SUSIE GHARIB: America goes to war, and Wall Street reacts with restraint. No signs of panic selling, even as the United States engaged in a second round of bombings in Afghanistan this afternoon. Investors stayed calm as they mulled over the military strikes and what they mean for the country, the economy, and the markets. The Dow fell 51 points and the NASDAQ edged up a fraction. Scott Gurvey has more on today's market reaction.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Early morning gains turned to losses on Wall Street once the second round of air attacks on Afghan targets began. But the market closed mixed, and Wall Street moves were subdued as investors contemplated the effects of the new military action. Natural gas, defense, and some oil and gold stocks posted gains. Financial, retail, and cyclical stocks declined. In the technology sector, chips, networking, and hardware stocks showed gains. The NASDAQ gained a fraction. Analysts say that shows the market has no clear direction.

ALAN ACKERMAN, MARKET STRATEGIST, FAHNESTOCK & COMPANY: I think there's a high level of anxiety. There's a high level of nervousness. The real issue is not what's going to happen to the economy, but what may happen on the part of the terrorists in retaliating against the US and coalition attack on Afghanistan. My own sense is that this is a scenario that's going to play out over a long period of time.

GURVEY: Investors sparked a big rally when the air attacks began in Iraq during the Gulf war, but that may not happen this time around. In the Gulf war, the air strikes began what was seen as a definitive plan of action that would end with the liberation of Kuwait. This time, the world has been told there will be a long period of sustained military action. Advisors say investors will have to consider that fact as they develop their investment strategy.

TONY DWYER, CHIEF MARKET STRATEGIST, KIRLIN SECURITIES: At the end of the day, from a trading perspective, we're overbought and we're into resistance where some people start selling stocks. Now, over time, I think we've put in a low, and I think the fundamental backdrop will improve dramatically, and as that happens, you should get a much better market environment next year and beyond.

GURVEY: Analysts say a better market environment will require a healthy dose of consumer confidence and spending, and that will require progress on the anti-terrorism front. Scott Gurvey, "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.

10/08/01: Market Strategies With Ned Riley of State Street Global Advisors

SUSIE GHARIB: Our guest tonight says that while investors are anxious about the war in Afghanistan, they are overlooking some strong market fundamentals. Joining me live now from Boston, Ned Riley. He's chief investment strategist at State Street Global Advisors. Hi, Ned.

NED RILEY, CHIEF MKT., STRATEGIST, STATE STREET GLOBAL ADVISORS: Hi, Susie.

GHARIB: Well, let's begin with what is your take on the markets right now?

RILEY: Well, clearly things developing in Afghanistan do take center stage. But I think as we move through this month, and it appears that we don't lose ground in Afghanistan, people are going to start to focus on the fundamentals of this market as well. The only issue outstanding of course is retaliation and that is still in the backs of everybody's minds. But what people are failing to remember here is the markets are down very dramatically from their highs. The NASDAQ is down over 72 percent from its high and the Standard & Poor's Index is down 38 percent from its high. So the markets have already discounted an awful lot of the short-term negative economics that is clearly in the market today. And what we'll be seeing over the next two to three weeks. I'm going to pass on a little about what I think may happen. In the next two or three weeks we're going to get some company reports that will be totally dismal. Profits are going to be down. CEO's and CFOs aren't going to really talk about a very bright future. But stocks may actually rally on that news, feeling that the worst is behind us and this is the low point for psychology.

GHARIB: Let's talk a little bit more about the war, though. Historically, wars have been good for Wall Street. But many people say that this military action is not typical of the historic wars. So might the market reaction be atypical as well?

RILEY: Well, I think the market action may be atypical, but I do believe that we are not going into this area without being successful. We did the same thing in Baghdad, only that was a little further away from us in terms of its impact on us. But I do believe that the ultimate resolution of this issue and clearly a closure to this issue will actually be an added benefit to the market, I'd say of at least 4 to 500 points on the day that it's resolved. So I think from that perspective, we are going to see a much higher market by the end of this year, whether it be just from the closure of this issue or just the fundamentals for next year.

GHARIB: You were telling me that there's a lot of uncertainty and a lot of fear that negative psychology in the market, but that investors are not prepared for good news. Tell our viewers what you mean by that.

