Market briefing---Lane (medium)
NYSE---Deb (fast)
Retailers---Carmen (fast)
Currency:
Greg Gribbs---Royal Bank of Canada--Senior Currency Strategist
welcome to “world financial report.” i’m lane bajardi. the dow jones industrial average closed above 10,000 for the first time since may of last year. retailers led the final push to the psychologically important level. deborah kostroun is at the new york stock exchange. deb, i assume this time nobody wawas throwing hats around.
>> not this time. we did cross 10,000 a couple of times and it seems like the sizzle out of this 10,000 for now and closing above that level for the first time since may of 2002. obviously, an important psychological point and a lot of big questions coming in tomorrow as to whether or not we can sustain the level. it was retail names leading the s&p 500 higher. carmen roberts will do more on the retail story in a moment. but this was the big push in today’s session with the november retail sales report. tomorrow’s consumer confidence report will likely give us more indication as we’re into this very important season. now, in addition, some of the other things we were looking at in addition to some of the retail names, homebuilders. they were up and in fact just over the past couple of days they were down 9%. today, see a pretty big jump and the concern over the last couple of days as we’ve heard about mortgage lending tapering off and that impacted homebuilders but today merrill lynch saying that the drop in the homebuilders may have been unwarranted and similar things from wachovia securities saying that the market may be confusing a slow refinancing market with a slowing new home building market. they say those are two completely different things. one of the things that led the dow jones industrial average above the 10,000 mark and allowed us to close above that level, united technologies jumping to a record high and that analyst meeting. will give more indication of what u.t.x. has to say about their future. caterpillar also gaining after naming a new c.e.o. late yesterday. that stock also, once again, nearing a record high. altria advancing to an 18-month high on a report from prudential. the analyst saying that the illinois class-action lawsuit brought by light cigarette smokers likely doomed. so one of the reasons we did see altria performing well. only four dow components lower, wal-mart was one of them in the retail area.
>> deborah kostroun at the new york stock exchange. the jump in retail sales helped push the dow above 10,000 today and sales rising more than expected in november as u.s. shoppers bought more cars, furn furniture and electronics. carmen roberts has more.
>> consumers are providing fuel for the u.s. economy, a signal that profits will keep rising. as one economist tells us, the outlook is bright as we get continued support from consumers and start to see acceleration in business spending. retail sales rose a better-than-expected .9% in november while the government revised october sales to flat.
>> i think it reflects improving confidence on the part of consumers, that confidence translated into purchases of the big ticket items you noted, especially autos.
>> that was mark mandel with blaylock and partners. retail sales minus autos were .4%, which means that more than half of november’s sales came from autos as automakers continued discounts and incentives. daimlerchrysler’s chrysler division says that auto sales are accelerating this month. today’s report is boosting retail stocks with the s&p 500 retailing index adding 2% for the day after falling 6% this month. david brahman with draman value management says the earlier give-back shows the market is wondering how long the good news may last. he says he’s less enthusiastic about retailers, but sees good pockets, stocks such as borders which his company holds with good growth without being pricey. it’s too early to tell how retailers will do in 2004 and that will be a decisive year because that’s when all the stimulus due to mortgage refinancings and tax rebates should be through the system and we will learn whether or not consumer spending can hold up.
>> treasuries rose after the federal reserve released minutes of its october meeting. the minutes showed the federal open market committee sees low labor numbers until 2005. the dow jones industrial average settling above 10,000, better by 86 points. the s&p 500 up 12 at 1071 and the nasdaq composite up 7.63. 1.4 billion shares changing hands. same story on the nasdaq with 1.8 billion shares changing hands. the wilshire 5000 gaining 1.3%, the broadest measure of the market. bonds rising at the same time stocks did today. the 10-year note jumping 22/32 with a yield of 4.23%. the five-year note up more than .5 point. on the short end, a .25 point gain for the two-year note and three-year note yielding 2.31 pr%.currency trading in the asia-pacific region. the dollar erased its gain against the euro. to see how the dollar is doing in asian currency markets, we bring in senior currency strategist from royal bank of canada, joining us from sydney. what are you anticipating will move the currency markets there today?
>> we had the tankan―sorry, i have feedback in my ear. we’ve got the tankan report out in japan today. and that’s likely to be a focus in our market. the japanese economy has been showing strong growth over the last few months and there is concern over the strength of the yen. i think if the tankan report comes out on the strong side today, it’s probably going to provide a boost to the yen but is certainly a focus of the market. the trade report in the u.s. is another key report and in canada, trade numbers out there. the problem with the u.s. dollar at the moment being the widening of the trade balance and that’s another concern for the markets.
>> getting a sense of whether we’re seeing a true reversal of the direction on the dollar or is this just a pause here in.
>> you saw the dollar bounce overnight and sell off again once it was revealed that rates in the u.s. are likely to remain on hold for longer. i think that is probably still going to be a focus in the market and the trend is towards a weaker u.s. dollar.
>> federal reserve chairman alan greenspan spoke about the% chinese currency peg. let’s listen to what he said.
>> the rise in the value of the ram bee would be unlikely to have much if any effect on aggregate employment in the united states, but a misaligned chinese currency, if that is indeed the case, could have adverse effects on the global financial market and hence indirectly on u.s. output and jobs.
>> greg, your thoughts on his comments?
>> it’s anythin interesting, those comments, because one of the criticisms about the chinese currency is about the trade balance and greenspan is referring to the chinese economy overheating because of excessive growth in base money reflected in the strong growth in reserves. he’s suggesting another reason for the chinese currency to revalue for chinese reasons, for potentially providing some reasons to slow the economy down next year.
>> greg gibbs, thank you very much, senior currency strategist with royal bank of canada. the dow closes above 10,000 for the first time since may 2002. but the question is, can the blue chip index stay above this level? we’ll ask john wilson of morgan keegan what he sees from the technical perspective when we return.
