9/30/05:
Gains Reign In The 3rd Quarter
SUSIE GHARIB: Stocks wrapped up the third quarter on an up
note. The Dow gained almost 16 points and the NASDAQ rose 10. In fact,
all the major averages posted gains for the quarter even though stocks have
traded sideways since July`s big rally. Scott Gurvey takes a look at how
the fourth quarter is shaping up.
SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: The markets
closed the quarter with a whimper as investors moved to the sidelines to
plot their moves for the fourth quarter. Looking ahead analysts note that
higher energy prices are having a negative impact on consumer confidence.
They say that means less spending, lower corporate profits and more rough
sledding for the equity markets. The Dow has in fact barely budged since
the first of the year while the more broadly based S&P 500 gained about
three point seven percent. A poor holiday spending season is the market
watcher`s biggest fear as it is usually the best selling season for most
sectors in the economy.
ARNIM HOLZER, CHIEF INVESTMENT STRATEGIST, DEUTSCHE ASSET MANAGEMENT:
We think that when heating bills hit the consumer for this fourth quarter
you could have 40 percent, 50 percent increases in heating bills over the
last year, that`s going to have a tendency to reduce consumer behavior.
That might make the fourth quarter a little bit soft in terms of equity
performance. We see you know, potentially a one, two or three percent gain
this quarter. Not much more than that.
GURVEY: One of the biggest problems in forecasting the fourth quarter
is the problem in getting a good assessment of the damage from hurricane`s
Katrina and Rita. Much of the nation`s refineries and gas generating
capacity remains off line. But while investors have their eyes on energy
prices the experts say that monetary policy may be the biggest unknown in
the fourth quarter, the Federal Reserve has yet give some indication of how
just high it will push interest rates.
ERNEST ANKRIM, CHIEF INVESTMENT STRATEGIST, RUSSELL INVESTMENT: What
we can`t predict with perfect vision is exactly how quickly we`ll get up to
high levels of production; what the winter will be like. These things are
uncertain. But what the long term effect on the market is I think is more
driven by the fed`s stance on how they proceed in their monetary policy and
interest rate targets and that may not fully unwind before the year`s
done.
GURVEY: The earnings pre-announcement season arrives in earnest next
week as companies begin to warn Wall Street about problems they see coming
in their third quarter reports. 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. Copyright (c) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
09/30/05: Future Fuel Prices Are Already Leaving Consumer Wallets On Empty
SUSIE GHARIB: If you`re booking travel on Continental or Delta Airlines
expect to pay more to fly. Today the carriers raised fares within the U.S.
and between the U.S. and Canada by $20 for each round trip. They say they
need the money to help offset soaring jet fuel prices. Continental is also
reviewing its schedule and says it might suspend some flights in some
markets. That`s already the case for American Airlines, which today
grounded some flights. The carrier said it`s temporarily canceling 15
daily roundtrip domestic flights because of fuel costs. The domestic
cutbacks will begin on Wednesday, and run for at least three weeks possibly
longer. In addition, American is discontinuing all of its service from
Chicago to Nagoya, Japan at the end of the month. Due in part to
hurricanes Katrina and Rita, American says jet fuel prices are now almost
double what they were just a year ago.
PAUL KANGAS: The airlines aren`t alone in coping with rising energy costs.
As I mentioned earlier, high fuel prices are already slamming the breaks on
consumer spending. And with winter already beginning to chill some parts
of the country, it won`t be long before home heating bills enter into the
equation. Darren Gersh reports.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: In Washington
D.C., low-income consumers, already hit hard by rising energy prices, are
signing up for help with natural gas bills expected to soar even higher
when the temperature falls.
UNIDENTIFIED MALE: Gas is outrageous.
GERSH: And it`s going to get worse. The Federal Energy Information
Administration is predicting natural gas and propane prices would add $500
to the average consumer`s winter heating bill. But that estimate will be
revised up in two weeks to take into account the devastation from hurricane
Rita.
