Interview: Alan Greenspan
>> the nasdaq closed the day with a gain of five points. semiconductor stocks paced those gains but oracle was notably weak. robert gray is standing by at the nasdaq marketsite in times square with details.
>> heavy volume of 2.3 billion shares, well above average volume today. the nasdaq gapping up to levels we haven’t seen in a month. you can see the yellow line, the 2150 level, a point of resistance going back several months according to head of nasdaq trading at piper jaffray today, saying the chart looked spectacular with the breakout, the key, does that resistance become support? he said there was momentum chasing in semiconductors. semis helping lead the rally in the past several sessions, up 2% on today alone. s.o.x. up 6% this week, as well. you see the transports continuing to help lead the rally, rising to a new record high for this index here on the nasdaq and biotechs helping lead the way, up 2% in today’s session. oracle shares falling on very heavy volume, above 100 million shares for oracle. shares down better than 2% as people familiar with the matter say chief financial officer may be leaving the company after just five months on the job. they say he’s clashed with top executives at the company and it would mean oracle would be looking for their fourth c.f.o. in two years. qualcomm shares surging 9% today, rising on their forecast, reporting earnings after the close last night. apple computer at a new high today. american technology research saying new video ipods are selling well and boosting estimates. playboy and penthouse may make adult movies for portable videos such as ipod. google rising to a record today as they made thousands of public domain books accessible to the world online today. we had strength in retail, as well, but that’s all the time we have.
>> thank you. treasury yields at their highest level since march after fed chairman alan greenspan said the u.s. economy is poised for continued growth. bloomberg’s bob bowden jones me with more on chairman greenspan’s testimony.
>> 79-year-old alan greenspan took to capitol hill today and said hurricanes katrina and rita will produce inflationary effects not yet felt.
>> with the recovery from the first storm barely underway, hurricane rita hit causing additional destruction especially to the energy production and distribution systems in the gulf. these events are likely to exert a drag on employment and production in the near term and to add to the upward pressure on the general price level.
>> greenspan then said the economy is on solid footing, which by itself would be enough to stoke inflation fears and push bond prices lower but then he specifically addressed inflation uncertainty.
>> the united states economy remains favorable. structural productivity continues to grow at a firm pace and rebuilding activity building the hurricanes should boost real g.d.p. growth for a while. more uncertainty, however, surrounds the outlook for inflation.
>> that’s perhaps one of the key lines right there. later in the q&a portion, the fed chairman was asked about high energy prices.
>> so long as the federal reserve is perceived to be holding inflation expectations in check, which means holding core inflation in check, the pass-through of energy costs into the underlying inflation rate will be subdued.
>> but, still, the lines about inflation and uncertainty drove bond prices lower for the third consecutive session with the 10-year dunn 9/32 -- down 9/32. lori rothman, back to you.
>> thank you. it is a balancing act, the fed wants the economy to grow but at the same time keep inflation in check. policymakers have raised rates at a measured pace. but do central bankers run the risk of slowing things down too much? we’ll talk about that and the fed post-greenspan.
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Listen Market briefing --- Lori (slow)
Merck --- Tom (slow)
NYSE --- Deb (fast)
Hartford ---Ellen (slow)
the stock jumped on the news, rising nearly 4%. first, let’s get you to the closing numbers today. the dow jones industrial average up nearly 50 points to close at 10,522 -- back to our top story. shares of merck rose nearly 4% after a jury reject good liability for merck in a heart attack suffered by a 66-year-old postal worker from idaho.
>> after losing its first trial in texas over vioxx, merck rebounded in a new jersey courtroom with a win, the jury finding merck not liable on all counts that it hid the risks of vioxx from the heart attack victim and his doctors. frederick mike humeston accused the company of failing to warn doctors of the heart attack risk of taking the pain drug. the jury rejected the argument, deciding that merck did warn doctors and that vioxx did not cause humeston’s heart attack. the jury rejected the allegation that merck had committed consumer fraud. one juror said merck’s lawyers successfully pointed out the many infirmities afflicting humeston, who earned two purple hearts in vietnam.
>> here’s a man that has been medicated for over 20 years where his medical records are plummeted with many, many issues, many health things, stress in his life at that particular time in my opinion was over the top.
>> outside the courthouse, humeston said he was disappointed by the verdict.
>> i feel that the system is worked, that’s part of the reason why i went to vietnam. i feel that i had great counsel. and i wish to impart to other plaintiffs do, not let this deter you because vioxx is a bad product.
>> also in the courthouse steps, merck’s lawyers who said the verdict vindicates their courtroom strategy.
>> this confirms our strategy to continue vigorously defending the company based on the science, that’s what we’re going to be doing going forward.
>> some legal experts say today’s victory shows merck can explain its science clearly to a jury and argue that short-term use of vioxx does not increase risks in the same way using the drug for 18 months or more does. investors and analysts betting the win could discourage more lawsuits from short-term vioxx users as well as use the pressure on merck to settle the nearly 6,400 cases already filed.