RILEY: Well, I don't think they are prepared for good news. The first piece would be obviously resolution, what happens in the middle east. But more importantly, I think profits are actually close to bottoming out by the first quarter of this coming year and if anything, by the second quarter, when they have a plus year over year, change in profits. We have a tremendously low inflation rate which historically has been very positive for valuations and high price/earnings ratios and we have a huge amount of liquidity that's just been frozen on the sidelines because of the recent events and also the fear that we're deteriorating further into a recession. And I think that we're already two-thirds of the way through the recession. I've said this before. Unfortunately for economists, I think they're a day late and a dollar short. We've been two-thirds through a profits recession already.

GHARIB: Ned for someone who wants to put some new money to work in the market, they see all these bargains out there with prices falling so much, what would you - give one or two stocks that you think would be worth putting money in.

RILEY: Well, I think Dell Computer (DELL) is one of them, leader in its business, very good cost structure right now and is clearly going to knock a lot of competition out of the box. I think Cisco (CSCO) with its cash and its balance sheet and its cash flow of a billion and a half, million dollars, each quarter, is another add to the balance sheet.

GHARIB: All right, real quickly, let me just ask you this. Those are two great suggestions but today, a lot of people were off. It was a holiday. Investors weren't here. Tomorrow, what kind of market reaction are you expecting?

RILEY: I'm expecting a rally actually, particularly if we continue with the attacks and the food dropping an I think we're probably going to get a good rally in this month of October if not early November. So I would buy long term right now.

GHARIB: All right, thank you so much, Ned.

RILEY: My pleasure.

GHARIB: .My guest tonight, Ned Riley of State Street Global Advisors.

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.

10/08/01: Tom Ridge Assumes The Position of Director of Homeland Security

PAUL KANGAS: As the United States continues bombing runs on Afghanistan, there are continuing efforts to shore up security at home. The nation has a new director of the Office of Homeland Security tonight, former Pennsylvania Governor Tom Ridge. As Stephanie Woods reports, even before Ridge was sworn in, many American firms were already rethinking their security plans.

STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: President Bush used the swearing-in ceremony for the newly created Office of Homeland Security to assure a nervous nation that terrorists will be stopped.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: America is equal to this challenge, make no mistake about it. They've roused a mighty giant- compassionate land-will rise united to not only protect ourselves, not only make our homeland as secure as possible, but to bring the evildoers to justice so that our children might live in freedom.

WOODS: The new office will coordinate among 40 Federal agencies to close security gaps. Homeland Security Director Tom Ridge says the challenge is immense.

TOM RIDGE, DIRECTOR, OFFICE OF HOMELAND SECURITY: The president's executive order states that we must detect, prepare for, prevent, protect against, respond to, and recover from terrorist attacks-an extraordinary mission, but we will carry it out.

WOODS: The FBI has already put some companies on notice to be on the highest alert for attacks. Among them: telecommunications facilities, electric power, oil and gas plants, as well as banking, information technology, and water supply systems. Many businesses aren't waiting for the government to act. Hours after the September 11 attacks, many power companies put their disaster plans into effect. Earl Nye heads up a security task force for the electric utility industry.

EARL NYE, CHAIRMAN, EDISON ELECTRIC INSTITUTE: Our traditional disaster plan served us well, but we know this is a new normal. Nothing is like it was before and the industry is looking at longer-term actions that may need to be taken, and we'll be about those as soon as practical.

WOODS: It's not just critical infrastructure that's at risk. Companies across the board are also rethinking their security systems.

ARMANDO LARA, VP OPERATIONS, CONTROL RISKS GROUP: It requires a company now to seriously look at their crisis management plan, their business continuity plan, their business recovery plan, and decide if those are workable systems that they have in place, and practice them, rehearse them, update them and understand that they may have to, at a moment's notice, put those plans into action.

WOODS: Those plans will need to be in effect for as long as the war on terrorism continues, which is likely to be a years-long mission. Stephanie Woods, "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.

10/08/01: "America Rebuilds"-Keeping Investor Confidence Alive & Well

SUSIE GHARIB: As Americans look back over the events of the past 24 hours and the past month, we look to the future. After the terrorist attacks and their aftermath, we have begun to rebuild our economy, our landmarks, our society. So tonight, we begin a special series of reports that we're calling "America rebuilds," efforts to recover following the events of recent weeks. Stephen Aug looks at how investor confidence might be battered, but not broken.

