SUSIE GHARIB: A bad day here on Wall Street, but it could have been worse. Stocks plunged and then staged a dramatic comeback in the final hour of trading. By the closing bell, the Dow was off by 144 points after being down by more than 400. The NASDAQ dropped only 27, recovering from a triple-digit loss earlier in the day. Investors are overwhelmed by the worsening outlook for the economy and corporate profits. Suzanne Pratt reports.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Hopes that the worst was over for stocks faded today as a new wave of heavy selling hit Wall Street. Although stocks ultimately trimmed their losses, the Dow was down as much as 400 points earlier in the session; and since the market reopened Monday, the blue chip index has lost 9 percent. The NASDAQ has plunged 10 percent and the standard and Poor's 500 slipped 7 percent. Market strategists blame much of today's selling on newfound worries about the economy and earnings.

RICHARD HOEY, CHIEF INVESTMENT STRATEGIST, THE DREYFUS GROUP: Discounting of the lower path for the economy and corporate profits that's likely to occur.

PRATT: It's starting to become evident that last week's terrorist attacks are making weak corporate profits even weaker. Just today, Dow component Boeing (BA), citing a slowdown in air travel, said it would make massive layoffs. Eastman Kodak (EK) lowered its third quarter earnings guidance as a result of reduced sales and negative effects from the tragedy. And media giant Viacom (VIAb) said earnings for the year would be lower than expected due to higher costs for news coverage and lost advertising revenues. And although most analysts have not yet slashed their estimates for the third quarter, experts say the numbers should start to fall soon. Before the attacks, Wall Street was forecasting a 14.7 percent decline in third quarter earnings for the S&P 500. Today, that number stands at over 15 percent. But First Call predicts profits could ultimately fall by nearly 23 percent. Insurance, airlines and travel related industries will be among the hardest hit.

CHUCK HILL, RESEARCH DIR., FIRST CALL: That's kind of the first phase of estimate reductions we'll see, and most of those will I think take place this week, maybe into next week. But then we have a second phase that certainly will be coming, and that is a result of lower consumer confidence.

PRATT: Just how low consumer confidence ultimately falls is key to the outlook for corporate profits. If jittery Americans drastically cut their spending, experts say an earnings recovery is likely to get pushed out even further into next year. Suzanne Pratt, "NIGHTLY BUSINESS REPORT," New York.

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. 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.

09/19/01: What Are The Spark Plugs In The Economic Stimulus Plan?

PAUL KANGAS: Turning now from earnings to the economy, the other big issue for investors. The president and congressional leaders today began talking about an economic stimulus plan. The goal: jump starting the American economy following last week's devastating terrorist attacks. Darren Gersh has the latest.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Meeting with congressional leaders late this afternoon, the president said there was no question the terrorist attacks have shocked our economy, and he vowed to spend enough to get America moving again.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We're dedicated to saying to the American people this is an emergency the likes of which we have not seen in a long time in this country, and this government will come together and deal with it.

GERSH: The White House says the president is considering everything from tax cuts to increased spending and regulatory relief to help the economy recover. Earlier in the day, congressional leaders met with former Treasury Secretary Robert Rubin and Fed Chairman Alan Greenspan to get their views on a stimulus package, but Greenspan cautioned more time was needed to assess where the economy is headed. After meeting with the president, House Speaker Dennis Hastert said no decisions have been made on the timing or size of a stimulus package.

REP. DENNIS HASTERT, HOUSE SPEAKER: We've gotten together, talked to various economists and people that are familiar and deal with this on a daily basis. We plan to continue that discussion and come up with a prudent plan.

GERSH: Talk of stimulus comes as bad economic news continues to pour in. American Airlines (AMR) saying this afternoon it will lay off at least 20,000 workers. Boeing says it may lay off 30,000 commercial aircraft workers. To get business back to business again, Congress is considering everything from speeding up the tax rate reductions passed earlier this year, to a temporary cut in the capital gains tax, and faster depreciation deductions for business.

RICHARD GRAFMEYER, NATIONAL DIRECTOR TAX POLICY, ARTHUR ANDERSEN: Congress is attempting to try to improve corporate cash flows and individual cash flows so that people will have confidence to make purchases. And that they can afford the purchases they make.

GERSH: Tomorrow night the president will address a joint session of Congress. He is expected to touch on how the terrorist attacks have impacted the economy, but he will focus on explaining the nature of the enemy we face, and preparing the nation for the long campaign ahead. Darren Gersh, "NIGHTLY BUSINESS REPORT," Washington.

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. 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.

