Market briefing --- Lori (slow)
NYSE --- Deb (fast)
Auto makers --- Bob (fast)
>> welcome, from world headquarters in new york city. i’m lori rothman. this is “after the bell.” investors pare a 134-point rally in the dow industrials with the heaviest selling coming in the last half hour of trading. the settling numbers -- energy, technology, financials were stronger industries today but on the downside, weighing on the market especially late in the session, as you can see in the charts, retail, food stocks, real estate stocks. semiconductors had an outstanding day, though we saw weakness in biotech stocks on the nasdaq. much more on that, markets , as you saw, late-day drop, still managing to go higher. let’s get the details on the market and the drivers with deborah kostroun live at the big board.
>> as we close out, stocks were higher but a little bit of disappointment because we had such a great start to today. at one point, the dow was up 138 points and we really couldn’t sustain that because here in the last hour we saw a little bit of selling. when you’re looking at the dow jones industrial average, what we did see, g.m. taking a dip and closing―it was the biggest drag on the dow all day today. but one of the things that we’re looking at, stocks closing off their best levels of the day. so a 40-point gain doesn’t look all that bad but when you’re looking at the earlier gains of 138 points, maybe not looking all that good. look at the records in today’s session. kind of interesting that we have transports, cyclicals and the amex broker/dealer index at records, mainly because transports, why that is so interesting was the fact that crude oil was at a two-month high. if you look the transports and correlate that with the cyclicals, you have to remember, those cyclical stocks do well when we expect the economy is doing well. then, of course, the transports do well because, hey, you have to transport all those goods. so a lot of the railroad stocks among the biggest gainers. the s&p transport index, the biggest gainer of the 24 industry groups in the s&p 500. once again, crude oil coming in at a two-month high. you did see integrated oil and oil services performing quite well. material stocks, another big gainer in the s&p 500. this is really mainly on the fact that you do have crude oil―excuse me―you have gold and copper doing well. gold is at a 25-year high. copper is at a record once again. we’ve been talking about that over the past week. however, we did see material stocks, metal stocks all performing well. of course, the biggest drag today on the stocks, was the auto sector.
>> the nasdaq lost steam this afternoon. it was pretty strong all day and around 2:00 p.m., it started to downtrend. same with the philadelphia semiconductor index. the s.o.x. was the strongest group here today and at the beginning of the day, we had 19 out of 19 in the group performing very strongly. as the day went on, we ended up with 14 of 15 performing strongly. but still up five points. you had to see broadcom and marvell leading the way, both ending in the top 10 performers in the nasdaq 100. an industry group said that worldwide semi sales rose 6.8% in february from a year earlier and that sales of cell phones will exceed earlier forecasts of 10% growth this year. another leading group―by the way, sandisk was the one that was really a drag on the semiconductors today after it was downgraded by goldman. another group that was strong today, computers, led by microsoft. it ended the day up 1.2%. it was up more than 2% during the day, after a “barron’s” report said that the world’s number one software maker will be a growth stock again. citing its new operating system and revising its office, predicting it may rise as much as 59 cents a share in the next three years, basing that on rick sherlund of goldman sachs. we saw microsoft stronger, oracle stronger and we saw today that alderwoods was purchased by c.s.i. and both these stocks -- this is the largest cemetery and funeral home holder, and both these stocks did really well today. chiron was halted and started trading at 1:00 p.m. immediately, it went into the nasdaq’s top-10 performers in the nasdaq 100 after novartis raised its bid from $45 to $48 a share for what is remaining of chiron that it doesn’t yet own.
>> thank you. general motors finally agrees to sell a 51% stake in its gmac finance arm but it didn’t help g.m. shares which suffered their worst percentage loss of the year so far. the big three automakers announced march sales data. bob bowden has the latest on all the auto story developments today.
>> thank you. the march sales data kept coming out with two of the three big u.s. automakers exceeding estimates, but not g.m. general motors sales fell 14.3% in march compared to a year ago. 23 economists and analysts surveyed by bloomberg news expected a 9.3% drop. ford, although down 4.6%, better than the drop estimated by analysts. and chrysler rose 1.6%, better than analysts’ estimates. what about the japanese names? toyota up 6.9%, continuing to gain share in u.s. sales. on to that gmac story. it had been widely speculated but today we got the final details as general motors chairman and c.e.o. rick wagoner spoke at a press conference.
>> yesterday the general motors board of directors approved an agreement to sell 51% of the equity that g.m. has in gmac to a consortium of investors led by cerberus capital management, a private investment firm, and including citigroup and azora bank.
>> g.m. will receive $10 billion this year and $4 billion over the course of the next three years to add up to the $14 billion price tag. none of the three major credit rating agencies―s&p, moody’s nor fitch―changed ratings of g.m. or gmac bonds but moody’s said the gmac rating is under review and it may still downgrade gmac because the buyer, cerberus, is not seen as a so-called strategic investor. s&p said its preliminary assessment would be to raise gmac’s rating one notch, the highest of the junk ratings, bb-plus, if the transaction is completed. for some investors, the gmac announcement does not fix g.m.’s underlying problem, the car business.