STEPHEN AUG, NIGHTLY BUSINESS REPORT CORRESPONDENT: At age 72, Bob McFarren is retired. He looks fit, and golfing helps, so it was not surprising that he was out golfing near his home in Washington, D.C. the morning the World Trade Center and the Pentagon were hit. His first thoughts were of deep shock at the tragedy. It was only a few days later, when his financial adviser called, that he began to think about how the attack might affect his investments.

ROBERT McFARREN, INVESTOR: I said to him, "is there anything we should be doing?" And he said, "I don't know yet. You know, things are in such turmoil." He says, "I don't know what it is we would think about doing at this point."

AUG: McFarren says he now feels pessimistic about the near term, but he believes nearly every dark cloud has a silver lining.

McFARREN: The probability is quite good that we haven't seen the bottom. We're probably not going to see the bottom for three to six months. That gives bargain hunting a time to operate.

AUG: As a result, McFarren plans to commit some spare cash to the market soon. Meanwhile, he has not been among the sellers. With much of the recent selling thought to be by financial institutions, McFarren says he and the institutions just have different outlooks. He can afford to be patient.

McFARREN: They exist in a different atmosphere totally, and they're being paid to manage, and they have a driving force on them to manage things, and that means action. And that's buy sell in their game.

AUG: It's much the same as the view from Colin England. At 45 years old, he's a pension actuary. As a hobby, he collects oriental rugs. He's also a long way from retirement, and whether investors have confidence in the market or not makes no difference to him when he's thinking of investing.

COLIN ENGLAND, INVESTOR: It's the same things consistently, and that is companies that are making money or that have taken a temporary dip in their earnings, that are at a relatively low price relative to their earnings and finally, almost always, stocks that pay dividends.

AUG: So in his spare time recently, England's been looking over the stock tables, trying to find some bargains. What's he looking at?

ENGLAND: Probably some of the pharmaceuticals, some of the real estate investment trusts, and potentially a few of the tech stocks.

AUG: Generally, the investors I spoke with, while horrified and frightened by the World Trade Center disaster, seemed more sanguine about the markets. Many have taken big hits on the bottom line, and that hurts. But they have not bailed out of stocks. They view the hurt as temporary, and they seem confident about prospects for the long term. Stephen Aug, "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.

10/08/01: Commentary: Transportation Alternatives & Incentives

SUSIE GHARIB: Tonight's commentator has some thoughts on the government's $15 billion rescue plan for the nation's airlines. Here's Paul Krugman, columnist for the "New York Times" and author of "Fuzzy Math."

PAUL KRUGMAN, COMMENTARY: Last week I did something I've never done before: I took a train from New Jersey to Boston. I wasn't afraid to fly, but the extra hour or so I would have had to spend at the airport because of the newer security measures helped tip the balance. Should it have required an atrocity to induce me to take the train? During the 1990s, most things in America got better: incomes increased, jobs became more plentiful, crime declined. But transportation definitely got worse. The time lost by the average American to traffic jams tripled between 1982 and 1999. And thanks largely to congestion, air travel delays also got much worse. Road and air congestion are costs we impose on each other. When I fly or drive, I make it more difficult for you to do the same. Yet we have no incentive to take those costs into account. No doubt for many purposes, cars and planes are the only realistic transportation methods. But in some cases there are alternatives, and if we offered the right incentives, people might take those alternatives. So in a way, it's a shame that the immediate response to the crisis has been to subsidize the airlines. I understand why it may have been necessary-the example of Swiss Air shows that letting the airlines go bankrupt might have been disruptive indeed. But maybe in the near future we can step back and ask, literally, whether air and car travel is really the way we want to go. I'm Paul Krugman.

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.

