Market briefing---Lane (medium)
Microsoft--- Su (fast)
NYSE---Deb (fast)
welcome to world financial report. i’m lane bij in new york. microsoft, the world’s largest software company faces a fine of up to $3 billion and sanctions against its software programs. that’s the latest word from the european commission now seeking to settle the four-year-old antitrust case. sue keenan has vr reaction.
>> lane, analysts say what’s most significant about the european commission’s talk of sanctions against microsoft is that it signals an end to the four-year-old antitrust case. charles schwab said this is a significant win for microsoft and removes a negative. you are looking at performance of the shares today, surging as much as 2% higher before retreating as the market dropped in late afternoon. ubs analyst heather bulini told clients to view any weakness as a buying opportunity. she says a $3 billion fine would not hurt the company’s $50 billion cash position. and many analysts say microsoft will probably not face the maximum penalty.
>> we don’t see that as a possibility. we believe it will be somewhat less than that. so clearly the range of the fines is pretty dramatic. but the bottom line is that that’s been known by microsoft’s investors, and the news today based from the east again is just comical and sabre rattling going into the settlement discussions.
>> u.s. bank corp piper jaffrey’s analyst calling the european commissioner’s comments sabre rattling. what they said is they may force microsoft to disclose programming data to its competitors, and to change the way it sells its music and video software.
>> it does not, and that’s very important, expand the scope of are previous inquiry which is on the interoperability and the media player tie-in. it does introduce a lot of new facts and we wanted them to see the facts before we adopt the final decision.
>> walter casey holds microsoft as a major position in the tech fund. he runs for bank one investment advisors. he says there is vr optimism that a settlement is coming sooner than expected. microsoft may be closer to paying a higher dividend once the european antitrust case is behind it. under e.u. rules microsoft has two months to ask for a hearing to state its case.
>> sue keenan. the head of global markets and investment banking at merrill lynch is retiring at year’s end. last week current and former merrill executives told bloomberg news he was on a collision course with c.e.o. stanley o’neill. today’s announcement follows the departure of his mentor, the company’s former vice chairman, thomas patrick. in the interest of disclosure we will tell you merrill lynch is a passive minority vr in bloomberg low pressure, the parent of bloomberg news. city group has a new head of global operations. marjorie mag ner was named chairman and chief executive. the world’s biggest credit card operation is also the source of more than half of city group’s profit. mag ner has been chief operating officer of the division since 2002. applications for home purchases and refinancing has moved in the opposite direction last week. the mortgage bankers association of america’s applications index rose slightly, more than 1%. that’s the first increase in three weeks. the index has fallen by almost half since reaching a record in the last week of may. the group’s purchase index rose 6.9%. refinancing declined as mortgage rates advanced to their highest in more than a year. treasuries rose as some investors said the recent runup in yields boosted the fixed rate government debt and investors snapped up $8 billion worth of five-year notes sold at government auction. demand was the strongest in three years. on the shorter end of the year you see the three-year note up a quarter point, two-year note is up 1/8 of a point at 1.75%. stocks held onto a small gain as decline in interest rates eased vr concern that higher borrowing costs would slow the economy. financials led those gains. doujs up 25 points at 9,061, s&p better by a point and 2/3, nasdaq down 21 points. big board volume under 1.5 billion shares on the day, better than the day before. we see nasdaq volume at 1.8 billion. declines outpacing vears by nearly but not quite a two to one margin. wilshire 5,000 on the day barely moving. while currency-wise the dollar rose against the euro/dollar for the first day in four. vr appetite for the five-year treasury auction indicated demand for the u.s. asset. things currently flat. price of crude oil in new york fell after u.s. energy department reported nationwide nfts closed last week, crude closing at almost $32 a barrel, while gold futures rose for a third straight day on speculation indian demand for gold jewelry will increase with the approach of indian festivals.
>> there has been a lot of focus on investment rates and its investment in equities and bonds. deb kos has more from the new york stock exchange.
>> in fact lane, earlier this week―actually yesterday as the market went down, a lot of concern about interest rates rising. of course mortgage rates still increasing. however, as the 10-year note actually increasing, a little easing of that interest rate. that helping out at least the financials because what we are looking at, an increasing situation with interest rates actually would hurt corporate profits. as we are talking about easing of interest rates here just a little bit, some of those financials really helping to push the market higher in today’s session. however, financials really kind of the leader with america express the biggest gainer in the doujs, leading the dow jones up 98 points. david sauer by with loomis sales and company saying the stock market is most likely for the rest of the year going to be driven by corporate earnings and cash flow. he says what we’ve seen for the last two quarters has been very robust and he thinks it will continue to be positive and send the markets higher. he says there is this tug-of-war with rising interest rates. fundamentally he believes corporate earnings news is going to be the key catalyst that’s going to send stock prices higher between now and december. while we are talking about the financials helping out the market, another area that we saw today that kind of reacted maybe to some of the interest rates, home builders. of course, mortgage applications up, home builders performing quite well. in fact, not only did we see these some of the best performers, but also the volume on many of these stocks hitting some record levels as well. so many of the home builders performing quite well. the big stories on the days, talking about all the gainers, h.m.o. stocks , they’ve been down for the past few sessions. h.m.o. stocks , we see quite a bit of volume in thoses as well.
>> deb kos at the new york stock exchange. some of the biggest u.s. economic news of the week could come tomorrow. that’s when most retailers report their july sales results. 3% growth in smals is the forecast of an economist at bank of tokyo mits beerb. he tracks about 8 80 american store chains. this time around many chains have been discounting to get rid of summer items. consumers have been bullish on spending given signs the economy is improving. checking retail numbers, wault rising, the ko down $1.17. retailers began releasing their july sales information after the close of regular trading in new york. shares of hot topic rising in the extended hours. the teen retailer boosting its forecast for the second quarter, seeing earnings of 17 krnts, a penny more than forecast. analysts expected 16 krnts. smams rose 3.34% in july. you can see it’s been a good 12 months for hot topic, which is up again in extended trading. retailer aero postal boosted earnings. you can see aero postal ahead of that news was higher and currently is unchanged in extended hours action. the connection between aero postale and hot topic is they both serve the teen market. american eagle lowering its forecast in the second quarter, seeing earnings of 10 to 11 cents a share meeting the 11 cent analyst. the company says smals fell 10% in july. the extended hours action on this news down 5%, 1.07 at $19.80. small caps have outperformed large caps so far this year but the next guest says that is all about to change.