09/19/01: The Economic Outlook From John Lipsky, Chief Economist at J.P. Morgan

SUSIE GHARIB: Paul, our guest tonight believes that the economy could post a "serious decline" in the third quarter. He is John Lipsky, chief economist at J.P. Morgan, and he joins us now live from his firm's trading floor. Glad to have you on the show, John.

JOHN LIPSKY, CHIEF ECONOMIST, J.P. MORGAN: Thanks. Nice to be here.

GHARIB: All right, how big of a decline are you expecting in third quarter gross domestic product?

LIPSKY: Well, prior to these latest tragic events, we had been looking for about a one percent decline in GDP in the third quarter of this year. We're worried that, of course, with the effects of that tragic event that we could see an exaggeration of that downward figure, albeit on a temporary basis.

GHARIB: But how much? Can you quantify it?

LIPSKY: Oh, it could easily, there's really no precedent for much of what's happened. But it could be three percent down at an annual rate or even more than that.

GHARIB: So we're really talking about a recession now?

LIPSKY: Oh, yes. Well, it, obviously it won't stop there. Our guess is that we have already entered into a mild recession.

GHARIB: John, you heard our report about the worsening situation for corporate earnings for the third quarter. But there are a number of experts who are saying that it's the financial crisis of the airlines that's the real threat to the economy. What's your thought on that?

LIPSKY: Oh, it seems that the downward revisions to corporate earnings haven't been big enough. Our guess is that, in fact, the figures are going to be worse than have been talked about so far, for example, earlier in your show. Now, some of that will be concentrated in the airline industry, insurance industry, other hard hit sectors. At the same time, there's going to be a worry and a risk that corporations under earnings pressures are going to make new cutbacks in jobs and therefore it will slow down income growth and further weaken consumption spending.

GHARIB: And we're already seeing a lot of job cuts coming out of the airline industry. Just today United Airlines (UAL) announcing 20,000 layoffs, the same amount at American Airlines. And a Congressman today was saying that we could potentially see more layoffs in the airlines and that could hike up the unemployment rate by 2 ½ percentage points. How realistic is that?

LIPSKY: Well, I'm hopeful that if, in fact, the government is about to reach agreement with the airlines on some kind of short-term aid package that it would ameliorate the need for immediate cutbacks in jobs.

GHARIB: We heard that the White House is trying to work out or considering a number of plans for some kind of tax package that would help out businesses. To what extent, John, do you think that that will help stabilize the economy?

LIPSKY: Well, it's possible that that could help one of the weakest aspects of the economy, the cutback in business capital spending. But the history of fiscal fixes for the economy on the short-term basis is not very good. It's not like turning a spigot on and off. And therefore there runs a risk of if we did too much it could be unbalanced. But some help could be useful.

GHARIB: Real quickly, we just have a few seconds left, looking ahead to next year what's our economy going to look like?

LIPSKY: We think that there's going to be a rebound that will be more vigorous than we had expected previously thanks to the action of the-the strong action of the Fed-we think there's more to come- and through fiscal policy.

GHARIB: All right. Well, hopefully you'll keep us posted on all of that.

LIPSKY: Will do. GHARIB: Thanks so much for talking to us tonight.

LIPSKY: Thanks, Susie. GHARIB: We've been speaking with John Lipsky of J.P. Morgan.

09/19/01: Delta Chairman Leo Mullin On The Airline Industry's Plea For Financial Aid

SUSIE GHARIB: Well, airline stocks have been hit hard on Wall Street this week. In Washington, D.C. today, airline executives testified in front of the House Transportation Committee, pleading for $17.5 billion in financial assistance. Delta (DAL) Chairman Leo Mullin has emerged as a spokesman for the major carriers seeking help to recover from the after effects of last week's terrorist attacks. He joins us live now from our Washington bureau. And it's a pleasure to have you, Mr. Mullin, on the program this evening.

LEO MULLIN, CEO, DELTA AIR LINES: Thank you, Susie.

GHARIB: All right, I know you're going for $17.5 billion. Do you think you're going to get that money from the government and how soon?

MULLIN: Well, we received an excellent response. As you mentioned, it is $17.5 billion. It's in two parts. $5 billion is associated with the immediate losses associated with the tragedy of September 11 and $11.5 billion is a loan program that will give us financial stability over time. So we really need a very fast cash infusion. And we do have a good outlook in terms of getting the $5 billion relative quickly.

GHARIB: All right, and so when do you think you will get that?

MULLIN: Well, I think the House will take up the bill probably tomorrow. We will be talking with the Senate tomorrow and hopefully both houses can put it together by Friday.

GHARIB: Even if you get the money, Mr. Mullin, isn't it critical that somebody, whether it's the government or airlines, provides security so that the traveling public feels safe to go back on airplanes?

