SUSIE GHARIB: Wall Street kicked off the week with a powerful rally. Stocks surged for the first time since the terrorist attacks. The Dow vaulted 368 points, and the NASDAQ jumped 76. Investors started buying again after positive comments today from several top market strategists, including one of Wall Street's best-known bulls, Abby Joseph Cohen of Goldman Sachs. But as Erika Miller reports, many on Wall Street are still cautious.

ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Nearly two weeks after the terrorist attacks, Wall Street finally struck back in the form of a decisive rally. Blue chips soared 4.5 percent. The NASDAQ surged more than 5 percent and the Standard & Poor's 500 gained nearly 4 percent to close above 1,000. Investors regained confidence after hearing bullish comments from several influential Wall Street strategists, among them Abby Joseph Cohen of Goldman Sachs. She raised the stock portion of the firm's model portfolio to 75 percent from 70 percent. She cut her bond allocation to 22 percent.

ABBY JOSEPH COHEN, CHIEF INVESTMENT STRATEGIST, GOLDMAN SACHS: We think this is an economy which has very good prospects in the intermediate and long term. Stocks were just too cheap, offer good value. In addition, we think that there were some important confidence boosters over the last few days. They take the form of government policy and also companies standing up and saying that they were ready to buy back the shares of their own companies.

MILLER: Credit Suisse First Boston's Tom Galvin also raised his stock portion to 70 percent from 65, cutting bonds by 5 percent. And Bank of America strategist Tom McManus boosted his firm's equity recommendation to 70 percent, also reducing bond holdings to 25 percent.

TOM McMANUS, EQUITY MARKET STRATEGIST, BANK OF AMERICA SECURITIES: It got to be the point where stocks were so cheap, you'd almost have to have another attack in order to justify the kinds of fear that we were seeing in stock prices.

MILLER: Most sectors did well, but technology stocks were among the biggest gainers, helped by encouraging comments from JDS Uniphase (JDSU). The network equipment maker says it is seeing early signs of stabilization in its business, even though the economic downturn has yet to reverse. Airline stocks, some of which lost more than half their value last week, soared today in response to the government's approval of a $15 billion bailout package. The big question is whether today's rally is a sign the market has bottomed.

ALAN ACKERMAN, CHIEF MARKET ANALYST, FAHNESTOCK & CO.: My sense is this market will try to stabilize. There will be no quick fix, but over a period of time, this market will be higher than it is right now.

MILLER: But even Wall Street bulls are warning investors not to read too much into the stock market rally. Many big-name companies continue to warn of lower profits and uncertainty persists about the U.S. economy and possible U.S. military retaliation. Erika Miller, "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.

09/24/01: Market Outlook With Jeffrey Applegate, Lehman Brothers'Chief Market Strategist

SUSIE GHARIB: Despite today's rally, my guest tonight says that economic and political risks will continue to weigh on the markets. Jeffrey Applegate, chief market strategist of Lehman Brothers joins me live now from midtown Manhattan. HI Jeff, nice to have you on the program.

JEFFREY APPLEGATE, CHIEF MARKET STRATEGIST, LEHMAN BROTHERS: Susie, good to be here.

GHARIB: You lowered your targets today for the next 12 months. You're looking for the S&P 500 to be around the 1200 mark and the Dow at 10,000. Talk us through your thinking.

APPLEGATE: The primary reason we lowered the targets is that risk went up. Equities, as you know, are a risky asset class as compared to bonds and certainly cash. And we had this savage and surprise attack, which I think has unfortunately raised the equity risk premiums. So while we do think the market can do well going forward, we think that valuation is not going to be as rich as it otherwise would have been. So that's why we took the targets down.

GHARIB: We had a pretty strong rally today. Do you think that the worst of the selling is over, that capitulation that everybody has been looking for?

APPLEGATE: Yes, I do think the worst of the selling is over. I mean if you look at what the market did last week, and it was really reeling from, again, this surprise attack and also the fact that it looks like the U.S. economy has now tipped into recession, if you look at how poorly the stock market has been doing relative to bonds, you really have to go way back in history to find periods when the market has done equally poorly. That was back in the Depression and the first couple years of WWII. Now, we certainly have our challenges today as we did back then, but much as it wasn't a good idea to sell at the market bottom in 1932 or 1942, I don't think it's a good idea to be selling at the market bottom in 2001.

