Market briefing --- Matt (slow)
Homebuilders' story --- Carmen (fast)
NYSE --- Deb (fast)
Martha Stewart --- Allan (slow)
welcome to “world financial report.” i am matt nesto. let’s begin. two homebuilders benefiting from continued demand for houses. lennar and k.b. homes. lennar said second quarter profit rose 26%. we’re waiting, as we said, to later from k.b. any moment they should be out. carmen roberts has the homebuilders’ story today.
>> demand for houses still high even as mortgage rates rise and federal reserve prepares to boost its benchmark interest rate. economists for the national association of realtors says during an early phase of a rate increase cycle people typically rush in to buy homes thinking it may be their last chance to get in.
>> the number one complaint we are hearing from our realtor groups is that they have home buyers but don’t have enough homes to show. so there is an imbalance between strong demand and very limited supply currently.
>> mortgage rates stayed below 6% for most of the year, pushing u.s. home sales to a record pace and pushed homebuilders’ profit higher. k.b. home, fifth hrarplgest by stock market value, is expected to say that a second quarter profit rose to $2.10 a share, 16 cents more than a year ago. analysts surveyed by thomson financial expect revenue to rise nearly 5.5% to $1.5 billion. and the numbers are just now coming out. k.b. home is saying that its second quarter profit was $2.40 a share and revenue was 1.57 billion. it is topping analyst estimates on those numbers. we’ll have more as we get time to crunch them and bring them to you. lennar, the largest by stock market value, raising its 2004 earnings forecast by 20 cents a share to $5.50.
>> housing has remained strong, demand has remained strong. we keep seeing traffic remaining strong. that’s fueled by fundamental supply and demand basics. the population continues to grow. household formation continues to grow. people are out buying homes. interest rates are up marginally. but still at historical lows, keeping housing affordable.
>> even in the pace of rising interest rates and rising housing prices, he expects demand to grow because the population is growing. he says as long as the economy and job growth keep improving, the interest rates can withstand a fed fund rate of 4%. most economists expect the federal reserve to raise rates by .25 on june 30 lifting from 1% to 1.25%. housing starts on track to surpass two million at an annual rate, best in 25 years. back to you.
>> amazing stuff. carmen, while you were working, i was reading the k.b. press release. saying $2.40 a share. revenue coming in at $1.57 billion, up from $1.44 billion a year ago. they point out they’ll buy back a million shares. said their net orders were up 28% for the second quarter. interestingly, their order backlog up 32% to about $4.5 billion. you figure they did just hit 1.5 billion in this quarter. they have .75 billion worth of order backlog on the books at k. home. if we check on the trading in extended hours, no change. 63.71 where she was in new york trade. up 32 cents. let’s give you the broader market closing indexes here today. the dow down very little. i’m just using a pun, if you will. s&p up and nasdaq up .1%. one thing they all shared in common was the v-word. nasdaq below its average, 1.3 billion today. a quick check on broader indexes gains there but also modest. we look at bond market here today. we see some weakness following yesterday’s super strength of the 10-year. biggest one-day jump in three years. a little giveback there. yield inching higher right on down the line. shares of ford higher in after hours. deborah kostroun at the big board to explain the latest about their forecast. deb?
>> that’s right, matt. ford is the second largest u.s. automaker. increased their profit forecast by 15 cents a share for the second quarter. also increased their forecast for the year citing performance of their financial unit. now that was ford in today’s session. you can see what they’re doing in after hours, a little higher. what they said for the quarter, they’ll earn 45 to 50 cents a share. according to thomson financial, the earlier estimate, about 42 cents. also raidsing the full-year estimate to 1.65 to 1.75. so that is the latest on ford. now remember back on the first quarter, ford came out with a net income of 94 cents a share. that was almost double what analysts had forecast. ford was actually criticized by some analysts for not revising their forecast higher before the release of their first quarter earnings on april 21. and ford will actually release their full results coming out july 20. actually coming in and revising estimates. however they didn’t do it in the first quarter. look at what we saw in today’s session. a lot of range bound trading going on in today’s session. not a whole loft movement in the dow, s&p and nasdaq. however, we did have better than expected economic reports that failed to move this market . also the positive earnings didn’t do much to move the market either like best buy. best buy earnings led that stock a little lower. energy, that was the big push. trying to lead this market higher, at least in the s&p 500. exxon closing at a three-year high. a couple of others like burlington resources at a record high today. back to you in the studio.
>> thanks. always appreciate it. we have the latest now on the martha stewart saga. the former head of the secret services’ forensic lab is charged with lying on the witness stand. the ink expert pleaded not guilty to two counts of perjury. allan dodds frank at federal courthouse today tracking the details and joins us now. what have you got?
>> during the trial of martha stewart and peter bacanovic, larry stewart identified one of his titles as the national ink expert. now stewart, a 46-year-old who has worked for the federal government for 25 years and was chief of the secret services’ forensic lab is scheduled to stand trial december 20. he faces as much as five years in prison. larry stewart, no raoels to martha is charged with perjury for lying about his involvement in the laboratory examination of a key document used by the prosecution. the indictment says the key work was done by others in the lab. larry stewart’s lawyer says her client stands by his testimony.
>> what i’m saying is he did what he testified, that he participated, observed and reviewed the work done by a subordinate as he testified in trial.
>> stewart, who sported an american flag on his lapel in court, said little other than not guilty to the two charges of perjury. one perjury account alleges that he lied on the witness stand about a work sheet prepared by peter bacanovic which listed her stock holdings. prosecutors said bacanovic added a notation to the document to bolster a cover story about why stewart sold her imclone systems stock. the defense claim the notation “at 60” proved a prior agreement between martha and her broker to sell shares if they fell below $60. the other count charges that larry stewart falsely testifyed that he knew about a book being written by other government ink experts from the secret service. attorneys for martha stewart and peter bacanovic want judge cedarbaum to overturn the guilty verdicts against them on the grounds that larry stewart’s testimony destroyed their right to a fair trial. martha stewart and peter bacanovic each face as much as 16 months in prison and their sentence something scheduled tor july 8.
>> i’m looking forward to it. can’t wait to see what will happen.
>> tough one for the judge.
>> and defendants, no question. shares of microsoft fell today, that after losing a contrack for programs to run 14,000 p.c.’s for the city government in munich. winner is linux which will provide free software. hard to compete with free. windows runs 95% of the p.c.’s in the world. that didn’t matter much to the munich city council which voted in a closed door meeting, 50-29 in favor to switch to linux. analysts say the switch is the biggest p.c. defection to linux ever. accounts for less than 3% of the operating systems shipments. that is expected to grow, however, to 6% over the next three, four years. our next guest says oil won’t drop below $30 a barrel in his lifetime. i’m not sure if that’s a health forecast or oil forecast but jeff saut, chief investment strategist at raymond james, will sort it out and tell us his latest thoughts on stocks, next.