GUY CARUSO, ADMINISTRATOR, ENERGY INFORMATION AGENCY: Clearly this is
going to increase the price that consumers pay this winter. It adds a
further blow to an already tight market situation.
GERSH: The ultimate price for natural gas this winter really comes
down to a race between the weather and efforts to restore production in the
Gulf of Mexico. The Energy Department reported today 15 percent of the
nation`s natural gas production remains offline and some plants may not be
up and running until next year. That`s why analysts expect prices to
remain volatile.
CHRIS MCGILL, MANAGING DIRECTOR, AMERICAN GAS ASSOCIATION: This isn`t
going to hit most residential consumers until late December or January
until you get that first full seasonal bill and then it just comes all at
once.
GERSH: Analysts expect consumers will adjust, putting on sweaters and
turning down the thermostat. But that may not be enough to support
consumer spending. Especially since the Federal Reserve is still pushing
interest rates higher.
JACK ALBERTINE, CEO, ALBERTINE ENTERPRISES: So the combination of
higher mortgage payments, higher gasoline prices, higher natural gas
prices, and then higher food prices as a result of transportation costs
going up, I think has a major effect on the consumer.
GERSH: To soften that blow, 28 state governors have asked
the president to increase funding for low-income fuel assistance
by more than a billion dollars. And on Monday the Bush administration
will officially launch a campaign to help consumers conserve
energy. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.
To learn more about this topic, click
here.
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. Copyright (c) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
09/30/05: 3rd Quarter Analysis With Sam Stovall,Chief Market Strategist at Standard & Poor`s
PAUL KANGAS: With me now to review how the major stock market averages
fared in the third quarter and what stocks were the big gainers and losers,
is Sam Stovall, the chief market strategist at Standard & Poor`s. Welcome
back to NIGHTLY BUSINESS REPORT, Sam.
SAM STOVALL, CHIEF INVESTMENT STRATEGIST, STANDARD & POOR`S: Happy to
be here, Paul.
KANGAS: As we look at averages, do you find it surprising they
manage to post gains in light of hurricane Katrina and Rita and the surge
in oil prices?
STOVALL: Also when you look back at history in the third quarter,
the S&P 500 falls more than 2 percent, the worst of all four quarters and
we eked out a winner this time.
KANGAS: Let`s get to the individual individuals. We see Hewlett-
Packard in the best performing stock in the third quarter up 24.2 percent.
What was behind that?
STOVALL: I think the Street thinks it will post good earnings and it
is a vote of approval for the new CEO.
KANGAS: Caterpillar did well up 33 percent. What`s behind that one?
STOVALL: The company will likely be a beneficiary of the highway
spending bill.
KANGAS: McDonald`s must be loving it with a gain of 27 percent.
STOVALL: Exactly. I think, basically management succeed with menu
alterations and the potential of pushing through some of the real estate
privatizations could benefit the share prices.
KANGAS: OK. The worst performers in the Dow led by Merck down 11.7
percent.
STOVALL: Well, I think mounting Vioxx-related litigation is pushing
shares lower.
KANGAS: General Motors slipped in with a 10 percent drop having
problems with legacy expenses and so forth.
STOVALL: Absolutely. Lower production volumes and higher material
costs.
KANGAS: And a major drug, Pfizer down 9.5 percent.
STOVALL: The mother of all drugs coming off patent. Lipitor will
happen in 2010 and the FDA is rejecting recent compounds.
KANGAS: All right. Let`s take a look at Standard & Poor`s 500 third
quarter winners led by Visteon.
STOVALL: Auto manufacturer looking to take over 23 facilities.
KANGAS: King Pharmaceuticals, one of the best percentage gainers in
this case.
STOVALL: That`s right, basically because of the potential merger with
Mylan Labs taking off credit implications.
KANGAS: And the third quarter losers in the Standard & Poor`s 500 led
by another auto parts maker.
STOVALL: That`s right. Four of these companies are on this list.
Adelphi, a company basically likely to go out of business or has the
potential making investors nervous.
