Market briefing---Bob (medium)
NYSE---Deb (fast)
Nasdaq---Anthony (slow)
Applied materials---Bob (fast)
and welcome to world financial report. i’m lane bajardi. glad you are with us this afternoon. spending is firming, so says the federal reserve policymakers. but they say labor market indicators are mixed. in its statement today the fed said the risk of a fall in inflation exceeds that from a rise from its low level. the committee says the risk of inflation becoming undesirablely low is likely to be the predominant concern for the foreseeable future. as expect today federal reserve left its target rate for overnight loans between banks at 1%. policymakers say rates will stay low, “for a considerable period.” since may the fed has cited slowing inflation as a risk to economic growth. policymakers have said they are willing to leave rates low until there are signs inflation is accelerating. former fed governor susan phillips found the statement more upbeat than after the last meeting.
>> they are feeling a bit more optimistic about the economy, but they are still concerned about the labor market, so they are looking for a strengthening in the labor market to sort of indicate that this is going to be a sustainable growth.
>> pimco fund manager paul mcculley says he was expecting more in the fed statement.
>> they’ll beat up on white bread. the fed used two words. they said for the foreseeable future they think the dominant risk is on the downside for inflation, and they said they were going to be on hold for a considerable period. so those are the two phrases that the marketplace was looking for. to me the fed needs to be a whole lot more explicit about that. i think the fed did the minimum that they could do today.
>> mcculley, who manages $100 billion, says the rise in bond yields will hit consumer spending, not this year but beginning in 2004. he expects economic growth between 3% to 4% in the second half, but says it will slow down next year.
>> stocks rose after the fed decision. retail and semiconductor shares led the gains. running down the numbers for you now, the dow jones industrial average up 92 points at 9,310. s&p up 9.76 at 990. the nasdaq was better by 25.5 points at 1,687. big board volume, though, look at that number, 1.1 billion, well below the six-month average at new york stock exchange. advancers outpacing declines by a two to one margin. nasdaq also summertime volume on the lighter side, 1.3 billion shares, below average, two to one in favor of gainers. treasury notes fell with the 10-year note down for a third day after the fed decision. the fed year note lower by 19/32. the five-year was also lower, however, the two-year note rose on speculation the central bank will leave its benchmark rate unchanged for coming months. the dollar rose against the euro/dollar as the fed signals it will keep rates low, and that it sees growth in the u.s. economy overall. the dollar sun chained against the euro/dollar and yen. deborah kostroun joins us at the big board with more on how investors reacted to the fed’s decision. i suppose it got quiet on the floor.
>> at that point things were crawling. that’s how i described it at 2:15. after 3:00 we were really up and running. and in fact, up and running to close out at our best level of the day. not only the best level of the day. take a look at today’s market and some of the things we are looking at. we are looking at the trade range closing above the trading range, 9300. we’ve been in 9,09300 for so long. the trading range, we are getting near the june 17th high, so very important that the june 17th high, and that’s 9,323, getting close to that, only 13 points away from that. we’ll have to see how we do tomorrow. also earnings for the third quarter and the fourth quarter, we have very lofty expectations. we are looking at third quarter growth of 13%. fourth quarter growth of 21%. you have to remember the market is already anticipating that if we don’t get that we will certainly see the market pull back on that. one of the things that so many traders point out, like peter mancuso of performance specialists is the fact that the g.d.p. growth that we saw on the first half of the year was all war related. without that we don’t have all that much growth. one of the things we need, he says, is a lot of consumer type growth. another type growth we need, we need jobs. in fact, what we are looking at is a jobless recovery at least for right now. in taking a look at what we saw in today’s session, a lot of highs. this is not only a good thing. caterpillar had a new record high but it’s also very concerning that we are at so many new highs. the cyclicals hitting new highs. many retailers hitting new highs. wal-mart does record earnings tomorrow, they hit a 52-week high.
>> big number ahead from a big retailer. deborah kostroun. the nasdaq rallied to close at the high of its day after the fed held rates steady. with more on that anthony massucci from the market site.
>> the nasdaq wound up outperforming the dow and s&p on the day. the nasdaq up 1.5%. some traders i talked to including fund manager sandy lynn said this is likely to go down as the most perfectly worded fed statement in history. she talked about how they said the evidence is accumulating that shows firmer spending, although labor market is not as strong as they’d like it to be. risks are balanced for the next few quarters. and with that you saw techs really rally in the last hour of trading. stocks like oracle close at its high of the day, up 4%. yesterday merrill lynch said they would like oracle to go up 33%, and with that it moved up both yesterday and today. merrill does expect faster economic growth to boost oracle sales and increase its stock price. and really what we are seeing from the fed today is an indication of faster economic growth, possibly steady growth. sun micro shares went the other way. they went down today. moody’s investor service said it’s reviewing its rating on sun. they cited a continuing decline in operating performance. and this due to sun’s $1.3 billion in debt. that is the concern there. one i.p.o. to mention on the nasdaq today, a company called direct general. it’s an insurance company. they sell auto insurance in the southeast. here in the u.s., the stock priced at $21, close higher by $4 on the day. the company raised $146 million and they plan to use the proceeds to underwrite new policies and repay bank loans. this according to a filing from the company. t.h.q., it was also up today. the company got the rights from microsoft to distribute game titles. they announced the game boy advance packed with microsoft. let’s go back to the fed. one trader who owns more oracle and microsoft said u.s. stocks may climb as much as 10% over the next few months based on a more stable environment for interest rates. that really underlines what we saw today with the nasdaq closing p over 13r7b9. back to you in the studio.
>> anthony massucci. applied materials out with third quarter earnings. bob bowden has been crunching the numbers and he’s here with the headlines and the story.
>> mr. by jarry, the amat beat earnings estimate by a penny may be alie. applied materials post ad net loss of two cents a share last quarter because of what it described as a realignment charge. more on that in a moment, that compares to a seven cent per share income last year. taking out the charge, amat earned a penny ahead of expectations. the realignment totaled $164 million. what does it mean? a variety of things. the company said it includes inventory writeoffs, refocused product efforts, workforce reduction and facilities consolidation. revenue came in at $1.09 billion 1% below estimates, 25% lower than the same quarter a year ago when amat sold 1 every$1.46 billion worth of chip machines. new orders is a key number analysts use to predict applied materials’ fortunes. last quarter’s new orders came in at $1.05 billion, 8% above the company’s new orders forecasts they gave previously of $971 million. from last quarter to the current quarter, the forecast, amat sees fiscal fourth quarter earnings in a range between four cents and five cents a share, below the six cents a share consensus analysts’ estimates estimates. the second biggest number analysts were waiting for was applied materials forecast for order growth in the current quarter. analysts at soundview technology and deutsche banc were expecting a forecast of 10% on that number. in fact it did come in at 10% at the expected amount. but checking amat shares at this hour, we see they are down 35 cents, almost 2%. keep in mind these shares are already up 41% year to date. but the shares, i should point out, lane, did rally after the headlun number broke. that is they beat earnings estimates by a penny. shares closed at $18.45, rallied to $18.61. now as a result of the forecast they are lower by 35 cents.
>> the fed may have held interest rates but could the language in the statement by the fed have broader implications for the bond market here? we’ll talk to harry resis, head of fixed income at henderson global investments.
