of price shock with the heating bill.

KANGAS: Let's go back to the chart and look at some of these other, for the grains, up only 2.3 percent, not much of a move there.

PENDLEY: Yeah, it's been a really one dimensional run in commodities this year so far, Paul. You know, 80 percent of the, or 80 percent higher for energy and really nothing for the other markets to speak of. The grains market has a record crop and we know we have to have exports pick up to get the grains moving and they're not.

KANGAS: OK, let's look at the chart once again. The Industrials up nearly 12 percent. Livestock, 0.4 percent, not much move there.

PENDLEY: Right.

KANGAS: Precious metals have had just a minor move. Tell me what softs are. Our various viewers would want to know. They're down.

PENDLEY: Yeah, that's true. The softs market has really struggled. For those who don't know what the softs are, you can think of them as our favorite breakfast food-cocoa, coffee, sugar-those are all the in the softs component and the cocoa market right now is at 27 year lows. The coffee market is at seven year lows. Those markets have tons of supply. They're not increasing the demand chain at all. They're even talking about tearing away some of the coffee stocks and not selling them, just destroying them.

KANGAS: Well, good for the consumers and bad for the producers there.

PENDLEY: That's correct.

KANGAS: I thank you very much for that interesting review, Kevin.

PENDLEY: Thanks, Paul.

KANGAS: My guest, Kevin Pendley, Chicago Bureau Chief for BridgeNews.

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.


11/15/00: "Money File"-Tips For Today's Investor

SUSIE GHARIB: In the money file tonight, is the modern investor a smarter investor? Here's Charles Jaffe, Personal Finance Columnist at the "Boston Globe."

CHARLES JAFFE, PERSONAL FINANCE COLUMNIST, "BOSTON GLOBE": Armed with today's personal investing technology and an ocean of available data, investors believe they are smarter than ever. Well, they're not. At the recent Society of American Business Editors and Writers conference on personal finance, Terrance O'Dean, a leading researcher in the study of investors and their money, noted that the general overconfidence of investors actually hurts their returns. Simply put, investors are outsmarting themselves. O'Dean's research shows that people, one, trade too often; two, sell winners early and hold losers too long; and three, chase the action, confusing news reports on a company's daily numbers with real research and knowledge. Combined, those actions are costly. Presumably, your minimal goal in a stock trade is that what you buy beats what you sell, including brokerage costs. O'Dean found that investors fell almost eight percent short of that goal in the first two years after trading. In fact, O'Dean's study of 160,000 individual brokerage accounts showed that investors who traded the least made the most, and vice versa. Trading too much won't lead you to the poor house, but it could eat away a few percentage points worth of potential returns. That's worth remembering the next time you are anxious to make a move in your portfolio. Statistically speaking, what you buy is unlikely to do better than what you have now. That sobering message shouldn't make you stop trading, but it should encourage you to make sure that your next move is based on more than a gut feeling that you're a smart investor. I'm Charles A. Jaffe.

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.





11/15/2000: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: The stock market opened modestly lower today as profit takers moved in after yesterday's big rally, but at 10:00 a.m., the Dow Industrial Average gave back only 28 points of Tuesday's 163-point run-up, while the NASDAQ lost only 10.5 points of yesterday's 171-point, or 5.8 percent gain. That mild early downturn brought buyers off the sidelines as morning trading continued. And with healthcare-related and semiconductor stocks leading the way higher, while the banking sector showed widespread weakness, the Dow moved to a 76-point gain by noontime, and the NASDAQ Index posted a 38-point advance. About a half an hour before the Fed announced it would hold rates steady, the Industrial Average was up 100 points and the NASDAQ up 65. But when the Fed said inflation could still be a problem, the market sold off sharply, driving the Dow to a 13-point loss at 3:00 p.m., when the NASDAQ was down nine points. The final hour brought a bit of a rebound, which lifted the Dow Industrial Average to a closing gain of 26.54, putting it at 10707.60. In today's 164-point trading range, the Dow closed down 92 points from the best level of the session, but up about 71 3/4 points from the low. The NASDAQ Composite finished with a gain of 27.22 at 3165.49. In its 105-point trading range, the Composite Index settled 44 points below its best level of the day and up 61 points from the low of the session.

Big board volume dwindled a bit, just over a billion shares, down quite a bit from yesterday. More up volume than down volume by about a 6 to 5 ratio.

The Dow Transport Index up nearly 18 points.

And the Utilities up 4.67, rebounding nicely from a drop yesterday.

The Closing Tick still moderately bullish at +469.

Standard & Poor's 500 up just over seven points.

A gain of 3.86 in the 100.

The MidCap 400 gained just over 10 1/4.

And the Bridge Futures Price Index up 1 2/3 points.

New York Stock Exchange Composite gained over 2 1/2.

