Market briefing --- Matt (slow)
Hurricane --- Su (fast)
NYSE --- Bob (fast)
welcome back to the “world financial report.” i am matt nesto. let’s begin with oil. you can’t not talk about oil prices continuing their climb to never-before-seen prices. today, concerns about oil supplies in nigeria as well as here at home pushed crude futures in new york. intraday high of $50.20, twice. late in the afternoon before famentering at the close to $49.90, still a record closing high. tomorrow promises more volatility for oil trading. we’ll learn whether u.s. stockpiles fell for the ninth straight week during to hurricane disruption su keenan, gloating from our personal oil bet, joins us with the detail.
>> matt did not think it would hit $50. wednesday’s inventory report could show that u.s. oil stockpiles have fallen to the lowest level in 30 years. the report by the energy department is expected it show oil stockpiles fell by 3.7 million barrels in part due to hurricane ivan’s damage. that’s the median estimate in a survey by bloomberg and if that’s the case, the ninth straight week of declines. supply concerns have helped drive crude oil futures more than 75% higher in the past year, 77% as of today. one group of analysts say prices head higher from here. cambridge energy research associates says prices may rise well above $50 a barrel as demand soars. former vice chairman at the federal reserve says that will hurt the economy.
>> i think it’s too bad. it won’t do the economy any good. i’m not a chicken little. i don’t think it will cause the economy to head into recession but it will clip the wings of growth. oil up at this level could certainly take a point or so off of growth for a year or two.
>> you won’t find disagreement from lawrence lindsey, former chief economic adviser to president bush, but he does not think rising energy prices hurt the recovery.
>> i think the best rule of thumb for oil is that the $10 increase in the price of oil takes about .4% off g.d.p. growth. that’s not good but on the other hand i think it’s something that the u.s. economy can survive.
>> among today’s latest developments, saudi arabia, the world’s largest oil exporter, said they can pump more oil to make up for shortages. the use of two new oil fields allows them to make up for output by 5% and nigeria’s oil adviser does not expect any disruptions from that country’s oil disruption to result from rebel clashes. nigeria is the fifth largest supplier of oil that u.s. refiners need.
>> thank you very much. checking on the other energy movers here today―natural gas, the headline stealer, up almost 9% in u.s. trade. unleaded gasoline also higher by about .9% and heating oil up about .7%. that runup in crude oil futures is impacting energy stocks. valero, one of the big names moving in the ancillary groups. valero, the largest independent oil refiner. we’ve seen energy, the macro group move, and then you get into the majors, for example, as shown by the amex oil index, you get to the exploration companies, the drillers, the tool makers, the oil service companies. the whole group benefiting here as the market goes. starting with valero, we heard from the c.e.o., the company raised its current third-quarter forecast to at least or more than $3 a share. a couple of weeks ago they saw it at $2.50. so valero shares higher today. if you look at the stock, it’s interesting to look at valero because they only came public in 1997 but the chart i put together here shows the runs of the record high really kicking off from right here. this is just about two years ago. it’s about october of 2002, the stock trading about 24 bucks a share, now just about at 80. it has more than tripled during that period of time. also worth taking a look at is the fact that the oil refiners―oil and gas refiners versus the majors have outperformed the amex oil index. so you see the yellow and white line. the yellow line is oil refiners up 78% in one year. the price of nymex crude futures up 75% and relatively lagging behind, only half as much, 45% higher, is the amex oil index. which was strong today, 11 of 13 members rising. key movers include names like repsol, amerada hess, unico sunoco and conocophillips. it’s worth noting who didn’t participate in a broad-based rally. total, the french oil company, as well as shell transport and royal dutch, the two pieces that make up the royal dutch-shell group, year to date, just quick, 67% higher for amerada, sunoco and oxdontle and conoco and marathon pushing the group higher. with oil reaching $50, stock extended gains in the afternoon as caterpillar raised its annual sales forecast -- bob bowden is at the big board an hour after the close with late-breaking news.
>> earnings that broke after the closing bell, selectron, maker of circuit boards, reporting quarterly operating earnings of% -four cents a share, matching the analysts’ estimates. the company forecasting first-quarter operating profit in the range of four to six cents a share, a penny below the six-cent consensus analysts’ estimates. shares after hours down 1% for selectron shares. an hour before the closing bell, we got the breaking news on caterpillar, raising 2004 sales forecast to a gain of 30%. the previous forecast was a gain of 25% and we see the move there late in the session when caterpillar did that, you see the shares finishing up 3.75%, one of the best two performing dow industrial stocks along with alcoa. delta air lines wants to cut costs to avoid bankruptcy, increasing the amount employees will have to pay for healthcare coverage, it will cut vacation time scpen force a 10% pay cut for delta executives. the price up 13% and a relief rally for other airlines, as well, on the day, as many have been hit hard, other airline names gaining 3% or more. snap on tools with a genuinely bad day, cutting its 2004 earnings forecast by 25%, the worst percentage loser of the s&p 500. and i finish with my nesto special, a small cap stock with a big move. this is blue-green corporation, they don’t cell algae but acquire, develop and market time share resort locations, including myrtle beach and aruba. the stock rose after a second analyst with oppenheimer covering the stock with a buy rating. and the company has posted better than 30% earnings growth for six consecutive quarters. that’s my piece on blue-green corporation, my nesto special.
>> the conspiracy theorists will go nuts with the blue shirt and green suit i’m wearing here today.
>> oh, come on.
>> we’ll forward the emails to you.
>> ok.
>> on we go. consumer confidence fell on worries about slow hiring and rising oil prices. the conference board’s september reading fell to 96.8 down from 98.7 last month.
>> when you look at employment, jobs plentiful, down significantly. jobs hard to get, up significantly. and so people very nervous about the job picture. of course, energy prices are also a factor in this. the iraq war is also a factor in this.
>> looking at the bond market reaction today, a mixed market because the 10-year was down, the two-year and five-year little changed here today. the government plans to sell $24 billion in new two-year notes tomorrow. stay tuned for that. treasury secretary john snow says persistent high oil prices will slow down global economic growth. we’ll hear from him on oil and get a preview on the upcoming g-7 meeting when we return.