>> well, you just heard the legal side of things for merck. now we’ll find out what today’s victory means for investors. merck still faces billions of dollars in potential liabilities. analyst with raymond james will tell us why he thinks the risk is already built into the stock. the bullish case for merck coming up in the next half hour. stick around for that. another medical device maker, legal issues to contend with. new york attorney general eliot spitzer filed a lawsuit against guidant, claiming guidant misled doctors about the heart defibrillator. guidant is accused of failing to tell doctors about a mechanical problem which could have led to fatal consequences if the device was implanted. in a statement, spitzer goes on to say that by concealing the information it is the essence of fraud. the suit comes a day after johnson & johnson tuesday may abandon its $25.4 billion acquisition of guidant because the company refused to accept revised terms after recalling faulty defibrillators in june. johnson & johnson down .1% to close at $61.20. shares of sfbc international plunged today in the wake of a bloomberg news report about problems in the u.s. drug testing industry. sfbc operates the largest clinical trial center in north america located in miami.
>> sfbc stock fell more than 26%, the biggest decline since july 2002. a report in the december edition of “bloomberg markets “ magazine says some individuals participating in clinical trials at sfbc broke rules without the company’s knowledge and that the industry is poorly regulated and suffers from conflicts of interest. sfbc’s chairman called bloomberg’s story a “severe distortion of our work” and said the company complies with all regulatory standards. sfbc today said third-quarter profit jumped 74%, beating analysts’ expectations. even though merck was the biggest gainer in the dow jones industrial average, other industry groups led the s&p 500 today. deborah kostroun has more on what moved markets in this report.
>> merck was the headline story on the day and it did lead the dow jones industrial average higher. but if you look at what led the 24 industry groups in the s&p 500 higher on the day, you saw semiconductors at the top of the list and energy stocks rising for a fifth straight day. in fact, over the past five days, that index is up 7.6%, just in the last five trading days but you have to remember that index at a very rough october. energy stocks were down about 10% in the month. tech hardware performing well. pharmaceuticals not too far behind as some of the biggest gainers in the s&p 500 on the day. obviously, led by merck and other drug stocks, as well. also, above-average volume in merck. four times the average daily volume that we saw in merck. merck generally trades at about nine million shares but what we saw in today’s session, about 36 million shares. with energy stocks higher, crude oil, natural gas and gasoline all higher on the day. in fact, oil and natural gas higher after hitting some three-month lows yesterday. crude oil up over $2 a barrel, closing at $61.78 a barrel. even with the gains we saw in crude, gasoline and natural gas, transports, once again, hitting a record high. we talked about the transports yesterday at a record high. once again, hitting that record high in today’s session and what you did see, a lot of the shippers, railroad and even trucking stocks all performing well. retail stocks also a big gainer in today’s session, that after october sales from retailers coming in better than expected. j.c. penney said october revenue increased 2.4% and the company also boosted its third-quarter profit forecast. nordstrom says always growth was up 6.4% last month. also, dillard’s and wal-mart saying sales last month about better than expected. laggards on the day, telecom, media and real estate. i’m deborah kostroun at the new york stock exchange for bloomberg news.
>> thank you. the clock is ticking on the refco auction. companies have until 4:00 p.m. new york time friday to submit bids for the bankrupt futures broker. money managers expect the bidding will drive the price to about $1.2 billion. at least six companies have said they will submit bids. some of the names still involved include interactive brokers group, man group and apollo management. we have earnings reports that have crossed after the bell. hartford financial is one of them. for all the details, we check in with stocks editor ellen braitman.
>> lori, hartford said third-quarter operating earnings were $1.82, higher than analysts were expecting. but the company said that for the year it forecasts operating income as high as $7.60 a share, shy of the previous forecast earnings would reach $7.85. hart hartford says the figure accounts for storms and catastrophe and fourth-quarter catastrophe losses will be up to $170 million on a pre-tax basis. those shares up 17% so far this year. one thing surging in extended trade, shares of expedia. the online travel agency spun off by barry diller in august, said third-quarter profit rose 41%, stronger than analysts were gating for. shares up―looking for. shares up 11% at this hour. the surge in earnings helped by strong hotel and airline bookings. sanmina, contract manufacturer, shows shares up 8.5% in extended trade. earnings coming out at six cents a share excluding items. analysts were looking for five cents. sales also coming in stronger than expected at $2.77 billion. those shares down 57% so far this year. a quick look at fluor, biggest publicly traded construction and engineering company, up 3.4%. net income, $1.51. the company boosting its forecast for 2005 saying it will earn as much as $2.60 a share on average. analysts were expecting only $1.93. back to you.
>> thank you. alan greenspan testified before congress and bonds took another hit. when we come back, we’ll break down greenspan’s speech and get clues about the future of the economy. we’ll also talk about the nasdaq, it’s risen to a one-month high.