GHARIB: But yet your asset allocation is still pretty bullish, 80 percent in stocks, 20 percent in bonds and nothing in cash. So what is your recommendation to investors?

APPLEGATE: Well, our recommendation is that we think you should be over weight equities as compared to a normalized or a neutral weight since equities have under performed bonds by so much and since you've got a fair amount of policy stimulus now, both from the Fed as well as fiscal policy being put in the pipeline, that should mean that stocks will outperform bonds and with the Fed aggressively easing, cash returns are going to continue to come down. So cash, we think, is the last favored asset class. Stocks first followed by bonds.

GHARIB: Jeff, you've also predicted, speaking of the Fed, that when they meet next week on October 2 that they will cut interest rates again aggressively by 1/2 a percent. Will that stimulate the markets, do you think?

APPLEGATE: I think it will certainly help. One of the things that has been concerning us really for several months now is that if you go back and look at the history, whenever we've had profit declines of this magnitude, high double digit percent declines, go back and look at the history and you'll see that the Fed has always had to take real short-term interest rates so its nominal rates less inflation-take real rates down to zero. We're not there yet. If we get the Fed taking rates down to 2 ½ percent with inflation running a little bit above that, we'll finally get to zero real rates and that should be a very good sign for future recovery.

GHARIB: Jeff, unfortunately we only have 30 seconds left. But I do want it find out what sectors of stocks that you think are attractive at these levels.

APPLEGATE: OK, well, given our view around the Fed financials we think are a sector that ought to do well with further Fed ease, the term structure rates coming down and falling inflation. But generally we've got a portfolio that is overweight cyclicals and underweight non-cyclicals. So in addition to financials, Industrials as well as information technology, we're hugely underweight the defensive sectors of the market.

GHARIB: OK. Wish we could get into more details, but we've run out of time. Thank you very much for being with NIGHTLY BUSINESS REPORT this evening.

APPLEGATE: My pleasure. Good seeing you.

GHARIB: We've been speaking with Jeffrey Applegate of Lehman Brothers.

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.

09/24/01: President Bush Fires Up The War On Terrorism With A Financial Freeze

PAUL KANGAS: Calling it the international equivalent of a most wanted list, the President today announced that the United States Is moving to freeze the assets of groups linked to terrorist Osama bin Laden. As Darren Gersh reports, it's the first step in a new kind of war.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The President said he was putting the financial world on notice-if you do business with terrorism, you will not do business with the United States.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Money is the lifeblood of terrorist operations. Today we're asking the world to stop payment.

GERSH: At 12:01 this morning, the President signed an executive order freezing the assets of 27 terrorist leaders or organizations. The order also allows the Treasury to freeze assets of other organizations or banks found to support terrorism. And it broadens the authority of U.S. officials to block transactions of foreign banks that refuses to help identify terrorist accounts. Jack Blum was special counsel to the Senate Foreign Relations Committee during its investigation of money laundering by a Pakistani bank, BCCI. BCCI funneled money to the Mujahadeen in Afghanistan. Blum says banning foreign banks from doing business in the United States would, in effect, cut them off from the international dollar system.

JACK BLUM, MONEY LAUNDERING EXPERT, LOBEL, NOVINS & LAMONT: And for most banks in the world that is the kiss of death because most of the world's commerce is in dollars. If they can't cash dollar checks, move money for their customers in dollars, they're pretty well out of the banking business.

GERSH: But a broad campaign to police the global banking system could increase costs and slow trade. It may also have little effect, since terrorists do much of their business outside traditional banking systems.

SHERMAN KATZ, INTERNATIONAL BUSINESS ANALYST, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: Just as we know the terrorists moved around the United States without getting detected, so, too, the funds are going to be transferred in primitive ways and it's up to us to find techniques for getting into the sewers with these lower level transfers to help block them.

GERSH: The President vowed this campaign against the financial foundations of global terror is just beginning. More assets will be frozen as they are discovered. 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.

