Market Briefing---Lane (medium)
NYSE---Deb (fast)
Car story---Su (fast)
>> welcome to 2 final hour of “world financial report”. i’m bob bowden. fannie mae’s chief executive says accounting problems at freddie mac have nothing to do with the company’s status as government sponsored enterprises and do not indicate similar problems at fannie mae. shares of fannie mae have fallen 5% since freddie mac got rid of its c.e.o. and other executives. freddie mac is restating earnings which has led to calls in congress for tougher regulations on the companies. earlier on bloomberg television i spoke with franklin raines, chairman and chief executive at fanny he says his company has not been called for hearings on the matter.
>> would you like to testify?
>> i’m beingtually not looking forward to testifying because simply the confusion about between fannie mae and freddie mac. this is really a concern that affects freddie mac, something that saddens us, by the way, four our colleagues there. bupt also it’s important to the people at fannie mae that people realize that fannie mae has actually done this the right way all the way to becoming an s.e.c. reg strant earlier this year, subjecting us to the full s.e.c. powers now. so we have done everything that we can to insure that our accounting is done properly and that it’s subject to public scrutiny.
>> senator richard shell bishings chairman of the senate banking committee has scheduled a hearing on the accounting issues that freddie mac said it had misapplied for years to help reduce the volitility in its earnings. that hearing scheduled for july 17th. let’s get to the closing numbers on this monday trading day. we saw little movement in the markets by the end of the session. the dow jones industrial average down just four points. s&p 500 down about 2 points, rounding off there. the nasdaq down about 2.5 points. the dow, however, for the quarter rises 13%. that’s the largest gain since the last quarter of 2001. the s&p 500 climbed 15% in the quarter. that’s its biggest quarterly gain in over four years. the nasdaq was up 2 13r7b9 in the second quarter. that’s the largest gain since the fourth quarter of 2001. checking on volume, you see 1.44 billion shares on the nyse traded there. and advancers and declines almost about as close as it gets between advancers and declines on the nyse. checking over at nasdaq, you see 1.67 billion shares traded. that 18% lighter than the three month average. check that. it’s probably closer to the three month average. nevertheless, advancers and declines about equal at the nasdaq. checking the wilshire 5000, the broadest look at the markets, the wilshire 5000 falling 2/10 of a percent. a survey showed that manufacturing in the chicago area expanded this month. the national association of purchasing management said its factory index rose to 52.5 from 52.2 in may. the less than expected rise in the chicago report suggests a slow recovery for the nation’s factories following the war in iraq. well, bonds gain after a disappointing report. the 10-year benchmark report we just mentioned, the 10-year benchmark notarizing 8/32, yield down to 3.51%. checking the shorter end of the curve we see similar action, that is the prices of bonds moving up. the three-year up 6/32, the two-year up 3/32. the dollar fell against the euro for a third day in four to 114.98 for a euro. hourvegs it moved the other way against the japanese yen. the dollar paring a .5% advance against the japanese yen to trade near an eight-week high at 119.74 yen for a dollar. the price of crude oil rose 3.1% as tropical storm bill threatened refineries and forced the nation’s largest oil port to shut down. crude futures gained 92 cents to $30.19 a barrel. oil prices are down 2.7% for the quarter. gold prices rose for a second straight session in new york trading, up 80 cents to 346.30 an ounce. the dollar fell today against the euro, as we said, a little bit earlier. well, moving on, volume was looking rather light for most of the day. by the closing bell volume did not look all that bad. deborah kostroun is at the big board to tell us more about the level of trading activity we saw on this monday session. deborah.