KANGAS: And Danas.
STOVALL: Another situation like GM where the low production volume
and high material cost.
KANGAS: Let`s have a look on the NASDAQ, and the best performer, it
almost doubled.
STOVALL: It skyrocketed, basically, the feeling for surging demand
for flash chips for cellular phones.
KANGAS: And Garment Limited. That`s a move up 8 percent.
STOVALL: This company will likely benefit for increased demand for
GPS navigational systems.
KANGAS: That`s the things these days.
STOVALL: And on PetSmart, I know what you will say on this one.
KANGAS: It went to the dogs weak quarter guidance and slow in komps
and losing 25.7 percent of its value.
STOVALL: Here is a reversal of the situation where this company is
likely to see weakening mobile content business.
KANGAS: OK. That completes the stock information. Sam, any thoughts
on what investors should expect in the fourth quarter? We have a little
over a minute.
STOVALL: Well, I think we could actually see history repeat itself in
which the fourth quarter is by far the best quarter of the year on average
since 1990 gaining 6.8 percent and maybe the feeling investors overreacted
to the negative consumer sentiment reports. We could see third quarter
earnings be stronger than expected and might see oil prices moderate a bit
and let`s face it, the fed will end the rate tightening policy and
consumers will anticipate that.
KANGAS: What stock groups look most attractive to you at this stage?
STOVALL: Our feeling is consumer discretionary and technology will be
sector leaders this quarter.
KANGAS: OK and the ones to stay from?
STOVALL: Well, telecom will see pressure from voice-over Internet
protocol as well as cable broadcasters.
KANGAS: Any final thoughts? About 20 seconds left, Sam.
STOVALL: I would tend to say, Paul, one of the concerns really is
what`s likely to happen, not only this year and next year as well, and if
you look at typically what happens in the fourth year of a bull market, the
anniversary is October 10th of this year, typically what we find the S&P
500 catches a second wind.
KANGAS: All right, very interesting. Thank you so much, Sam, for
providing all the information. We`ll look forward to your doing it again.
STOVALL: Thank you, Paul.
KANGAS: My guest, Sam Stovall, chief market strategist at Standard &
Poor`s.
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. Copyright (c) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
09/30/05: "Commentary"-Helping Hurricane Victims Without Causing A Financial Disaster
SUSIE GHARIB: Tonight`s commentator says it`s important to help the people hurt by
the hurricanes along the gulf coast. But he says it`s also important to
find financially responsible ways to pay for it. Here`s Charles Schultze,
senior fellow at the Brookings Institution.
CHARLES SCHULTZE, SENIOR FELLOW EMERITUS, BROOKINGS INSTITUTION: To
help the people of the Gulf coast rebuild their lives and communities,
President Bush has outlined what he called "one of the largest
reconstruction efforts the world has ever seen". The compassion of our
nation indeed demands such a response.
But apart from a perfunctory call for cutting unnecessary spending,
the president proposes no way to marshal the hundred or more billions of
dollars that will be spent, except by borrowing. This has become standard
practice. Thus, we have had a series of large deficit-financed tax cuts,
which, when made permanent as the president has asked, will add some $4
trillion to the national debt ten years from now. A Medicare drug program
was inaugurated with no new source of financing, at a 10-year cost of $400
billion to $500 billion. In Iraq and Afghanistan we are spending more than
$80 billion a year and have added that to our borrowing as well.
The president and the Congress have become addicted to launching
costly national commitments without even thinking about how to pay for
them. But our children and grandchildren will pay. Their taxes will pick
up the bill when the IOUs come due. And since today`s federal borrowing
soaks up funds that could have financed private investment and higher GDP,
their incomes will be lower than they otherwise would. It`s a sorry
spectacle. I`m Charles Schultz.
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. Copyright (c) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
09/30/05: "The Week Ahead"
SUSIE GHARIB: Here`s a look at what`s happening next week.
Our "market monitor" guest is Robert Morrow, editor of "Institutional
Advisory Service."
