Market briefing---Lane (medium)
NYSE--Deb (fast)
Aetna---Carmen (fast)
welcome to “world financial report”. i’m lane bajardi in new york. glad you are with us. the federal reserve’s regional survey finds the u.s. economy shows signs of strengthening. the fed putting the evidence about current economic conditions around the country eight times a year. this report is known as the beige book. eight of the 12 regional banks reported somewhat stronger growth in the past six weeks. no district said its economy weakened since the last survey. fed policymakers will use the data when they meet to set interest rate policy coming up next month. u.s. 10-year treasuries rose for the first day in five in new york trading. investors were lured by the highest yields in almost a year. take a look at the bloomberg. we can show you the yield on the notes which moves opposite the prirks has risen 1% from a 45 year low of 3.07% since mid june since 1987. some strategists say that jump may have been too rapid, given the economy is still not showing consistent signs of a rebound.
>> i think you are trying to make a low in here in terms of prices on the treasury notes, and because i do think you are going to get a muted second half of the year, at the 2%, 2.5% g.d.p. growth rate, i think bonds are a buy here at least into the end of the year.
>> take a look at the price and yield. 10-year note up a full point, as you saw on the chart earlier, 4.31% for yield. five-year note better by 20/32, 1.6%. maturing treasuries, three year note at $2.09%, a little more than a quarter point t two-year note up 1/8 of a point t treasuries had their gains and held them up as the government said it plans a record sale of $60 billion worth of three, five and 10-year note, $2 billion more than last quarter’s $58 billion figure but smaller than some economists forecast. now look at equities. the dow jones industrial average showing a loss of 4.5 points settling at 9200, nearly even there. the s&p 500 down nearly 2 points 987. nasdaq composite lower by 10.5 at 1,720. volume at the big board again, it is summertime and that’s what we are seeing in the numbers below the six month average, 1.36 billion shares. declines outpacing advancers slightly on the nasdaq. similar story on less than a 1. billion shares changing hands. broadest measure of the market is the wilshire 5000. it was down on the day by 15.5 points, a fractional percentage loss. well, the dollar had risen in new york for a third day against the euro/dollar and yen on speculation faster u.s. growth would boost demand for dollar denominated assets. but in the late action we are seeing a bit of a difference, but again, not much of a change at all in the currencies as they stand at the moment. deborah kostroun, meantime, at the big board with more on the day’s trading there. take it away.
>> in fact, lane, some of the things we saw in today’s session all that choppy trading, the sideways seesaw action that we did see, a little lighter than average volume. in fact many traders saying that we could see stocks really tumble if the weekly jobless claims that are coming out tomorrow could be higher than 400,000 that’s expected by economists surveyed by bloomberg. in fact, that 400,000 level a pretty key number. remember last being it was actually pretty good below that. john wheeler, head of trading at american century investments, managing about $75 billion, he says that he really does thinkt it will be too big of a negative. but he says obviously yesterday we were willing to forgive the worse-than-expected consumer confidence report. the big number comes out on friday, the unemployment rate. the june number 6 the 4%. we are looking at least to the expectation to rachet down to 6.3%. thomas garcia, head trader at thorn berg investment management he says if we can get a down tick in that maybe we will see we are getting the idea companies are getting back in there and hiring. he says if they are hiring that’s good for profits and we could see a pickup in business. one news item out of the close of stock market trading involving dow component alcoa. they plan to lay off workers in washington because of electricity prices. but in fact they are going 0 be laying off about 60 workers because of a planned increase in rate prices for electricity, and they say it will be a temporary closure that will begin in october. however, the company kind of very interesting, saying that if there is a change in the electricity prices, they might be willing to look at the situation once again, but it looks like they are looking at the electricity prices and their bottom line. in today’s session, obviously semiconductors and also computer-related stocks kind of the big story on the day. you had news about intel, saying that information spending not likely to pick up. so we did see technology, the biggest drag on the market. back to you in the studio, lane.
>> deborah kostroun at the new york stock exchange. aetna says it’s second quarter profit topped estimates as it controlled medical costs and raised its premiums. profit from operations was $1.28 a share or 26 cents more than what wall street expected. more on aetna’s results and turn around story, we bring in carmen roberts. carmen.
>> lane, there were a couple of surprises with aetna’s earnings. first the profit from operation’s, top estimates by so much. the other was the early accidental release of those results. aetna said someone loading the results to be released after the closing trading hit the send button rather than the save button, and s.g. cowan’s analyst said that contributed to the drop in aetna shares this afternoon. said it surprised investors in that they were unable to get immediate information from a conference call which of course, usually follows. that call starts in about 25 minutes. he says also probably shares sold off because they had gained so much over the past few days prior to the results. not surprising, though, to analysts and investors is the good job the c.e.o. jack roa has done in turning aetna from a company whose costs were growing faster than the insurance premiums it charged. with that turn around aetna posted a 28% rise in second quarter, for the second biggest u.s. health insurer. net income was 87 cents a share, compared to a year ago 70 cents. profit on continuing operations $1.28. analysts were looking for $1.02. the company earned $138 million on a 12% drop in revenue to about $4.5 billion, as membership fell. aetna has dropped more than six million members who were too costly to insure and raised rates for others to stay ahead of those rising medical costs. analyst john fairly who does not own any aetna shares, says the company is also benefitting from the overall improvement in the industry.
>> they are not doing quite as well as some of the leaders in the industry, united, humana, wellpoint, but they are doing better and doing better year over year as the comparisons are pretty easy.
>> analysts say the next challenge is growing membership while remaining profitable. membership was flat sequentially showing that it has stabilized, and that’s good news according to an analyst at banc of america securities. another plus is aetna’s cost picture. for every premium dollar aetna collected it spent 77.3 cents on medical costs. that is even less than q1’s 77.5 cents, which some analysts had called unsustainably low. many analysts expect aetna to revise its profit forecasts higher during the conference call. that’s in about 20 minutes or so. bank of america’s france says aetna shares should open higher tomorrow because the results were so strong and investors have had all day to digest them. lane, back to you.
>> carmen roberts. now, from aetna to cigna. cigna shares had their biggest gain in almost six months. people familiar with the situation say the insurer hired goldman sachs to arrange the sale of its pension business for as much as $2 billion. cigna is trying to raise capital after two credit rating cuts in the past nine months. the stock has lost almost half its value in the past year as medical costs have risen and clients have left for rivals such as aetna and united health group. singular wireless has agreed to buy cell phone frequencies from bankrupt next wave telecom for $1.4 billion. that sale means u.s. bankruptcy court approval. it would be next wave’s first transaction since it won a u.s. supreme court battle over ownership of those licenses. cingular is a joint venture of bellsouth and s.b.c. communications. the aacquisition would help the mobile telephone operator expand its services in washington and boston. crude oil rose today after a report by the u.s. energy department showed that nationwide inventories of gasoline fell more than expected last week. coming up ahead of that opec meeting tomorrow we’ll talk toffee ma’s john kill da.