09/24/01: Trouble May Be Building For The Housing Market

SUSIE GHARIB: As the economic picture darkens, there are new questions about the outlook for one of the few bright spots, home sales. As Jeff Yastine reports, there are signs that the housing market is starting to soften.

JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: It had been one of the few parts of the economy yet to falter. Home sales by the nation's largest home builders have remained vigorous over the past year despite the sharp drop in the stock market and eroding consumer confidence. Top builders like Lennar said its third quarter earnings jumped 70 percent. KB Homes (KBH) reported a 36 percent earnings gain for the same period. But all that reflects the situation before September 11. What about after? Analysts are beginning to have a few concerns, namely fewer customer visits to model centers and the like.

MATT MOYERS, HOUSING ANALYST, AG EDWARDS: Most of them have seen significantly lower traffic but order rates and new orders are comparable to last year. But the traffic numbers are what's giving us pause at this point. As layoffs continue to increase and consumer confidence will likely fall further, we think it's time to be a little bit more cautious with the home builders.

YASTINE: Industry groups are a bit more optimistic. Most say traffic by perspective buyers did drop off in recent days, but the fundamentals for the industry are intact. Mortgage rates remain attractive. Because of demographic trends, the pool of potential homebuyers remains large and the inventory of unsold new homes in the U.S. remains at low levels.

DAVID SEIDERS, CHIEF ECONOMIST, NATIONAL ASSOCIATION OF HOME BUILDERS: So the health of the companies is good. The situation with inventories is good. Frankly that does put them in a position to protect themselves to some degree against a potential downshift in demand, meaning they have the resources to offer some incentives to keep the sales going if it comes to that.

YASTINE: Still, analysts remain cautious about the group, raising earnings expectations for firms that continue to deliver profits yet lowering their price targets for the same stocks. Investors will find out later in the fourth quarter if such caution is warranted. Jeff Yastine, NIGHTLY BUSINESS REPORT, Miami.

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.

09/24/01: Commentary: The Real Threat To Freedom Isn't Terrorism

SUSIE GHARIB: Tonight's commentator believes the recent terrorist attacks are not the real threat to our liberty and freedom as Americans. Here's Walter Williams, professor of economics at George Mason University.

WALTER E. WILLIAMS, COMMENTARY: Yes, the September 11 terrorist attack destroyed the World Trade Center and parts of the pentagon. That attack did not destroy our country's most important foundation, the Constitution and our Bill of Rights, that guarantee our liberties. The true threat to liberty comes not from terrorists, but from political leaders whose natural inclination is to seize upon any excuse to diminish them. We're going to hear calls for restrictions on privacy, on our freedom to engage in commerce, to travel, to communicate and other rights that not only make for a free society, but a rich one as well. A politician's natural tendency to seek to control and regulate and now with the terrorist attack, they have a ready made excuse. We should not tolerate any restraints on our liberties in the name of combating terrorism and producing domestic safety. Keep in mind that a caged canary is safe, but by no means free. Our message to politicians should be use restraint when you're talking about restricting liberty, use ruthlessness in the pursuit of terrorists. Unfortunately, I'm afraid, Washington sees that message in reverse. I'm Walter Williams.

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.

09/24/01: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: Last week's plunges of 14 percent on the Dow and 16 percent on the NASDAQ by most any standard, put stocks on Wall Street in an oversold condition from which a solid rebound would be normal. Add to that a vow by President Bush that the economy would snap back, coupled with Abby Cohen's recommendations and a drop in oil prices, and it was no surprise to see the Dow surge 280 points, or 3.4 percent, by 11:00 this morning, when the NASDAQ Index vaulted 4.4 percent. The sharp early rally was helped along by some frantic short covering purchases which soon faded, and yet the market not only held its gains, but added to them for the rest of the morning and through the noon hour, suggesting there was plenty of buying on fundamentals. At 1:00 p.m., the Dow moved to a 367-point, or 4.5 percent, gain. NASDAQ was up nearly 80 points, or 5.6 percent. Encouraged by the market's strong performance, buyers continued to bid stocks higher throughout the afternoon on confidence that a bottom may have been reached. After pushing to as much as a 413-point advance, the Dow did back off late in the session to close with a gain of 368.05 points, 4.5 percent and now stands at 8,603.86. The NASDAQ Composite climbed 76.21, ending at 1499.40.

