Market briefing---Lane (medium)
Job report---Peter (slow)
NYSE---Deb (fast)
Nasdaq---Julie (slow)
the labor market’s not on fire, that businesses are very cautious. i also think it’s interesting. we’ve seen the caution in terms of this dramatic depletion of inventories. and here we are in the christmas season, all early indications are that this christmas season will be better than last year’s. i think we could get a last-minute rush to restock shelves as well as to hire some workers.
>> the manufacturing sector lost 17,000 positions, marking the 40th straight month of declines. 23,000 jobs were lost because of strikes at grocery stores. the unemployment rate fell to 5.9% and separately, the commerce department said u.s. factory orders in october rose 2.2%, the biggest jump in 15 months. bond prices surged on the jobs report, posting the biggest gains in three weeks. traders speculated the federal reserve may hold off on increasing interest rates as job growth was weaker than expected. looking at the 10-year and five-year, 10-year up more than a full point yielding 4.23%. five-year note up 3/4 of a point. two-year note up 11/32. the dow jones industrial average down on the day 68 points at 9862. the s&p 500 lower by 8.25 at 1061 and the nasdaq composite 31 points lower at 1937. big board volume on the lighter side -- the wilshire 5000 is the broadest measure of the market, down 79 points at .75%. the dollar there, 1.21 to the euro. the dollar fell to another record low against the euro touching 1.21 per euro at around 1:00 new york trading. traders expressed concern that interest rates will be below those available in other economies in coming months. the fed’s target rate to 1% has helped drive the dollar to record lows against the euro for six straight days. today’s job numbers raise new questions about what the federal reserve may do when the open market committee meets next week. two-year treasury bonds scored their biggest gains since the summer of last year and the markets decided the federal reserve will not raise rates until next summer. the jobs report is igniting a debate regarding the federal reserve’s language. peter cook has more.
>> lane, “considerable period” are the magic words that sparked the debate and it’s obvious that alan greenspan and the rest of the federal open market committee suggested interest rates could remain low for a considerable period of time. with the economy showing signs of life, the question is when will the fed alter those words, the first hint that a later rate hike could take place. before today’s job numbers were released, 12-22 so-called primary u.s. government securities dealers surveyed believed the fed would remove the phrase as early as next week’s meeting. that view was shareholder by analysts going into today but as soon as word came that the economy added a lower-than-expected number of jobs, opinions changed.
>> this means to traders that the fed will not be pressured to change their wording for “a considerable period” because they’ll have the excuse that the jobs market isn’t growing. this is a substantial change from what traders were thinking a few moments ago when they thought the fed would be boxed into changing the number and it’s a shock.
>> economist doug lee, president of e-economics from washington, disagrees. he sees ample economic evidence beyond the job numbers for the fed to drop the phrase next week.
>> it is clear that the fed will need to raise interest rates at some point in 2004 and they will need to prepare the markets for the fact that will happen and the question is really how soon do they need to start edging in that direction. i think it’s about time for them to begin that process.
>> lee points out that rates had been low for a considerable period of time already.% the fed funds rate has been at 1% since june and the removal of the phrase doesn’t mean an imminent hike in rates will actually follow, simply the possibility of an increase at some point in the future. one other thing to consider, the fed could well remove the phrase next week and replace it with an equally open-ended comment. chairman greenspan last month in a speech said, “monetary policy can be more patient.” that could be the new phrase to debate after the fomc meets next tuesday.
>> peter cook in washington. today’s jobs report also impacted several stocks . deborah kostroun is at the new york stock exchange with that side of the story. deb?
>> lane, we did see retailer stocks under pressure once again in today’s session. that’s something we’ve been seeing all week. as we learned yesterday, many of the retail names coming out with some of their store sales and looking at the holiday shopping season, maybe not getting off to that great of a start. when we got news about the jobs created, less than we expected, also fuels a lot of concern about if we’re not looking at creating a lot more jobs, what does that mean for retail stocks . so retail among the biggest losers along with semiconductors. also, you had sears, the biggest drop in the s&p 500. november sales coming in down 3.6% yesterday, saying that will drop their profits by 10 cents this quarter. and so retail really has been in the spotlight. j.c. penney in preliminary talks with suitors over the sale of their eckerd drug store chain. in addition, commercial services like robert halve, many temporary staffing services, lower in the session, as well. gold stocks performing well with the drop in the dollar recently. gold stocks again seeing one of the biggest gainers in the market today. gold stocks also lifted after csfb saying that with gold, the commodity, above $400 an ounce this week, they raised their earnings estimates on many of the gold mining companies you see up here on this chart and so we had some of the gold stocks performing well. in addition, caterpillar, very interesting story, this was the best performer in the dow jones industrial average in today’s session. they were upgraded by smith barney and caterpillar also, they get over half their revenue in 2002, it did come from overseas so a weaker dollar very good for caterpillar and as we we talk about gold stocks , the smith barney analyst, he said that mining equipment sales likely to increase for caterpillar and that really feeds into all the things we’ve been hearing about gold stocks , as well, and that’s one of the things that caterpillar will likely perform well in.
>> deborah kostroun. the jobs report wasn’t the only news weighing on the market. intel dragged the nasdaq and other chipmakers lower. julie hyman has details on the day’s trading from the nasdaq marketsite in times square.
>> shares of intel down more than 4% today after the company’s fourth-quarter sales forecast did disappoint some analysts. the company did come out and raise the lower end of its sales forecast for the fourth quarter. however, it didn’t raise the upper end of that forecast. many analysts were disappointed in that news. also, the company said it will write down the value of an acquisition of a mobile phone chip company d.s.p. communications. that acquisition back in 1999. and the value of that writedown will be $600 million. analysts also disappointed in that move and that took shares of intel down tell. also affected shares of other chipmakers and chip equipment makers on the nasdaq. we saw shares of r.f. micro devices, maxim and applied materials down in the session. alalso, dragging the nasdaq today, the effect of the jobs report. and not only did we see the effect on the index as a whole, also on specific jobs-related companies. we saw monster worldwide declining in today’s session. that’s the operator of the jobs website and we saw kelly services and paychex also declining. also, to look ahead to next week, i wanted to talk about cisco systems. that company is having an analyst meeting from tuesday to thursday of next week with c.e.o. john chambers who will speak on wednesday. soundview technology analyst ryan mullroy expects positive comments from john chambers because of the rebound in corporate spending we see on computer networks and telco companies buying new switches. he doesn’t expect chambers to change the quarter’s forecast but is likely to expand on recent comments surrounding the early turn in global i.t. spending patterns. cisco was down 1% in the session but did rise 4.6% this week. so we’ll wait until next week to see what comes out of that meeting. back to you.
>> julie hyman. coming up, we’ll talk more about where stocks are headed with robert millen with jensen investments.
