Market briefing---Lane (medium)
NYSE---Deb (fast)
Novell---Su (fast)
welcome to “world financial report”. i’m lane bajardi in new york. the u.s. federal reserve will not adopt inflation targets to set monetary policy. that’s the word from fed chairman alan greenspan in a speech to central bankers gathered in wyoming for a conference. some fed officials have been pressuring the central bank’s policy making board to adopt a target for price increases, arguing it would improve communication with the financial markets. greenspan and others argue that is no replacement for personal judgment to assess risks.
>> markets for the most part like certainty. they’d love for the fed to tell them exactly what’s going to happen over the next six months or a year but they are not going to get that. the fed and alan greenspan chiefly here has said the primary goal of the fed is not to make sure markets are comfortable, but to look at the economy and address the ever changing landscape of the economy.
>> rule based monetary policy involves setting numerical goal for inflation and adjusting rates in order to meet that number. more than half a dozen central banks including the european central bank use inflation targeting methods. a reading of consumer confidence fell more than previously estimated this month. the university of michigan’s final measure of what it calls consumer sentiment brought the index down more than a full point from july’s reading to 89.3. economists polled by bloomberg had expected that the preliminary index of 90.2 would be revised upward 3/10 of a point. consumer spending shot up 8/10 of a percent in july, the sharpest rise in four months adding to evidence that the u.s. economy was picking up steam as we began this third quarter. the commerce department says personal income climbed 2/10 of a percent and people were taking home more of that money, thanks to the president’s tax cuts. disposable income, the amount left after taxes, jumped 1.5%, almost four times the increase seen in the month of june. stocks rose for the day and the week on wall street, as reports on economic growth and consumer spending gave investors optimism that share prices will add to this year’s rally. dow jones industrial average up 41 points at 9,415. the s&p up five at 1,008. the nasdaq was up 10 points. big board volume, though, well below average. look at that. not even a billion shares changed hands ahead of the holiday weekend. advancers outpacing declines two to one there. on 1.1 billion shares on the nasdaq today, well below the six-month average for volume. the wilshire 5000, broadest measure of the market, up a half percent or 50 points. treasuries fell after an index of chicago area manufacturing rose to the highest in more than a year. the 10-year note down 12-32. that bolstered optimism about the pace of the economic recovery. those are the latest reports, the two-year and three-year note both down 2/32. the yen rose to a three-month high against the dollar in new york after japan’s factories boosted production and the government said it refrained from selling yen in august while the activity with the british pound was interesting for currency traders. the pound had its biggest one-day decline against the euro in six weeks after prime minister tony blair’s communications chief resigned. big travel weekend and trouble in iraq led to higher commodity prices today. gasoline futures surged 4 prbt% in new york extending a month long rally amid concern a late summer surge in travel will sap u.s. reserves close to a three year low. government data showed u.s. gasoline demand climbed to a record a car bomb killed a shiite leading muslim cleric in iraq stirring concern unrest will delay iraq exports. crude oil rising to $31.57. ko mex gold higher tradingality $376.80 an ounce, up 1.4%. another month of gains for the dow and s&p in august. deborah kostroun is at the new york stock exchange wrapping it all up for us.
>> that’s right, lane. in fact, in the dow jones industrial average we had a gain of about 2%, and a gain of about 82 points for the month of august. also the s&p 500 tacked on a gain of about 1.7%, or about 18 points. taking a look at the leaders for the month, probably not too much of a surprise. we’ve been talking about it so much over the past month, semiconductors, the big gainers up 15%. also retailers up 9%, and auto related you up 8.3%. semiconductors ve been gaining, as we are looking at this economic recovery and increase in business spending. those performing well. the retailers, they’ve performed so well mainly because as we started july and as we are getting into the back-to-school season, many of the retailers like wal-mart and target, reporting their sales ramping up for august. laggards in the s&p 500 for the month, we saw the pharmaceuticals, also healthcare equipment and insurance as well. and even if you go a little bit further down on the list. >> semiconductors in technology. definitely taking over. some of the other things that we saw in media stocks , we haven’t talked about media stocks leading this market in quite some time. these were the biggest gainers in the s&p 500. 500. clear chanlting a 52-week high in today’s session. the media movers really kind of speaks to the fact that as we are looking at an economic recovery, maybe companies will be more apartment to do more advertising. that’s going to be positive for the earnings and―for many of the media companies. also cyclical stocks putting in another strong performance. those have been performing quite well recently, putting in some pretty impressive gains. that really is media stocks as well as long as those auto stocks as they were also big gainers in the s&p 500. lane, back to you.
>> deborah kostroun at the big board. a closer look at the rebound in technology stocks . enterprise software company novell says it managed to shake off the effects of a weak economy. shares have more than doubled, up 126% since the rally began in early march. this week the stock hit its highest price in a year and a half. this company which makes software used to manage computer networks reported a net loss of three cents a share in the third quarter. still novell is giving a bullish forecast for the third quarter. su keenan is here with more on what novell had to say.
>> market strategists say companies like novell are part of a bigger story, a story of computer technology managers, managing more effectively in a slower growth environment. novell is now saying it will post a profit this quarter on optimism its linux programs will boost sales and c.f.o. joe at this point its says new products combined with significant cost cutting. the recent firing of 600 staffers are putting novell on the road to profitability.
>> we’ve been in a very difficult i.t. market and we continue to be in one, but novell has, you know, for 20 years been a leader in the network software and services marketplace, and our flagship net wear product continues to hit home runs and do well for customers. so even during this difficult time we’ve had flat revenues, and have been able to generate positive cash flow and increase the strength of our balance sheet.
>> improving balance sheets and difficult times because of tighter management styles. the outperformance of tech stocks such as novell. the nasdaq’s more than 40% gain since march all are key reasons that u.b.s. warburg’s technology strategist phillip pip coburn says the rally in tech stocks will likely continue through year’s end. he says the first eight days of september will cement the direction of this market. his work puts him in contact with hundreds of fund managers who invest in computer related companies. he says, “i get absolutely no sense that they are close to pulling the trigger and selling into the strength of this rally. it is almost suicidal to do this.” going into next year coburn says there may be concerns on a fundamental basis with some of these companies, but for now he sees at least two things driving tech stocks toward a nasdaq 2000 by year’s end. there is recent history. he says fourt last five final quarters saw huge gains for tech stocks . and he says there is enormous pressure on fund managers. he says on today’s wall street missing a rally could cost them their jobs. stay tuned, lane.
>> su keenan. now, the top u.s. economic advisor in iraq has chosen j.p. morgan chase to operate an export import bank there. j.p. morgan chase will lead a group of 13 banks in 13 countries in creating the trade bank of iraq. this bank will serve as an intermediary between iraqi government agencies making purchases of equipment and supplies from outside the country. foreign bank companies haven’t operated in iraq since the banking system was nationalized in the 50’s and 60’s. j.p. morgan beat out 58 other banks for the top job. most economists agree that the key to continued economic growth is a pickup in employment. milton ez ra tee is here.
