Market briefing---Lane (slow)
The numbers---Matt (slow)
NYSE---Deb (fast)
Mad cow---Peter (slow)
>> a new year and a new high for the nation’s manufacturers, this as the institute for supply management’s closely watched gauge of activity topped expectations and surround to its best level since 1983. for a closer look at the first big surprise of the year as well as how it played out in the markets we have bloomberg’s matt nesto standing by.
>> the other has to do with the institute of supply management number, a couple of statistics within the data release.
>> the second big superlative within that release orders were at the highest level since 1950. that’s unbelievable when you think about it―“the lone ranger” in it its second season. that said, the market overwhelmingly had a rally this morning but gave back most the gaines in the―most of the gains. at one point, 10-15 stocks were on the rise by the end of the trade today, it flipped right around and 10-15 finished lower. a chart of movers today and year to date, why it is sometimes bigger than the daily statistic. some of the key losers, 3m, illinois tool and kodak, but the real interesting story is when you go to the year to date figure looking at 55-60% gaines 55-60% gains. the fact that 14-15 members of this particular index are all higher except for eastman kodak which is down 26 the% over the past 12 months, so clearly, the gaines that we’ve seen in the manufacturing group and the numbers today have been well supported by the marp. if i can, i’ll just pop you up by the marketplace. s&p 500 versus that miscellaneous index in white. that is the miscellaneous manufacturers outpacing the s&p 500. lane, back to you.
>> matt nesto. the dow got off to a good start thanks to the i.s.m. report but by the close of trading it was a very different story. deborah kostroun has a wrap-up of today’s action.
>> lane, we even saw the dow eclipsing 10,500 this morning but it didn’t stay there even after the positive i.s.m. report, the manufacturing-heavy dow was the worst performing major index. what was stronger today were big-cap drug companies like pfizer and eli lilly, we also saw telephone companies such as s.b.c. and verizon actually up even though we actually saw a drop for the rest of the markets. as we kick off 2004, a concern among many investors are stock valuations, and in fact the s&p 500’s price-to-earnings ratio based on this year’s earnings, the index currently trades at 20 times earnings. many investors say that’s high but not terrible as long as earnings rise and interest rates stay low. u.s. trust fund manager tom vale saying that it could hit a head wind by rising interest rates and even if earnings grow as expected the contracting multiples could be a reason that stocks could have a tough year, and it was particularly poignant concern on a day especially when bond yields were jumping on the day, bond investors selling on fears that the i.s.m. report could force the fed to raise interest rates before june, but not everyone was convinced that was happening. mact, i got a report this afternoon from goldman sachs economist bill dudley and he is it sticking with his forecast that we will see no rate hikes this year, the key, he says, is inflation not―he says because inflation is low rates will not rise this year. big banks, even though citigroup actually a little bit higher, many of the other banks were lower and also mortgage lenders like wells fargo. speaking of mortgage companies, we should also show you some of the home builders because higher bond yields mean that mortgage rates could go up and that may eat into the strength in the housing industry. back to the studio, lane.
>> deborah kostroun at the big board. we mentioned eating into the strength and eating a topic when it comes to mad cow disease. cattle prices rose for the first time in six trading sessions friday―it is an indication the market may be stabilizing in the wake of the first confirmed u.s. case of mad cow disease. bloomberg’s peter cook joins us from washington with the very latest on the mad cow scare. peter.
>> lane, before today u.s. cattle futures had dropped 19% since the first news of the mad cow scare broke. today as you said, they gained ground back. cattle for february delivery.
>> today’s price improvement follows industry reports that american appetite for beef remains strong. keith bowman, a senior commodities analyst at an illinois-based cooperative that buys meat for 2,000 grocery stores tells bloomberg there has been no drop in consumer demand at his business. other industry reports indicate the same thing. the 3.6 billion export market is another matter. more than 30 countries have suspended u.s. beef sales since the mad cow scare. meanwhile, government investigators report more progress in their efforts to track the movements and history of the positive cow. they said today that they have found another of the 81 cows that entered the u.s. from canada in 2001 with the positive animal, leading to the quarantine of a third farm in washington state.
>> we now have 11 of them definitively accounted for. one is the index-positive cow. nine are those known to be in the index herd. one is the animal that i mentioned on the matawa dairy operation and we believe one may still be in canada. the whereabouts of the remaining 70 animals is still yet to be confirmed.
>> finding those cows is important not only because they may also be infected but because they will likely shed more light on where the positive cow first contracted the disease. the usda still maintains, however, that the risk to consumers at this point is minimal, something president bush stressed when he was asked about the situation on thursday.
>> i’ve talked to secretary vennaman about this issue. i’ve told her that i want her to take the steps necessary to make sure that the food supply is safe and that the american consumer can be confident. i think they should be. as a matter of fact, i ate beef today and will continue to eat beef.
>> u.s. delegation travels to mexico next week to try to convince that country that u.s. beef is safe, and a full ban there is not necessary. lane, of course, similar trips to japan and southern california last―and south korea last week failed to induce those companies to drop their ban.
>> california has begun an investigation into the sales practices of three mutual fund groups in the state. bill lockyer, the state attorney general did not indicate which funds but the franklin family of funds said it has received a subpoena from lockyer’s office. the investigation is focusing on whether the funds failed to disclose transactions. undisclosed transaction costs are a focus of the widening scandal of the mutual fund industry. u.s. corporate earnings more than dunled to a―doubled to a record last year. merrill lynch, intel and chevron texaco led. companies in the standard & poor’s 500 index had net income of $474 billion. shares in u.s. companies became more attractive to investors resulting the first annual gaines for―first annual gains for the major indices in four years. coming up next we’ll discuss the merits of diversifying your portfolio with high-yield bonds with brad brooks. portfolio manager at value line