>> bob, we had a lot of things going on. in fact, with the rebalancing of the russell 2000 we saw that volume propping up in the last hour. we were actually on track for about 1 billion shares. by the closing bell, 1.4 billion. that was a pretty average day. but most of that coming towards the end of the day. you can really kind of feel the vibe on the trading floor towards the close. however, of course, many traders talking about the fact we have a shortened holiday trading week, trading closes at 1:00 before that july 4th holiday. markets closed on friday. we have a lot of economic reports to contend with. today we had the chicago area manufacturing number. tomorrow we have the ism number, and the precursor yesterday from today’s number could be pointing towards maybe a little bit of a weaker number. also on thursday we do have an employment number, of course today, the end of the second quarter. tomorrow, of course, starts trading for the third quarter. now, some of the things as we are getting the second quarter out of the way, a lot of investors saying second quarter earnings really the key ingredient right now to determining whether stocks are going to hold onto the gains they made in the second quarter. in fact, the money manager at fort washington investments, managing $26 billion in cincinnati, ohio, he says what we should be looking for now is confirmation the first quarter earnings weren’t a one trick pony, and whether top line growth is returning. he says we are really not sure things are gettinging better. we are going to need confirmation the economy is on a rising upward path. he’s looking at bellwether companies and the earnings conference calls for evidence that stocks after rallying 16% in the second quarter can stick given the kinds of gains we’ve had. some of the gains that we saw in today’s session coming out of the semiconductors, that was really the call from salomon smith barney on intel. however, smith barney talking about national semiconductor. they downgraded the stock . l.s.i. actually narrowing their second quarter loss to about a loss of six to eight cents, compared with their previous estimate of a loss of 11 cents. still looking at a loss but looking a little better for l.s.i.. back to you in the studio, bob. tomorrow the major auto makers will release sales figures for the month of june. several analysts raised their forecasts today saying sales have picked up in the final days of the month. some are saying a better economy is luring back middle income buyers. su keenan has a preview of the car story. su.
>> bob, the car story is this. analysts at three firms, lee marngs merrill lynch and morgan stanley, are raising their forecast for june auto sales, just one day before the official numbers come out. now, on average analysts say they see a modest gain from last june. they credited several reasons; the return of the middle income buyer, tax refund checks, and extended discounts from some of the auto makers. now, eight analysts surveyed by bloomberg say june sales at general motors, ford and daimler chrysler’s chrysler unit will likely show gains when compared with june sales a year ago. lehman analyst darren kim el says in a note to clients late today that general motors, the biggest automaker by sales could “lead the pack” with a gain of 4.9% are. buyers with family incomes of $35,000 to $50,000 a year, considered to be the biggest group of car buyers here in the u.s., they are fueling this month’s buying according to art spi nel la of cnw marketing. he says this middle income group appears to be buying again after staying out of the market on concerns about the gulf war, they are buying used cars instead. morgan stanley steve gersky raised his number raising his june seasonally adjusted sales to 16.6 from 16.3. he raised his june estimates for ford, general motors and chrysler. he expects g.m. and ford sales to show year-over-year gains to 4.6%, revised from 1% to 3% gains. he expects chrysler to report the greatest gains over last year, sales increased from 5% to 7%, up from a previous estimate of 2% to 4% gain. his estimates are among the highest analysts that bloomberg surveyed. some analysts note the role incentives continue to play. general motors said that it is extending employee rebates and overnight test drives for consumers until after labor day. in mid may g.m. began issuing coupons to employees that they could give to friends and families offering steep discounts in addition to the other incentives. lehman’s analysts’ estimates notes the firm’s fundamental outlook for the auto industry remains negative due to concerns about pricing and high inventory levels. lehman says market share for g.m., ford and chrysler will decline more than it previously expected by year’s end. back to you, bob.
>> thank you, su. shares of good year were down following news of a breakdown in labor talks. north america’singest tire makers broke off contract talks with steel worker es union over the weekend. that rates the possibility of a strike by about 19,000 employees. they have been without a contract for more than two months.the union says it is rejecting good year’s latest offer and no new talks are scheduled. neither side has given the three days noticed required for a strike or lockout. the union says good year wants to slash healthcare and pension benefits for workers and retirees. north america’s largest tire maker is trying to cut costs after a $163 million net loss in the first quarter. well, contrarian investing in natural resources may not have been the most favored place for the first half of this year, but our next guest has made it work for his fund. we’ll come back and talk to andy polara of r.s. investments.
