Market briefing --- Matt (slow)
Mutual fund trading abuses --- Su (fast)
NYSE --- Deb (fast)
welcome to “world financial report.” a lot of things happening here at the start of the show. we have the $3.2 billion merger in the works here, may department stores offering to buy marshall fields, that figure $3.2 billion. the details still sketchy as the headlines are just crossing in terms of whether or not it will be a cash deal or a stock deal. but nonetheless, it is what it is, $3.2 billion consolidation in the retail industry, also out, just as i was greeting you this afternoon, we are seeing headlines crossing from new zealand and there we have the central bank raising its benchmark rate by a quarter of a point to 5.75%. two breaking news stories for you at the top of the hour on a day that saw stocks finishing at their worst levels of the day, snapping a three-day winning streak for the s&p 500, down 1%. the nasdaq down a little bit more, 1.6%. the dow, the best performer of the three, .6% and the volume, again, family―familiarly becoming a trend, light volume for the nasdaq and the nyse, 1.2 billion shares traded today, less than average. looking at the broader indexes today, give it to me, nyse, amex, russell all lower and the broadest of them all, the wilshire 5000, down a full 1%. on to the bonds we go, down today, at 4.81 on the 10-year note. the new york high coming at 4.85 on may 13. the low was 3.68 as recently as march 16. so clear upward movement in the yields in treasuries at all ends of the curve. crude oil futures rose eeraseing% earlier declines when a smaller-than-expected increase in inventories last week failed to sustain a move to lower prices. crude ended up slightly at the close of new york trade, .6%, $37.54 a barrel. if we look at futures in new york for gold, they were down about 1.7% here today and gold futures, that is, i want to point out, that 1.7% decline, the biggest decline in a month. there are increasing signs that the fed will quicken its pace of interest rate hikes and that reduces the metal’s appeal as a hedge against inflation as does the rising dollar. there may be a new round of settlements in the investigation of mutual fund trading abuses. bank one, invesco and conseco could all reach agreements with state and federal regulators as early as this month according to those familiar with the matter. su keenan is tracking that story and joins us with the latest.
>> potential settlements by these three mutual funds represent the final stages of a wide-ranging investigation into trading abuses. new york attorney general eliot spitzer uncovered improper trading practices in the $7.5 trillion mutual fund industry. that was back in september, and% since then, his office, together with the securities and exchange commission and other states has imposed $2.3 billion in sanctions against funds engaged in alleged violations. robert heim has worked as an attorney for the s.e.c. enforcement division.
>> these enforcement cases have given the funds a black eye. traditionally before the cases came out, they were thought of as a safe and reputable place for people to invest money but they were allowing favored% -investors special privileges% -that cost small investors money. i hope going forward new procedures will prevent that.
>> spitzer’s probe involved more than two dozen company, including chicago-based bank one, being bought by j.p. morganchase, forming the country’s largest bank. a person familiar with the matter says the bank is expected to pay penalties and cut fees in an agreement with regulators. bank one and denver-based invesco were accused of letting a hedge fund make quick trades at the expense of long-term investors. a spokesperson for invesco had this to say about the possible settlement, “certainly would like to get it done as expeditiously as possible but we have no time frame.” conseco, allegedly improperly traded in various annuityies. after emerging from bankruptcy in september, conseco no longer sells variable annuities and this is a story we’ll continue to follow.
>> i want to add that marshall field’s as a unit of target, that $3.2 billion cash offer subject to adjustment. just more details trickling in here today. that said, the three-day winning streak ended in the major market averages and deb kostroun is at the big board tracking it all to bring us the where, why and how it all happened.
>> one of the things we saw at the close of trading, matt, was the fact that altria group, a large drop off in that stock as an oregon appeals court reinstated punitive damages awards in a smoking case. philip morris saying they will appeal that oregon case and seek a new trial. telecom trying to help out the s&p 500 during the session and didn’t do a very good job although they performed quite well. the telecom generally performed well, the s&p, however, ending lower. this was on this f.c.c. ruling that did come out and so we did see the baby bells, regional bells, performing well on that ruling. however, at&t and m.c.i., those would be the biggest losers in the case. they actually were a little bit lower. also, on the other end of the spectrum, while telecom performed well, look at what dragged down the s&p 500 in today’s session. semiconductors at the top of the list. also communications services and retail. you take a look at some of the semiconductors, a lot of talk about intel, looks like a little bit of waning demand and that led many of the other semiconductors lower. the concern there is because of weak demand, some of the prices on computer chips could be getting at their weakest level in some time. household products, although avon said that household products index, some of the best performers, avon was lower although they actually said that their quarter, boosting their forecast for the quarter and the year. procter & gamble and gillette hitting 52-week highs. and caterpillar, this was the biggest laggard in the dow jones industrial average even though they said that they increased their dividend by 11 cents to 41 cents a share. back to you in the studio.
>> appreciate it very much. we have been talking about coca-cola a lot today. the shares were down and this is after the company said that president steven heyer was leaving. the 51-year-old executive was passed over last month, you’ll remember, for the top spot in favor of neville isdell. let’s take a closer look at coca-cola shares, i always like to start off on the big picture. this is a 20-year chart of coca-cola and obviously you can see the exponential run up, the years of unfettered sales growth, ending with the market peak in about 19-- or prior to the market peak in 1998. a couple of technical points, the red and green resistance lines. the red line at this―excuse me, the green line at 58, first resistance. second resistance coming at 62. also worth recalling is that that yellow circle, that is a seven-year low, in march of 2003, when the stock was at $37 a share. we’re up about 40% since that seven-year low, which is exactly in line with the s&p 500. and also, intelligent thing to look at, the four peaks in this stock over the past 18 months. the first one was a 20% drop. the second was a 12% drop and then a 10% drop and most recently in april, we had an 8%% -drop. so the 40% rebound has not been turbulent free by any measure. coming up, will the g-8 endorse% a 50% reduction in iraqi debt? robert hormats will join us to discuss the summit meeting.