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. Copyright (c) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
09/30/05:
"Paul Kangas' Stocks In The News"
PAUL KANGAS: Those concerns about the consumer sent blue chip stocks
modestly lower this morning. But the NASDAQ went the other way thanks to
better than expected results from micron technology. At noon the Dow was
down 23 points while the NASDAQ was up three. An easing in oil prices and
some last minute end of quarter window dressing purchases by institutions
helped stocks improve and end the day modestly higher.
The New York Exchange volume leader on 25.4 million shares, Micron
Technology (MU) moving up 1.11 - as I touched on earlier, 4th quarter
earnings much better than expected - 7 cents a share in earnings, versus a
loss of 14 cents a share last year. Sales during the period up 20 percent
over a year ago. CS First Boston and Thomas Weisel brokerages both boosted
earnings estimates.
Lucent (LU) in there with a 3 cent gain.
Delphi (DPH) gaining 24 cents. Of course, the company is flirting
between bankruptcy or a bailout by General Motors.
Procter & Gamble (PG) moving up 1.32. The Federal Trade Commission
has approved the company`s buyout of Gilette, provided that Proctor divests
itself of certain operations like Rembrandt Toothpaste, RightGuard and Dry
Idea deodorants and some other smaller units.
General Electric (GE), fifth in volume, was up 2 cents a share.
Nokia (NOK) with a 45 cent gain.
Pfizer (PFE) fell 12 cents.
Sprint Nextel (S) was up 18 cents even though Solay Securities
downgraded it from buy to just a hold.
Motorola (MOT) was down 12 cents and
Taiwan Semiconductor (TSM) tenth in big board volume, a 17 cent
gain.
Aetna (AET) moved up 1.44. The company`s board of directors has
authorized the stock buyback of up to $750 million.
First Marblehead (FMD) gained 2.55, now the chairman resigned on
Wednesday and the stock fell sharply, somewhere around 5 dollars, but now
the company is going to buy back up to 5 million of their own shares.
Best Buy Co (BBY) moving up .41 - the company is testing the
purchase and sale of used video game software at some of its stores.
Daimlerchrysler AG (DCX) down .96. The company squelched all talk
and rumors that it may acquire a stake in Volkswagen.
Whirlpool Corp (WHR) was up 1.15. The company reaffirmed that it
expects earnings of between 5.90 and 6.00 a share this year. Also it said
that its combination with Maytag will save 3 to $400 million by the third
year.
NBTY Corp (NTY) up 3.27 the Adams Harkness Brokerage upgraded the
stock from market perform to a buy.
National Semiconductor (NSM) -- .77 gain. The company is boosting
its quarterly dividend from 2 cents to 3 cents.
Google (GOOG) topped the active list on NASDAQ with a gain of 6.84
- it was up on speculation the stock will be added to the Standard & Poor`s
500 Index, replacing Gilette. But late today, Standard & Poor`s announced
Lennar, the homebuilder stock, will replace Gilette. In after hours
trading, Google was down around 312.50, while Lennar gained 1.59 from its
regular way close.
Microsoft (MSFT) a .21 drop.
Apple Computer (AAPL) moved up 1.27.
Cisco Systems (CSCO) a .06 gain.
Intel (INTC) up .17 - that was fifth in dollar volume.
Research in Motion (RIMM) down 1.70.
Amgen (AMGN) dropped .10.
Sandisk (SNDK) a good gain of 3.17. The company and Sony are
developing a new cell phone storage device.
Oracle (ORCL) was up .08.
And then tenth in volume, Qualcomm (QCOM), losing .24.
CTI Industries (CTIB) up 1.66 - that`s a 47 percent gain. The
company got a patent on its film texture process.
And a new issue today -- Vistaprint Ltd (VPRT). This was a 10
million share offering priced at $12 - opened at 12.27, the high of the day
15.71 and it closed pretty close to the high.