MULLIN: Well, we have worked extensively during the past week with the federal government to develop a greatly enhanced security system that is attuned to the new reality that we faced as a result of the tragedy. Those new processes are being put in place right now and we think that the aviation is absolutely safe and we are encouraging the public to get back on the airplanes and we really think that the government is doing an excellent job in terms of tracking down the perpetrators and that it really is safe now.

GHARIB: OK. One thing that I hear from a lot of analysts, they're saying that they really don't expect business travelers to come back, to fly on commercial airlines. A lot of corporate America will get private jets. What impact will that have on Delta and other airlines?

MULLIN: I think that commercial aviation will continue to provide, by far, the largest majority of air service and any shift to private jets would take some time. I do think that business generally is waiting for a week or two weeks, and I hope it's that short, before their employees return to travel again. But I think as time goes by and everybody sees how safe it is, hopefully they'll come right back.

GHARIB: We heard today from American Airlines they're laying off 20,000 employees, the same kind of number from United Airlines (UAL). Will we be hearing similar kind of announcements from Delta soon?

MULLIN: Well, I'm afraid we will have to have some employee cutbacks. We're working on our program right now. We wanted to wait and see what kind of response we got from the federal government to factor whatever financial help they might give into our thinking and we'll have to make our announcements fairly soon on that.

GHARIB: We just have a little bit of time left and I know this is a big question, but with or without a bailout from the government, how vulnerable is Delta to bankruptcy?

MULLIN: Delta is not very vulnerable at all. We have an excellent financial condition. But I think this is like a tidal wave that would engulf all ships if we did not have financial help, really all airlines. Delta could go considerably longer than most other airlines but at the end of the day without some help, all airlines could get engulfed by this.

GHARIB: Thank you very much, Mr. Mullin, and we wish you the best of luck.

MULLIN: Thank you very much.

GHARIB: We've been speaking with Leo Mullin, Chairman of Delta Airlines.

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. 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.

09/19/01: Money File-Investing In America Post Terrorist Attack

PAUL KANGAS: In the money file tonight, investing in America. Here's Kathy Kristof, business writer for the "Los Angeles Times" and author of "Investing 101."

KATHY KRISTOF, AUTHOR, "INVESTING 101": Financial markets started the first days of trading following the terrorist attack in turmoil. The stock market particularly is likely to remain highly volatile in the weeks to come. However, in this tumultuous time, investors must remember one thing: the U.S. economy is not failing.

Yes, the loss of so many productive people and the delay of so much important business will slow the nation's economic recovery, but the business of America will go on. American citizens will produce. U.S. companies will prosper. Financial markets hate uncertainty, as do many of us. But remember as a country we have faced war before. We have faced uncertainty. We have faced cowardly enemies like these who send their minions to kill innocent men, women and children while the perpetrators hide.

The only thing that's certain is that the American spirit will prevail. In fact, in times of extreme adversity the best of this country comes out. We become stronger, braver, more generous and more innovative. Our nation becomes mightier in every aspect than ever before. This is all you need to know about whether you ought to stay the course with your investments. When you own stock in American companies you own a piece of the U.S. economy. There is no economy like it in the world. For a time investors may take losses. Investors and all Americans will have to look beyond our personal interests while we focus on the good of the country. In the long run, we will all be rewarded. We live, work and invest in the most vibrant nation in the world. Freedom will prevail. I'm Kathy Kristoff.

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. 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.

09/19/01: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: The stock market opened slightly higher today as investors were somewhat encouraged that yesterday's relatively mild closing losses on Wall Street might be signaling a market bottom. At the outset of trading then, the Dow Industrial Average wiped out yesterday's 17-point closing loss by posting a 38- point gain, while a 13-point advance in the NASDAQ Index recouped a little over half of its loss on Tuesday. The budding upturn soon gave way however to renewed worries about the growing fragility of corporate earnings against the threat of a global recession, all compounded by the realization that there could be more acts of terrorism, especially if we initiate military strikes overseas. These fears seemed to turn many potential buyers into sellers by noontime, since the Dow had fallen to a 257-point loss and the NASDAQ Index was down 62 points, or nearly 4 percent. The growing number of uncertainties made some investors a bit panicky by mid-afternoon as they dumped a lot of their holdings and the Dow tumbled to just over a 400- point deficit a little before 3:00 p.m. That downward spike finally attracted aggressive buyers from the sidelines, and in hopes that a bottom had been reached, the ensuing rally cut the closing loss in the Dow to 144.27 points or 1.6 percent and it now stands at 8759.13. The NASDAQ Index closed with a loss of 27.28, ending at 1527.80.

