A preview of what's expected --- Daniel (slow)
>> oil prices rose to a six-week high on concerns that opec is pumping close to full capacity in order to meet the biggest surge in global demand. that leaves little slack to cover any possible disruption in supply. we check the price of oil today up just about 1.2%. $41.25 for barrel the futures in new york. another deal in the banking industry to talk about. pennsylvania’s biggest bank, p.n.c. financial, is buying riggs national. the price tag is $780. the stock and cash works out the $24.25 a share. it also represents about a 7% premium to the closing price of riggs on thursday before the deal was announced. the washington, d.c. bank has been under investigation for violating money laundering rules. riggs has been labeled a troubled bank by regular regular laytors and p.n.c.’s c.e.o. had this to say about the deal.
>> by the time we close on this transaction, which will be sometime at the end of the first quarter of next year, we believe the regulatory issues will be behind them. if there are surprises that take place duringing that time that are significant, we clearly have the right to change the transaction and not go through with it contractually. we do have protections in case there are any meaningful issues that arise.
>> what do you get for your money? p.n.c. gets $6 billion in assets and 50 branches in the washington, d.c. metropolitan area. well, next week is going to bring big earnings in. we’ll hear from ford, sun microsystem, j.p. morgan. in fact, over 170 companies in the s&p 500 are on tap to report the results. for a preview of what’s expected, we bring in bloomberg’s daniel sesla. we had over 100 in the last couple of days and 170 next week as well.
>> so far even though earnings have been pretty good, we’re looking at earnings for the companies that report of 25% with more companies than usual beating expectations. the market has really failed to respond. the s&p down for a fifth week in a row. and really it seems like investors are just focusing on disappointments and certainly been a lot of high-profile one, notably intel one of the bigger decliner this is week after it cut the 2004 profit margin forecast. also in the semiconductor area you had kla-tencor and p.m.c. sierra with disappointing forecasts. that really has drummed up concern that started with the software companies preannouncing saying sales fell short of estimates and companies like veritas and peoplesoft and it’s drummed up concern that tech spending may not be as strong as some investors anticipated.
>> what about on the financial front? we had a lot of big financial numbers coming out and more next week, j.p. morgan. what are we getting for a feel in term of financials?
>> merrill lynch, for example, fell short of the profit estimates. and they have been hurt by the slow trading that really hurt revenue. june was the slowest month so far this year in terms of volume ton new york stock exchange. you also had stage street fell 9% the day they came out and they said second half revenue may be lower because of the prospect of rising interest rates. next week hearing from j.p. morgan, a.i.g., and washington mutual who has already given us disappointing news in terms of the mortgage business and how higher rates are factoring into thing.
>> we were talking earlier because typically earnings season sees the majority of companies beating expectations, but i think the belief that we were going to see that happen again this quarter might have been a little less than usual. and yet the numbers are still a majority of them coming in better than the so-called street average.
>> yeah, there is still a ways to go in earnings season. right now with the 25% that have reported, analysts are expecting only 20% growth. really we have had so many quarters of 20% plus earnings growth that investors are used to it. and they’re looking ahead so the third and fourth quarter and even into 2005 and seeing the earnings rate start to slow. and a lot of investors are saying with stocks rising so much in 2003, that it set us up this year for disappointments because expectations for earnings just got too out of hand. awe sure. of course, it’s forecasting season which brings me to third and fourth quarter forecasts. we’re coming down from the 20, 25, to 20, and into the teen, i think, for the third, fourth quarter, full year, right?
>> about 15% in the third and fourth quarter. and about 18% for the whole year. but what’s important is that, yes, it is growth, but what investors are emphasizing and concerned about is that deceleration. you want to buy stocks going into an accelerating sales and profit stream. and that’s why a lot of investors have been moving from technology stocks to companies like energy, energy play, and also consumer stape stocks which have steady growth because they’re going to have a 10% growth throughout the year rather than very fluctuating growth for technology stock.
>> it is interesting because almost―i had the opposite performance in terms of the same groups with i.t. among the worst and energy the best. not among the best, but the best. all right. good. thanks. a lot of numbers to handle and wrangle today. danielle sessa. nobody does it better, folks. share of dell rose after the company boosted the forecast. we will take a look at the world’s biggest personal computer maker up next.