Safenet (SFNT) jumping 6.61, or 22 percent. The company received a
$155 million contract to upgrade the U.S. government`s encryption defenses.
And those are the stocks in the news tonight.
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. Copyright (c) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
09/30/05:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 10568.70 +15.92 + .2
HIGH 10569.81
LOW 10526.12
NASDAQ COMP. 2151.69 +10.47 +.5
HIGH 2151.69
LOW 2138.23
VOLUME 1,544.7
PREVIOUS 1,632.8
UP VOLUME 982.1
DOWN VOLUME 531.2
DOW TRANSPORTS 3740.55 +22.13 + .6
DOW UTILITIES 432.38 -.60 - .1
CLOSING TICK +991
S&P 500 1228.81 +1.13 + .1
S&P 100 566.80 +.01 unch.
MIDCAP 400 716.33 +4.89 + .7
REUTERS/CRB 332.97 -1.88 - .6
NYSE COMPOSITE 7632.98 +.48 + .0
VALUE LINE 409.73 +1.89 + .5
RUSSELL 2000 667.80 +2.77 + .4
DJW 5000 12289.26 +29.73 + .2
U.S. TREASURIES
5-YEAR NOTE 3.875%
Sept. 15,2010 98 19/32 -5/32 + 4.19
10-YEAR NOTE 4.25%
Aug. 15,2015 99 12/32 -7/32 + 4.33
30-YEAR NOTE 5.375%
Feb. 15, 2031 112 -13/32 + 4.57
LEHMAN BROS.
LONG BOND INDEX 1781.35 -7.42
DOW CLOSE 10568.70 +15.92 + .2
ADVANCES 2028
DECLINES 1286
NEW HIGHS 202
NEW LOWS 48
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
MU Micron Tech 13.30 +1.11 +9.1
LU Lucent Tech 3.25 +.03 +.9
DPH Delphi 2.76 +.24 +9.5
PG Procter & Gamble 59.46 +1.32 +2.3
GE GE 33.67 +.02 +.1
NOK Nokia 16.91 +.45 +2.7
PFE Pfizer 24.97 -.12 -.5
S Sprint Nextel 23.78 +.18 +.8
MOT Motorola 22.09 -.12 -.5
TSM Taiwan Semi 8.22 +.17 +2.1
NASDAQ CLOSE 2151.69 + 10.47 + .5
VOLUME 1,703.6
PREVIOUS 1,846.3
ADVANCES 1801
DECLINES 1200
NASDAQ ACTIVES
GOOG Google 316.46 +6.84 +2.2
MSFT Microsoft 25.73 -.21 -.8
AAPL Apple Computer 53.61 +1.27 +2.4
CSCO Cisco Systems 17.92 +.06 +.3
INTC Intel 24.65 +.17 +.7
RIMM Rsch In Motion 68.30 -1.70 -2.4
AMGN Amgen 79.67 -.10 -.1
SNDK Sandisk 48.24 +3.17 +7.0
ORCL Oracle 12.40 +.08 +.7
QCOM Qualcomm 44.75 -.24 -.5
AMEX CLOSE 1736.89 + 5.52 + .3
INDEX SHARES
DIA DIAMONDS TRUST 105.75 +.35 +.3
QQQ NASDAQ 100 39.46 +.26 +.7
SPY S&P DEP.RECEIPTS 123.04 +.38 +.3
STOCKS IN THE NEWS
AET Aetna 86.14 +1.44 +1.7
FMD First Marblehead 25.40 +2.55 +11.2
BBY Best Buy Co 43.53 +.49 +1.1
DCX Daimlerchrysler 53.12 -.96 -1.8
WHR Whirl Pool 75.77 +1.15 +1.5
NTY NBTY Inc 23.50 +3.27 +16.2
NSM Natl Semiconduct 26.30 +.77 +3.0
CTIB CTI Industries 5.17 +1.66 +47.3
VPRT VistaPrint Ltd 15.25 +3.25 +27.1
SFNT Safenet 36.31 +6.61 +22.3
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