Big board volume sparked up quite a bit at 2.12 billion shares, well above yesterday's pace, but more than three times as much down volume as up volume.

The Dow Transport Index off nearly 51 1/4 points.

Utilities fell nearly 6 1/2 points.

The Closing Tick just modestly bullish at +174.

Standard & Poor's 500 off 16 2/3 points.

Almost an 8 point drop in the S&P 100.

The MidCap 400 off 8 2/3 points.

And the Bridge Futures Price Index fell 2.17.

A loss of just about 9 points in the New York Composite Index.

Value Line losing 7 1/4 points.

8 1/2 point drop in the Russell2000.

And the broadly based Wilshire 5000 off 158 1/2 points or 1.7 percent.

Following several days of weakness on profit taking, the bond market bounced back today, except for some of the longer issues, longer maturity issues. Among the positive factors for the debt market was the report of a slight decline in the U.S. July trade deficit and of course the deep sell off in stocks brought in quite a bit of flight to safety buying in mid afternoon. But a lot of that evaporated on the rebound in stocks. So tax free and corporate bonds slumped back down to post 1/2 point closing losses on average and most Treasuries still ended higher on the day.

The 5-year notes up 17/32.

The 10-year notes up 7/32.

But here in the long maturities, a drop of 4/32 in the 30-year bond.

It looked today like we might be flirting with a bottom to this sharp decline on the market, off 144 1/4 points on the close but down over 400 at one stage. Of course, declines swamped advances by more than a 3 to 1 ratio. Only 23 new yearly highs, 550 new lows.

General Electric (GE) for the third consecutive day topped the active list and on 44 million shares today, down another $1.35, and it traded as low as $31 a share today. But it did make a comeback, as you can see.

EMC (EMC) down $0.30.

AOL Time Warner (AOL), a $0.50 gain.

Lucent Technologies (LU) edged up $0.18.

And Disney (DIS) up $0.10. It traded as low as $16.83 this morning, though, after First Boston downgraded it to a "hold."

Nokia (NOK) up $0.84. HSBC upgraded it from "hold" to "buy."

The NASDAQ 100s or the Cubes, they're called, down $0.53, but they were as low as $28.26 during the heart of the sell-off.

Cendant (CD), which involves, has subsidiaries in the travel business, down $1.40.

Citigroup was off $0.89.

And Compaq Computer (CPQ), tenth in volume, down $0.39.

Ambac Financial (ABK) down $5.17 after Standard & Poor's downgraded it from "buy" to just "accumulate."

Eastman Kodak (EK), a loss of $2.22. The company has cut its third quarter earnings estimates sharply. It now says it'll earn $0.65 a share at best, and that's against earlier guidance of $0.90 to $1.20 a share.

Goodrich (GR) off $2.46. S.G. Cowan Brokerage downgraded it from "neutral" to "under perform."

Merrill Lynch (MER), the weak brokerage, representing the weak brokerage group, down $1.31, and the low on Merrill today was 35 1/4.

Tyco International (TYC) fell $1 even though the company said it's still comfortable with its fiscal 2001 earnings estimate of $2.77 to $2.78 a share.

And Viacom (VIA) off $0.58. It traded as low as $29.93, however, when the company this morning warned about higher costs and lower revenues from advertising in the wake of the attack on America. Of course, the company owns CBS. And First Boston today, incidentally, downgraded it to just a "hold."

Factset Research Systems (FDS) did well, up $3.18. Fourth quarter earnings, $0.25, up from $0.21 last year on a 28 percent rise in revenues to a record level. Those earnings were in line with estimates. The company is a major supplier of computer based economic data to the financial community.

And here's Computer Sciences (CSC) doing well, up $2.65. It could be some bottom fishing there. The 52 week high was almost $80 a share.

Lone Star Technologies (LSS) one of the biggest losers, down $7.45. The company sees third quarter earnings of only $0.08 to $0.12.

The Street was expecting $0.70 a share.

NS Group (NSS) down $1.49. This company sees third quarter earnings, I should say a third quarter loss of $0.10 a share. The Street was expecting earnings of $0.24.

LSI Logic (LSI) dropped $1.49. The company is cutting 600 jobs or eight percent of its workforce.

And Cable and Wireless PLC (CWP) down $1.27. The story here, the company cut its first half 2002 profit guidance for its global unit.

NASDAQ trading, a loss of 27 ¼ points. Volume getting heavy, 2.46 billion shares. 12 stocks up for almost every 26 lower.

Microsoft (MSFT) topped the active list, down $0.45.

Followed by Intel (INTC), which dropped $1.19.

An $0.08 loss in Cisco Systems (CSCO).

Applied Materials (AMAT), a $2 loss there.

Amgen