10/08/01: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: Wall Street's nervousness over yesterday's air attacks and concern as to how the terrorists might respond was evident as the stock market opened today. At the outset of trading, the Dow Industrial Average fell 106 points, easily wiping out last Friday's 58-point closing gain. The NASDAQ Index fell 30 points after Friday's hard fought eight-point advance. The relatively light volume on the early sell-off gave some traders the courage to step in on the buy side over the next two hours. Also encouraging were reports from our Defense Department that the US air strikes appeared to have been quite effective against the Taliban forces. At 11:30 this morning, The Dow cut its deficit to only seven points. NASDAQ was up 10 points. The budding recovery lost its momentum as trading slowed to a crawl in the afternoon because of the partial holiday Columbus day atmosphere. All the uncertainty surrounding the war efforts was another reason why the Dow Industrial Average backtracked to close with a loss of 51.83 at 9067.94. The NASDAQ Index managed to inch up, .65, ending at 1605.95.

Big board volume slow as we could understand in this partially holiday atmosphere, 976.6 million shares and quite a bit more down volume than up volume.

The Dow Transports Index down nearly 26 1/4 points.

Utility Index fell 2.12.

The Closing Tick just barely bullish at +126.

Standard & Poor's 500 off nearly 9 points.

Exactly a 4 1/2 point drop pin the 100.

MidCap 400 off just about 4 points.

And Bridge Futures Price Index lost 1.13.

New York Stock Exchange Composite off 5 1/4 points.

Nearly a 2 1/4 point drop in the Value Line.

Russell2000 Small Cap Index off a little over 2 3/4.

And the broadly based Wilshire 5000 down 77.78.

No bond trading; this market was closed for Columbus Day.

Kind of a flat day on Wall Street, very narrowly mixed for the most part. The Dow off nearly 52.6 of a percent and the broader market lower by an 18-to-11 negative margin and interestingly, more new highs for the year than new lows, 62 versus 49.

AOL Time Warner (AOL) topped the active list on 20.1 million shares, down $2.06. "Barron's" columnist Alan Abelson quoted some negative comments by analyst Douglas Kass about the company.

U.S. Bancorp (USB) fell $1.56. It dropped about 3 1/2 Friday after cutting its own third quarter earnings estimate.

General Electric (GE) fell $0.65.

EMC (EMC) moving up $0.20.

Lucent Technologies (LU), a $0.05 gain, fifth in big board volume.

Motorola (MOT) edged up $0.49. Third quarter results are due out tomorrow. The Street is looking for about a $0.07 per share loss on Motorola.

AT&T (T) edged up $0.31.

Citigroup losing $0.68.

Texas Instruments (TXN) up $1.64.

And there you see AT&T Wireless (AWE) down $0.52, tenth in volume.

Alcan (AL) tumbled $1.80 after Prudential Securities downgraded it from "hold" to "sell."

Anheuser Busch (BUD) losing $1.40. UBS Warburg downgraded it from "strong buy" to just a "hold."

Caterpillar (CAT) was the biggest point loser in the Dow Industrial Average, off $1.61.

General Dynamics (GD) however, up $2.39 in a strong defense sector.

GMH down $1.10. SG Cowen brokerage downgraded it from "strong buy" to just "neutral."

And Raytheon (RTN) another defense company doing well, up $1.33.

Ackerley Group (AK), the outdoor advertising firm up $2.40 on news that Clear Channel (CCU) will acquire the company for .35 shares of Clear Channel for each share of Ackerley Group. That works out to a value of $13.75 today, even though Clear Channel stock fell $1.01.

Ducommun (DCO) up $1.30, partially a positive reaction to the company's restructuring plan. The firm also makes aerospace products like the fuselage skin for the C-17 aircraft which no doubt will be in demand in this guns and butter economy.

Atlas Air Worldwide (CGO) up $0.99. It traded as high as $11.44 after Bear Stearns upgraded it from "neutral" to "attractive."

The big loser percentage wise on the big board, Pediatrix Medical (PDX) off $5.54. A spokesman that we talked to could not account for that drop. No corporate releases.

Nucor (NUE) fell $4.22. Prudential downgraded this stock from "hold" to "sell."

And Allied Waste Industries (AW ) off $1.30. JP Morgan brokerage downgraded it from "buy" to "long-term buy," only for the patient apparently.

NASDAQ trading, a 2/3 point gain in the Index. Volumes low at 1.41 billion shares, way down from Friday's pace and for every 15 stocks higher, about 19 lower.

Microsoft Corp. (MSFT) topped the active list with a $0.32 gain.

Followed by Cisco (CSCO) up $0.11.

QUALCOMM Inc. (QCOM) gained $2.76.

Intel Corp.