Market briefing --- Bob (fast)
Chicago-area businesses --- Su (fast)
Nasdaq --- June (slow)
welcome to “world financial report.” i’m bob bowden. there are new signs the u.s. economic recovery is slowing. consumer confidence falls from a two-year high on concern about job growth and oil prize playing a key role. and chicago-area business are expanding but with fewer orders. su keenan has the details with the conundrum, expanding but fewer orders.
>> it’s a different and slower rate.% the drop in consumer confidence and slump in the growth rate of chicago-area manufacturing caught many economists by surprise. both indexes fell more than the median forecast of economists surveyed by bloomberg and both underscore the theme running through most of the recent economic dat -- - slowing growth. rand financial’s frank lesh.
>> the shock on both of these numbers, much weaker than expectations so i guess we’ll work higher most of the day.
>> the data moved the bond market higher and the dollar lower against the yen and euro. as you can see, the conference board’s index of consumer confidence shows the first decline since february, falling below 100. that’s from a revised reading of just over 105 in july. the conference board’s delos smith says american consumers are scaling back buying as job growth fades and energy prices rise.
>> the number one story will be the oil prices and again, yes it’s down, it didn’t reach $50 but $42 is still very, very high. it needs to get to the $30 to $34 category.
>> the consumer confidence reading is reasonable in the view of barry james with james investment research, now predicting a year-end rally for stocks.
>> particularly when you’re above 85 on the confidence number, that’s not a good sign for stocks, it’s growing too fast. and one of the other numbers, the jobs hard to get figure. typically when it’s less than 30% saying jobs are hard to get, that’s not good for the stock market . the blows coming not from weakness but maybe too much strength in the economy.
>> the decline in the chicago purchasing manager’s index, reflecting showdowns in orders and production, falling to 57.3 this month from july’s 54.7. it is the third measure this month showing slower manufacturing after the second-quarter pullback in consumer spending. bank of tokyo-mitsubishi’s ellen beeson says the labor market is key.
>> i wouldn’t call it unhealthy. we are creating jobs. the type of jobs we’re creating are more part-time than full-time and that’s where you see anemic personal income numbers feeding into the consumer confidence.
>> job growth slowed in the four four-month period through july.
>> thank you, su keenan. moving on to the dollar, weakening against the euro and yen after the economic news. on the bloomberg terminal, i’ve charted a six-year chart of the euro against the dollar and you can see the rise in the euro today indicating weakness, of course, in the dollar, over 1% move right there. as you see, the euro at almost $1.22, $12180 right now. you can see the trading range for the euro, this is $1.24 for the euro and this is $1.18 for the euro. we are in the middle of the range. today’s report suggests a slowdown in the economy may extend beyond the second quarter. analysts a that would erode demand for u.s. assets and the currency to buy them. the dollar surrendering gains made last week when fed governor ben bernanke said the economy’s soft patch was temporary. treasuries rose on the disappointing economic data, signs it may not be a soft patch stoking speculation the federal reserve may slow the pace of interest rate increases. the yield down to 4.11% on the 10-year. stocks were little changed on the day, although they had a ride down and back up again late in the session. technology shares declined after analysts said intel’s third-quarter revenue will trail the highest estimates. let’s get to the closing numbers as they settled on thursday with the dow up .5% as was the s&p 500. the nasdaq was little changed on the day. checking volume at the big board, slightly more volume than some of the record low volumes we’ve had lately, 1.14 billion shares on the big board with advancers beating decliners two to one. at the nasdaq, also advancers beating decliners, 1.3 billion shares traded there. checking other major market averages, green arrows for the nyse, amex and russell 2000. the nasdaq closed higher for the day but lower for the month. june grasso has details from the nasdaq marketsite in times square.
>> the nasdaq fell 2.85% for the month, and not surprising with the problems that tech stocks have been experiencing. the worst performing group for the month was the nasdaq computer index, down six points. analysts have been pointing to a concern about the buildup in inventories for chip stocks and also looking at another indicator in the nasdaq, dragging it down this month, is the philadelphia semiconductor index, down 11.4%. looking toward today, one of the worst performing stocks in the nasdaq 100 today was veritas, the world’s number two maker of data software storage agreed to buy kvault software for $225 million to add programs that archive email, the third acquisition for veritas today. earlier today, gary bloom, the c.e.o., said the acquisition leapfrogs veritas to where it wants to be. one of the best performers in the nasdaq 100 today was juniper networks, the maker of routing gear for phone companies has been raised to outperform at wachovia. wachovia raised its profit forecast saying juniper will benefit as business spending picks up in the second half of 2004 with telecom companies installing voice-over i.p. equipment. looking at apple computer, merrill lynch bumping up its 2005 estimates for apple computer from earnings of 87 cents on $9.30 in revenue to 90 cents on $9.53 billion in sales. merrill said it was making the revisions because of the new imac g5 and revised sales estimates for ipods. june grasso, bloomberg news at the nasdaq marketsite.
>> intel shares were lowered, the worst performing dow jones industrial stock after three wall street analysts said the company will not meet the high end of its revenues forecast when it gives the update on thursday. research notes from morgan stanley, j.p. morgan and prudential equity group reached similar conclusions, the top 1/3 of intel’s revenue forecast will be eliminated in the update. back on july 13, crarg craig barrett gave this third-quarter revenue forecast, between 8.6 and 9.2 billion. today, mark edlestone said the new low end will be 8.5 or 8.6 but the high end will only be 9.0 billion. two other analysts predicting the new high end will only be $9.0 billion. morgan stanley’s edlestone is cutting his third-quarter intel forecast to $8.7 billion and morgan stanley’s analyst cutting his forecast, as well. what’s going on with all of these revisions lower in the analysts’ forecasts? edlestone wrote that the demand for intel may be more disappointing than thought and that intel’s original third-quarter forecast was unusually aggressive, saying the midpoint was for revenue growth of 11% compared to a average of 7% revenue growth from the last 10 years. j.p. morgan’s analyst said intel margins go south for the winter, saying inventory levels have risen for 90 days, tying the highs since 1995. for his part, the analyst from prudential said his asian channel checks indicate flash memory demand and back-to-school sales are coming in lighter than expected.
>> in the last couple of weeks, most analysts on wall street have lowered their numbers. so unless they come in with something very drastic, let’s say well below 8.6 billion in revenues this quarter, i don’t think there would be that much of an adverse reaction because it’s been well advertised.
>> intel shares lower today by 2%. when we return, fuel cell says it has a deal to become a packager of power plants in japan. we’ll speak with the company’s c.e.o. about the deal.
