Market briefing --- Bob (fast)
NYSE --- Julie (slow)
Alert for NYSE --- Greg (slow)
Pharmaceutical industry --- Allan (slow)
>> welcome to this final exciting hour of “world financial report.” i’m bob bowdon. energy in the spotlight for another day. supply concerns eased on several fronts. russia’s largest oil exporter yukos said it has been given access to accounts needed to pay back taxes and oil production. saudi arabia has started pumping two new fields ahead of schedule and may delay the shutdown of older wells. the saudis may be able to boost output by 8%. the price of crude oil in new york on the day fell marginally after hitting the record highs early in the session. you see the intraday chart heading lower finishing down 3% at $42.80. gasoline futures plunged after a surprise increase in inventories. you see that down 3.3% for new york unleaded. the energy department reported the u.s. reserves of the fuel, that is unleaded, reached a 17-month high. well, moving on, even though the price of crude oil fell a little by the close of trading, airlines will lose as much as $6 billion this year on international routes if oil prices stay at these record levels. the international air transport association went from forecasting a gain of $3 billion at the beginning of the year to now a $6 billion loss. the industry was forecast to break even with oil at $33 a barrel. every dollar above that level means a billion dollars in losses for the airlines. delta airlines’ pilots’ union says the carrier’s request for a 35% wage cut plus other concessions is an effort to gauge them. the union offered concessions it said were worth more than $655 million. delta is trying to reduce costs to avoid a chapter 11 bankruptcy filing. shares are down almost 3% for the 10-year yield hovering near its lowest in more than two weeks on terrorism concerns. we have had five days, consecutive days of rallies in treasuries before today’s little change, you see to the five year, up 1/32. the two-year utterly unchanged on the day. the yield holds at 2.64%. well, stocks benefited in today’s session as oil dropped from its highs and as food and energy stocks rose. our julie hyman is at the big board with the wrapup of the day’s trading action.
>> well, the markets finished mixed today, really moving sort of in an inverse relationship to what we saw with the oil prices in today’s session. oil of course was the theme yesterday as it rose and the markets fell. but today, it fell and for the most part the markets rebounded, although the s&p 500 didn’t manage to rise by the end of today’s session. if you look at the oil, the stocks in today’s session, really the biggest decliner within the s&p 500 was the energy group and a lot of the stocks that made records highs yesterday or close to record highs came down off of those highs in today’s session. you see some of them there, exxon mobil, chevron texaco, conaco phillips as well as schlumberger all falling in today’s session. some of the stocks that benefited the most from the drop in oil were the so-called defenses. these are stocks that do well even in the economic downturn because people keep spending money on things like food and utilities. so the food group did well in today’s session. supermarkets stocks rising. wal-mart, walgreens, cosco -- costco and ail bertson’s all rising today. the utilities index did well led by duke energy there, another company in the category that we’re talking about that does well even when the economy does not necessarily do well. real estate companies also were strong in today’s session led by equity office properties trust. this after the company came out with earnings that beat analysts’ estimates. that led the real estate group higher. qwest communications fell for a second day. yesterday fell 20% after its second quarter loss widened, falling again in today’s session. back over to you.
>> thank you, julie. treasury secretary john snow visited the new york stock exchange today just three days after the federal government raised its terrorist alert citing the nyse as a possible target. bloomberg’s greg miles interviewed secretary snow during his visit and is here and joins me onset with that report.
>> a very relaxed secretary considering what’s happened in the past few days. secretary snow is the latest in the list of lead thears have visited the new york stock exchange, the world’s largest stock exchange this week. that’s part of a campaign to persuade the public and investors that terrorist threats won’t shut down the u.s. financial markets . secretary snow did say, though, the continued terrorist threats could dampen the growth of the u.s. economy.
>> absolutely. i think the threats of terrorism create uncertainty and uncertainty is the enemy of growth and prosperity. that’s why we’re taking all these steps we can to assure the markets , to ensure investors, to assure american citizens that everything is being done.
>> as a result of the latest intelligence on al qaeda’s targets, snow said the treasury department is taking special steps to protect the u.s. financial system during the next three months during the election season.
>> i won’t go into the details about all the things that have been done to harden facilities and test backup systems and put backup systems in place and make sure we’re as free from vulnerability on computer viruses as possible, but let me assure you that we’re in a lot better position today.
>> snow is also asking congress to raise the limit on the federal government’s debt by september at the peak of the election campaign. snow told me he fully expects congress including many democrats to raise the limit. even though the u.s. has a record federal budget deficit. lot of optimism there, bob.
>> thank you, greg miles. new york attorney general eliot spitzer is sugai the nation’s third largest pharmacy benefit company for allegedly overcharging the state by tens of millions of dollars. the lawsuit marked what spitzer calls his third front of attack against abuses in the pharmaceutical industry and allan dodds frank joins me with that story.
>> bob, new york attorney general eliot spitzer charged express scripts has overcharged new york by as much as $1 is00 million while handling prescription benefit services for one million customers in the state employee empire health plan ch the attorney general said in a press conference that express scripts illegally held onto tens of millions of dollars that should have been passed onto the state’s empire customers.
>> they were simply committing fraud. it is an ugly word but what they were doing. it’s wrong. they’re going to be held liable. it’s millions of dollars and cuts to the core of the integrity of their company and we’re not going to let them get away with it.
>> express scripts which has a multiyear contract with new york state, he said, circumvented the contract. the state contract for express scripts to earn a set administration fee plus $1.20 for each per scripings it handles while giving any savings from rebates back to the state.
>> the company first disclosed the spitzer investigation last week and since then its stock has fallen 13% or nearly $10. it’s down $1.37 today closing at $62.48. express scripts has disclosed it has been contacted by 18 other state attorneys general. in the statement today the company said it would vigorously defend itself in court and it said it had saved the state millions of dollars in rebates. spitzer said efforts to settle the case, bob, have failed.
>> very well. thank you, allan dodds frank. moving on news from eli lilly today u.s. regulators cleared its drug for depression. simbalta is lilly’s first antidepressant to win f.d.a. approval since 1987, prozac. it targets two chemical messengers in the brain, prozac and similar other antidepressants focus on just one. analysts estimate the annual sales of the new drug may reach $2 billion. lilly estimates almost 19 million americans suffer from depression each year. when we come back we’ll focus on energy supply and demand and go to the oil and gas conference in denver. we’ll hear from aubrey mcclendon the chief executive officer of chesapeake energy when we return.