Big board volume, 1.7, well down from Friday. The bulls would like to see that much heavier but up volume exceeded down volume by a very impressive 14 to 3 margin.

The Dow Transport Index up 75 points.

Utilities fell nearly 2 1/4 points.

Closing Tick still bullish at +606.

Standard & Poor's 500 up 37 2/3 points.

21 1/3 point gain in the 100.

The 400 up 13 1/3.

Bridge Futures Price Index plunged 4.14 on those sharp drop in the oil prices.

Almost a 17 1/4 point gain in the New York Composite.

Value Line up 11.70.

Almost a 15 point rise in the Russell2000 Small Cap.

And the Wilshire 5000 rising 338 points.

No safe-haven buying to bolster bond prices today as the big rally in stocks prompted debt investors to do a little selling. But serving to limit the downturn was nearly a, was a huge plunge in New York oil futures. We'll have more on that in a moment. A firm US dollar was another factor that limited the closing losses for tax-free and corporates to only eighths and quarters. The Treasury market ended on a mixed note.

The 5-years down 5/32.

The 10-years down 7/32.

But a gain of 4/32 in the 30-year bond.

Lehman Brothers Long-Term Treasury Bond Index off .19.

Certainly a rather violent day, but on the up side. I guess that's the main preference. 368 points and 24 stocks up for every eight down. A 3 to 1 ratio there. That's pretty good. Only 20 new yearly highs, though; 140 new lows.

General Electric (GE) topped the active list today, 54.3 million shares, up 390. Bear Stearns repeated a "buy."

Compaq Computer (CPQ) up $0.55. Salomon Smith Barney upgraded it from "neutral" to "buy."

EMC (EMC) up $1.70 even though Bear Stearns cut earnings estimates.

Disney (DIS) edged up $0.03.

AOL Time Warner (AOL) gaining $2.65 even though S.G. Cowan Brokerage cut earnings estimates. And after the close, AOL lowered its own guidance. The stock traded as low as $31.25 after hours.

Citigroup rebounding $2.64.

A similar gain in Tyco International (TYC).

Lucent Technologies (LU) up nearly $0.50.

Pfizer (PFE) gained $0.23.

And the NASDAQ 100 was up $1.42.

Caterpillar (CAT) rose $2.07. Bear Stearns upgraded it from "attractive" to "buy."

Delta Air Lines (DAL) up $1.52, responding positively to the government's promised financial aid.

Hewlett-Packard (HWP) gained $1.14. Salomon Smith Barney is upbeat about its merger with Compaq Computer (CPQ).

Marsh & McLennan (MMC), the reinsurance company, up $4.33. UBS Warburg upgraded it from "buy" to a "strong buy."

3M (MMM) was the biggest point gainer in the Dow Industrial Average.

And Viacom (VIA) up $1.65. Morgan Stanley upgraded it from "outperform" to a "strong buy."

NTL (NLI), this is Britain's biggest cable operator, up on reports it may sell its transmission towers unit for almost $2 billion and use part of the proceeds to cut its $16 billion debt burden. France Telecom (FTE) mentioned as a potential buyer.

Univision Communications (UVN) up $3.86. Sutro & Company said that's probably short covering.

Central Parking (CPC) up $2.52 on news that the family that controls the company is increasing holdings.

Galileo (GLC) yup $2.78. European regulators gave the go ahead for Cendant's (CD) acquisition of this company. Cendant was up $0.51 a share.

Dollar General (DG) the big point loser or percentage loser. The company dismisses DeLoitte & Touche as its auditor and Goldman Sachs downgraded the stock to just "market perform."

Conoco B (COCb) stock off $2.65. The company sees third quarter earnings of only $0.55 to $0.60 versus a Street estimate of $0.60 to $0.85. Banc America downgraded it from "buy" to "market perform."

NASDAQ, 76 1/4 point gain in the Index, volume not particularly heavy. 26 sto