Just over a 2 1/4-point rise in the Value Line.

Russell2000 Small Cap Index up nearly five points.

And the broadly-based Wilshire 5000 up just over 79 1/4 points.

The bond market got a little boost today from the report that industrial production declined by 0.1 percent last month, yet another sign that the economy's growth rate is slowing a bit. The market showed further strength when the Fed announced it will hold interest rates steady. A fairly firm dollar was another reason why tax-free and corporate issues closed with gains ranging from 1/8s to 3/8s of a point.

While the Treasury market ended higher across the board.

5-year notes rising 3/32.

Bellwether 10-year note up 8/32, with the yield down to 5.72 percent.

The 30-year bond gained 22/32.

And the Lehman Brothers Long-Term Treasury Bond Index gained almost 7 3/4 points.

Well, we had a marvelous rally going on in early afternoon before the Fed made its announcement, then a sell-off and a little comeback, up 26 1/2 on the Dow. The broader market nicely higher, about 16 stocks up for every 12 lower; 74 new yearly highs, 62 new lows.

Nortel Networks (NT) on 24.7 million shares topped the active list, down $1.81, although the chief executive officer and some other insiders bought $2.2 million worth of stock last month.

Solectron (SLR) up $0.19. This company's in the process of offering 35 million of its shares priced at $34.25, part of the proceeds to be used to buy Natsteel Electronics (NASL).

Bank of America (BAC) down $3.88. Merrill Lynch cut 2001 earnings, partly because the company has some questionable loans out there, one particular to Sunbeam (SOC).

Lucent Technologies (LU) down $1.19 today.

AT & T (T) was down $0.06. After the close, AT&T said it will spin off the Liberty Media Group in a move to reduce regulatory concerns over its cable television holdings.

Nokia (NOK) moved up $0.50.

Citigroup down $0.56.

GE (GE) down $0.25, very narrow movement here.

Pfizer (PFE) edged up $0.34.

And then EMC (EMC) rebounding $2.19.

Apache (APA) had a good day, rising $3. Lehman Brothers Brokerage upgraded it from "outperform" to "buy" and increased its price target from $65 to $75 a share.

Forest Laboratories (FRX) up $4.69 on news the company will be added to the Standard & Poor's 500 Index, replacing Seagate

Technology (SEG). The date that it'll get in there is yet to be announced.

HEALTHSOUTH (HRC) up $1.25. First Boston began covering HEALTHSOUTH with a "strong buy" and has a $24 a share target over the next year.

ICN Pharmaceuticals (ICN) up $2.44. The company and Schering-Plough (SGP) are in a long-term drug licensing deal for the treatment of Hepatitis C.

Intimate Brands (IBI) down $1.63. Third quarter earnings $0.09, just barely up from $0.08 last year, and UBS Warburg Brokerage downgraded it from "buy" to just a "hold."

And National-Oilwell (NOI) up $2.31. This stock will be added to the Standard & Poor's MidCap 400 Index on a date to be announced.

WMS Industries (WMS), one of the better percentage gainers, up $2.19. Bear Stearns upgraded it from "attractive" to "buy" today.

Analog Devices (ADI), which had a big jump yesterday, up another $7.75. And, of course, after the close yesterday, as we reported, Analog had fourth quarter earnings of $0.54, $0.04 better than the Street expected and it's also going to buy back up to 15 million of its shares.

Maverick Tube (MVK) up $2. No officers available to talk to us about that, but the whole oil sector was quite firm today, oil up $70 in New York on the December contract.

Tiffany & Company (TIF) all aglitter with a $4.13 gain. Third quarter earnings strong, $0.24, up from $0.15. That was $0.03 above the Street estimate, sales up 15 percent.

Longs Drug Stores (LDG) fell $2.50. Third quarter earnings, $0.19, $0.10 below what the Wall Street estimate and down from $0.32 last year. Standard & Poor's said sell the stock.

Sothebys Holdings (BID) down $2.13 after the company said its fourth quarter earnings will be down significantly from a year ago. It blames restructuring charges, etc.

NASDAQ trading, a gain of nearly 27 1/4. It had been up 65, though. Volume down 79 million shares from yesterday. And the broader market lower, for every 18 stocks on the up side, 20 dropped.

Cisco Systems (CSCO) edged up $0.44.

Network Appliance (NTAP) down $20.13. Second quarter earnings, $0.10, double last year, and a penny above the Street estimate, but the company sees lower gross margins in the next several quarters. That's what hurt the stock.

A $0.06 drop on Sun Micro (SUNW).

A $3.81 gain in QUALCOMM (QCOM).

Microsoft (MSFT) off $1.25.

Juniper Networks (JNPR) fell $6.50.

A $0.56 gain in Intel (INTC).