Market briefing --- Matt (slow)
Marsh & Mclennan --- Su (fast)
NYSE --- Julie (slow)
welcome to “world financial report.” i am matt nesto. a change in leadership at the world’s largest insurance broker. plsh marsh―marsh & mclennan chief executive jeffrey greenberg is resigning. his replacement, michael cherkasky, executive with a law enforcement background who has worked closely with eliot spitzer in the past. tonight, spitzer is saying a criminal prosecution of marsh & mclennan is “unnecessary.” he says his goals are better served by prosecution of individuals and su keenan is joining us now with the latest. su?
>> the pressure for jeffrey greenberg to resign has been mounting from the moment new york attorney general eliot% -spitzer filed suit and the% company’s stock lost almost half its value. greenberg ran marsh & mclennan for the past five years. one analyst said earlier today he expected resignation would help the company move forward.
>> we think the impact will be positive for marsh and the industry. obviously, for marsh, they have to get moving and try to settle the investigation, get a new leader who can stabilize the company and make sure they retain their market leading service base and also their market leading client base.
>> the new c.e.o. is michael cherkasky who ran kroll inc., the securities firm marsh acquired earlier this year. the day of the lawsuit, marsh & mclennan put cherkasky in charge of the internal probe into spitzer’s allegations and the next day he was named head of the brokerage unit, marsh inc., and today, he runs the entire company. cherkasky has close ties to spitzer, serving as his boss in the manhattan district attorney’s office more than a decade ago. one analyst who rates the company a strong buy says it sounds like he’s the right guy for the job.
>> we don’t feel the 45% decline in the stock’s value today since the investigation was announced is justified. we feel there will be hang-ups for marsh & mclennan going forward but we don’t feel like taking $11 or $12 billion off the market cap of the company is meaningful.
>> meanwhile, spitzer’s probe may help create a national insurance regulator in the u.s., an idea gaining support among consumer groups and congress. the consumer federation of america says while such a move might be costly, spitzer’s probe shows state regulation has failed. meanwhile, shares of aon corporation plunged to their lowest price in more than a year on concern it also faces legal problems. neither the company nor the attorney general’s office has commented on the company’s legal status. back to you.
>> and on we go with the earnings beat. we have results from zimmer. the company, z.m.h., the ticker, third-quarter profit and revenues coming in better than expected.% the stock over 11% over the year and up 1% in extended hours. 56 cents a share, the estimate was for 53, on $700 million. they are revising their fourth-quarter and 2005 sales and earnings forecasts. they see 62 to 64 cents for the coming quarter on $775 to $780 million in sales and for next year, a $2.80 to $2.85 a share on earnings on up to $3.35 billion in sales. zimmer, a medical device maker and the market is pleased with shares trading higher here today. the same cannot be said for the dollar, falling for the ninth straight session on concern oil prices will take a toll on the u.s. economy. it’s the longest losing streak since january. looking to see the dollar bought less yen. last but not least here, stocks closed lower. investors say there are a number of things hanging over the market , take your pick. oil prices, the war in iraq, the economic growth, the election, the outlook for the fourth quarter, earnings season, all television there leaving stocks little changed on the day. paring losses, finishing off of morning lows, afternoon drifts sideways to the finish line. insurers and metals did well in trading today with household products putting pressure on the market . for more on the day’s trading action, julie hyman with the report from the big board.
>> a delicate balance today with stocks higher earlier in the session, closing lower but not much changed. enough changed on the dow jones industrials to bring it to another low for the year, closing at its lowest since late november of last year. the s&p 500, not faring as badly today but not approaching the lows it reached in mid august. today, insurers doing well, returning from declines they had since eliot spitzer began his investigation of the industry. this index alone is down 12% since spitzer began the investigation, even with today’s gains. some of the best performers today, a.i.g., progressive and metlife. also gold stocks doing well today as the price of gold continues to rise. that index up 3.5%, some of the best performers within it, newmont mining gaining today, placer dome, anglogold and freeport-mcmoran. steel doing well with a deal within the industrial industry. it looks like the gains across the industry is due to speculation of more consolidation. carpenter technology gaining tas boosted its dividend and released earnings today. on the down side today, kimberly-clark led household products makers lower. the company came out with third-quarter earnings missing analysts’ estimates and the fourth-quarter forecast coming up short of what was expected. because of that, other household products makers declineing, such as coal colgate palmolive.
>> oil prices fell after reaching another record intraday. norway’s government intervening in a labor conflict that threatened supplies. the price down over 1%, 63 cents. $54.54, the closing price in new york. oil is up 68% this year as threats to production have risen along with demand for oil. goldman sachs chief executive says oil prices in the $70 range could shock the economy.
>> i think the important thing is recognize is this is not a nice smooth process. oil prices that might be slow enough―high enough to slow growth a bit, if they keep going up, at some point the economy breaks. one thing we’ve found historically is when the unemployment rate starts to rise, it usually doesn’t rise a little bit, but you end up in a full blown recession which says if you have a big enough shock to hurt the economy, things can fall apart in a major way.
>> unleaded gasoline you can see falling 2.8%, heating oil down about 1.8% and natural gas futures also down sharply, about 2.6% today. u.s. consumers are going to pay an extra $10 billion to heat their homes this winter according to the american petroleum institute. heating oil prices are up 48% from a year ago. natural gas prices up about 60%. halliburton’s no-bid contract in iraq and the extension of its government contract in the balkans should be investigated. a democratic senator is proposing just that. this after a u.s. army corps of engineer officer says the contracts violated procurement regulations favoring halliburton’s k.b.r. unit in giving and extending contracts without the proper justification halliburton was awarded a no-bid contract worth as much as $7 billion in iraq after the u.s.-led invasion. halliburton was once headed by vice president dick cheney by 1995 to 2000. the company says these are recycled allegations that were dismissed six months ago by the government’s top auditor. the deal between lakshmi mittal and wilbur ross will create the world’s biggest steel maker. we’ll hear from the steel deal makers democracy.