>> well, it’s a nice thing but it doesn’t solve general motors’ problems. the problem is that they make products nobody wants. until they solve that problem, how can you think general motors is a good buy?
>> of course, a possible strike at g.m.’s main parts supplier, delphi, still hangs over both delphi’s and g.m.’s prospects. on the day, g.m. shares finishing at the lows of the session, down 5.3%, the worst stock in the dow industrials and the worst in the s&p 500. auto stocks, as follows, ford down 2.39%. toyota up 1.33%, rising to an intraday and closing record price, the toyota a.d.r.’s.
>> want to bring you breaking news. zacharias moussaoui is eligible for the death penalty. the jury came down with its decision moments ago. mark crumpton will have much more in detail at the bottom of the hour. we want to move ahead with the market update. copper prices rising to a record today. traders speculate unexpected mine delays will lead to shortfalls. copper’s surge was part of a rally in metals. gold reached a 25-year high today. investors still convinced the precious metal will continue to outperform u.s. stocks and bonds. another high flyer of late, silver rising again today.
>> -- checking currencies on the back of some economic data along with the metals news. the dollar was weaker versus the basket of currencies. you can see there on your screen. in this trading environment, where should investors put their money? small caps, growth stocks, value? so many choices. what’s best for you? we’ll ask dan yacktman with yacktman sites management, next.
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>> in detroit, delphi c.e.o. steve miller spoke three days after asking a bankruptcy judge to void delphi’s labor contract with the united auto workers union. scrapping the contract would have a multitude of impacts. it could lead to a strike at delphi, increasing the chances of a g.m. bankruptcy as it would likely have to shut down production. greg miles has the story from detroit.
>> steve miller spoke here today to a packed audience of 750 business leaders at the detroit economic club in downtown detroit. wall street is very worried that delphi’s union will strike if a judge throws out their contract. that would enable delphi to slash their wages. miller made it clear today, though, that the worst-case scenario doesn’t have to happen. let’s listen to what steve miller had to say.
>> even if we get a court ruling permitting us to reject our labor contract, there is no mandate for us to act unilaterally. we would assess the situation at that time and continue to seek a consensual resolution if we believe such an outcome is achievable.
>> miller made his speech as a group of union protestors picketed outside. the protestors and the u.a.w. are incensed that miller has proposed to cut their pay from $27.50 an hour to $16.50 an hour in stages by september of 2004. neither―september of 2007. last fall, miller said he may have to terminate delphi’s pension plan and hand it to the federal government. now he says he thinks the plan can be saved.
>> we intend to honor our accumulated pension obligations, thereby avoiding termination of the pension plan. we want to restore our underfunded plan out of future profits. but we will need time. this means we must find a way to stretch out our required pension plan payments.
>> also, miller says he’s been busy sifting through a trillion dollars worth of claims against the company in bankruptcy court. he says he plans to emerge from bankruptcy in mid 2007.
>> bloomberg’s greg miles reporting. some traders say tech stocks have hit their peak, but todd solomon disagrees. he is vice president of schaeffer’s investment research and spoke earlier with bloomberg’s brian sullivan. he told brian there are select opportunities in the tech sector that are poised to see strength.
>> certainly the nasdaq has had a pretty good run. right now, it’s trading up around 2400, which, coincidentally, was a difficult level for the nasdaq to overcome in 1999 so that’s a level we are looking at. at the same time, it has overcome a lot of resistance areas. so i think the jury’s out as far as the nasdaq. however, if i were playing the nasdaq, i know i’d be focusing more on the small cap speculative names within that group and staying away from the large cap, microsoft-type names that a lot of people tend to like from time to time your charts, right, some of the large cap stocks like microsoft, dell and others look weak technically?
>> look very weak technically, look very weak fundamentally and the most important part of that is even though they’ve―they look weak technically, there’s optimism on those names. microsoft, for example, for three years, now, 90% buy ratings, which is totally shocking to me.
>> at this point you have to ignore sell-side analysts on microsoft?
>> based on their track record over the past few years, i would have to say so. plus, the shorts have left the building. that’s a stock that had 163 million shares short a few years ago and despite all that short-covering, the stock has done absolutely nothing. and the hopes of a new operating system coming out so that’s a stock i would avoid. i would not listen to the sell-side analysts right now.
>> looking at the dell ratings, according to bloomberg, 23 buys, 12 holds and zero sells on dell despite the fact that the stock is at $42. that was over a year ago, it’s down to $30. zero sell-side analysts recommend selling.
>> the whole large cap situation with that stock, other stocks. dell, two earnings reports over the last two quarters have disappointed investors. again, the shorts have left the building there. even when you look long-term in the options market , you look at the call open interest, the put open interest, which are basically bets the stock will go up or down. a lot of calls relative to puts and again, i become more concerned when i see a stock that is weak from a technical and fundamental perspective and then there’s that optimism because that represents selling power. that tells me that all the sellers have not exited yet.
>> todd salamone, vice president at schaeffer’s investment research. duke energy just sealed a deal acquiring synergy to be the largest utility company in the country. the company is already talking about its next move. we’ll hear about a possible selloff from the c.e.o. and chairman of duke energy when “after the bell” continues.
