Market briefing---Lane (medium)
NYSE---Deb (fast)
Currency
Interview: Macuarry bank---Joanne Masters-- Chief Currency Strategist
welcome to “world financial report.” i’m lane bajardi in new york. intel released its mid quarter update about 45 minutes ago, predicting fourth-quarter sales at the high end of its forecast. bob bowden has been breaking apart the update and joins me with more.
>> when is good news not good news? when it’s not as good as some expected, which brings me to the news about intel. intel raising its fourth-quarter sales draft to a range of between $8.5 to $8.7 billion, representing the higher end of its previous forecast, which was $8.1 and $8.7 billion. although the new mi midpoint at $8.6 now is higher than the consensus figure of $8.5, analyst at merrill lynch this week predicted an $8.78 forecast. and the announcement of a fourth-quarter goodwill impairment charge related to the wireless communications group, intel saying the long-term growth expectations for this business, looking into cell phone chips, are no longer projected to be as high as previously expected. intel will be more efficient at generating profit in the fourth quarter, predicting gross margin at 62% compared to the previous estimate of 60%. many analysts expected gross margins forecasts to increase so that was not unexpected. r&d numbers, intel saying full-year r&d spending in 2003 will be higher than expected at $4.4 billion against the previous estimate of $4.3 billion. checking shares right now, intel down $1.09, trading at $32.45. looking at the bloomberg terminal, we’ll show you the aftermarket trading of intel shares and in fact we have the announcement right about here, if i can get my pointer to work. this is 4:15 eastern time when the mid quarter update was announced and you can see the downward motion in intel shares trading right here as we said around the point earlier. i’ll bring up a current quote for you now at $32.45 per share of intel. that’s the latest.
>> thank you very much. now, shares of national semiconductor are set to close lower even after the company reported its strongest bookings quarter in three years. down nearly 4%. the maker of chips that boosts battery life in mobile phones and laptops said second-quarter profit surged ten-fold, beating the mean forecast by analysts. orders helped boost sales 12%. the company expects sales this quarter to be 5% higher than that, rising to $458 million. and speaking of semiconductors, the group was one of the biggest drags on the s&p today. deborah kostroun is at the new york stock exchange with more on that.
>> lane, even though national semiconductor had positive news, it didn’t help out the semiconductors. its own stock or many of the other semiconductors, because the semiconductors among some of the biggest drags on the s&p 500 that we saw in today’s session. there you can see some of the drags we did see but remember, semiconductors, as a whole, some of the best performers year to date, up about 90%. many traders and analysts looking at those valuations closely and especially in comparison with the rest of the market. talk about valuations, looking at the telecom names. recently, they have been underperformers but in today’s session, some of the best performers. not a big reason behind the telecom story. however, we did see a spill-over effect from qualcomm on many of the telecom equipment makers. even some of the communications equipment makers, but also telecom, the biggest gainers in the s&p 500. other laggards in the session, retail names as many of the retailers saying that november sales―some sales coming in better than expected, others not so well. but the general consensus is that consumers really not splurging this holiday season and retailers in fact over the past several days have been some of the biggest drags on the market.home depot, the biggest drag in the s&p 500. wal-mart performing quite well. an interesting trend developing in the market with small caps, some of the best performers year to date, have been trending lower. you have money flowing into the dow and also energy stocks , some of the best performers in today’s session. back to you in the studio.
>> deborah kostroun at the big board. now let’s run down the numbers for you, the dow jones industrial average closing out the day this way, up 57 points at 9930. rising above the 9,000 level and closing there for the first time in a very long time. the s&p 500 up five points at 1069. the nasdaq composite up 8.5 at 1968. volume on the big board, 1.4 billion shares with advancers and decliners about even. nasdaq volume just over two billion shares. looking at the wilshire 5000, broadest measure of the market, up 29 points or about .25% at 10,431. looking at bonds today, move upward 10-year note better by 10/32, following a larger-than-forecast rise in weekly jobless claims, raising speculation tomorrow’s employment report may not be as strong as expected. and currency-wise issue not much movement now that the aron pacific trading is underway but the dollar moved on speculation that the european central bank will remain higher in coming months. we’ll speak more about that later in the program. in the meantime, the dollar held near that record low and currently that rate is that of a comparable one in the u.s., that benchmark interest rate for the e.c.b. joining me now for a closer look at the currency markets is jo-ann masters, currency strategist with mcquarry bank, joining me from sydney, australia. welcome. at what level for the dollar does the bush administration get concerned here as we look at things? at what point do we have a problem here and why?
>> i think the bush administration at the moment is fairly comfortable with the level of the greenback. i think we went through a period where they wanted to see softening and now we’re in a period where consolidatioation is appropriate.
>> at what point we’re going to see that, however, we’re not seeing that in the trade from today certainly.
>> that’s right. we are seeing markets biased against the greenback and i think that sentiment will prevail to the end of the year. the u.s. dollar, good economic news and i think for the moment the euro will remain around the 1.20 levels and perhaps push higher in the near term.
>> what do you think the low will be for the dollar, where will we see it against the euro before it heads in the other direction?
>> certainly targets around the 1.25 don’t look unreasonable, although we believe anything above 1.20 has significant economic impacts on the european economies and that may be where you start to see pressure for turnaround coming.
>> what’s it doing right now in your trade?
>> we’re seeing fairly quiet trading early on in the australian session. most markets are waiting for payrolls data tonight and we look for a tight trading range until we get that number.
>> are rates backing up in europe and australia where you are, do you think the u.s. federal reserve is feeling the pressure to follow suit?
>> i don’t think so. i think the fed are clearly on hold for the moment and when they are ready to tighten interest rates, it will be a process managed very careful with that communicated to markets well ahead of time. next week, it will be interesting to see if they back away from fears on deflation and move to neutal outlook for inflation.
>> we have the november employment report due out from the the u.s. labor department tomorrow, what are you expecting there and how do you think the dollar will respond? >> we expect that market consensus of plus 135, certainly another good number. but in currency markets, we see the good numbers ignored. the risk is if the number comes in less than 100,000 and that would be enough momentum to push both the australian dollar and euro into fresh eyes.
>> what sense do you have concerning the dollar? we hear government officials saying they support a strong dollar, but we don’t see that as far as action. do you expect hem to take further action here?
>> i don’t think so. i think what you’ll continue to hear is very much that line about a strong dollar, but that doesn’t mean an ever strengthening u.s. dollar. you can argue at the moment the u.s. dollar is fairly strong. i think they’re looking for a period of stability ahead and will hope to see that in the early part of 2004.
>> thank you very much, currency strategist in sydney. and u.s. treasuries rose on concern that tomorrow’s jobs report may be disappointing. we’ll talk to ralph axel, fixed income strategist at hsbc securities and ask him what’s ahead for the fixed income market.
