Market briefing---Lane (medium)
NYSE---Deb (fast)
Interview money managers--- Su (fast)
Nasdaq---Anthony (slow)
>> welcome once again to “world financial report”. we are glad you joined us. i’m lane bajardi in new york. here is what’s happening. the benchmark 10-year treasury note had its first weekly gain in four. investors snapped up notes sold this week at the highest yields in at least a year. the 10-year note up 6/32, yielding 4.27%. the five-year note up 2/32 with a yield of 3.16%. on the shorter end we see the three-year note on the day up 2/32. the two-year was changed after lots of activity during the week. turning to equities, consumer stocks helped boost the s&p 500 to a gain for the fourth session in five days. running down the numbers, dow jones industrial average up 64.64 at 9,191. s&p 500 up 3.5 points while the nasdaq was down eight at 1,644. big board volume, typical for a summer friday, below average volume of a billion shares with advancers outpacing declines by a two to one margin. on the nasdaq a different story. declines just barely outpacing investors on 1.3 billion shares. the wilshire 5000 is the broadest measure of the market. it was up 30 points or 1/3 of a percent at 9,392. the dollar had its biggest gain in a week versus the euro/dollar. the u.s. currency rose on optimism economic recovery in the u.s. will outpace growth in europe. deborah kostroun is at the new york stock exchange. we check in with her now. take a look back at the day and the week that was, deb.
>> well, in fact, lane, one of the themes that really kept emerging, as you mentioned just a few moments ago, that was oynt rates and yields on the u.s. treasury notes. they have fallen for three days, and really kind of helped ease those concerns about interest rates. in fact, david spika with bank of america capital talking about just that. and in fact, some of the things that he says is that the market has been in a trading range over concern that higher interest rates would impact the market and also the economic recovery. he says that investors will be relieved that the 10-year note yield has stabilized. and, of course, as that―that did help out many of the consumer stocks . if you look at the biggest gainers in the s&p 500 by groups in fact, the restaurants among some of the biggest gainers. in fact, mcdonald’s biggest gainer in the dow jones industrial average, even for the week as well. and in fact, mcdonald’s saying that july same store sales p nearly 10%. other restaurant stocks performing quite well. behind the restaurants, retail, one of the second best performers in friday’s session. but not only in friday’s session in thursday’s session as well, as we heard that retail sales for july coming in better than expected as a lot more people are looking for those bargains, clearance items and buying more clothes. also the consumer durables as we’ve been talking about, also performing quite well, though eastman kodak got a credit rating cut. many of the other consumer durables putting in a strong performance. home depot, this was another area of the market that performed well. home depot had another gain for the third straight day, this amid that drop in interest rates and in fact, even u.b.s. agriculture analyst gary battler saying even if interest rates do rise, some of those home improvement stocks like home depot should perform quite well.
>> deborah kostroun at the big board. looking at the weekly trends in trading, the dow is the only major index to post a gain, the fifth weekly gain in the last six months. six weeks, i would imagine that is supposed to say. the nasdaq and s&p have lost ground. nasdaq posted its largest weekly drop in six months. su keenan looks at money managers and what they are saying next week.
>> the strongest performing index year to date, as you know, up 23% on the nasdaq. this week’s 4.2% drop is the largest weekly pullback since mid january. the second weekly drop and the third week of losses in the past four. if you look at the bigger trend, you can see the nasdaq has gained 30% since march 11th. but if you look closely, you see the index continues to pull back from its july high. many technology stocks are leading the way lower. now, market strategists point to nvidia as an example. shares fell 20% today. if more―they’ve more than doubled between april and june. the company makes computer graphic chips that are used in microsoft’s xbox video game system, as well as in dell and gateway products. nvidia says sales this quarter will lag its original forecast. now, analysts say many tech stocks have posted such strong gains that disappointments such as nvidia’s can cause declines. mark hertz go vits who manages a billion in assets for the company’s technology funds, says he’s well aware the five-month rally in tech stocks is fueled by investor optimism or tech recovery. he sees stocks moving higher in the second half, but that is based on his view the economy has turned, and p.c. demand is about to pick up.
>> any kind of modest dips appointment will result in a very big pullback. so i think valuation is a big issue. the economy in general is a big issue. if the economy doesn’t pick up as a result of this massive federal stimulation, both monetary and fiscal, i think that will cause trouble for all sorts of stocks , and tech being higher valued will suffer more than most i think.
>> herskovitz is not worried. he says the nasdaq two-week pullback does not make him question the strengthen of the current tech rally. other money managers say the volitility in the bond market has driven trading this week. marshall front who husbands manage $1.5 billion says this week’s lower bond yields as a result of the auction removes investor fear that higher interest rates will hurt the recovery. art cashen for u.b.s. financial services says the consensus view of traders going into next week, if bonds behave, stock bulls may try to regain ground. we’ll stay tuned.
>> su keenan. now, the price of crude oil in new york fell after the failure of prices to break above $33 a barrel prompted some speculators to unload their contracts. it closed at $32.18 a barrel. gold futures in new york rose for a fifth straight day as the price broke through resistance levels. this spurred more buying by investors who base their decisions on technical analysis. it closed at $356.30 an ounce. moody’s investor service cut the rating on about $3 billion of eastman kodak debt. the credit rating service is concerned weak cash flow will affect debt repayment. the world’s largest photography company’s credit rating is now two notches above junk. moody’s says profit deterioration in kodak’s consumer photography business has resulted in weak cash flow. the acquisition of health imaging company “practiceworks” will slow kodak’s ability to pay down its debt. broadcom will pay intel $60 million to settle court fights over patents t world’s large of the computer chipmaker had been seeking $82 million in damages, claiming most of broadcom’s products violated intel patents. they lost an initial trial in late 2001, but the suit was revived in february and a retrial was to begin next month. both companies last month settled a separate battle over graphics chips. nasdaq falling for a sixth day in a row, for the eighth time in the last nine, anthony massucci has more on the tech stocks .
>> with that, the nasdaq lost 5% this week. in fact, all five days this week it closed lower. with that some stocks went lower as well almost every day, like nvidia. that stock has been down four days in a row. today it lost 20%. late yesterday the company reported earnings saying that this quarter’s sales will miss forecasts. with the stock up a lot this year, investors took off 1/5 of the value. nvidia also said gross margin will be flat or slightly down in this quarter versus the last quarter. the stock , remember, up 72% year to date prior to today. now, nvidia makes computer graphics chips. with that other chip stocks went lower today as the semiconductor stocks led the way down. chip equipment stocks like novellus went lower, and kla-tencor, applied materials, the three big chip equipment makers in the u.s. all falling. other chip companies like maxim integrated, linear technology, rambus all falling as well. the semiconductor stocks down 6% this week. obviously the nasdaq down 5%. staying with the chips, a quick story on broadcom and intel. broadcom will pay intel $60 million to settle all outstanding patent litigation lawsuits between the company. with that both stocks were down with the chip group today. one stock that bounced back after yesterday’s 20% drop, x.m. satellite radio up 13% at deutsche banc calls it a buy. also we talked to price heedly at big trends.com. he says he’s not surprised that the nasdaq is going lower. in fact he thinks it could go from 1,644 where it closed today down to 1300. he said even in a bull market you get pullbacks. he said he’s watching the market swing from agreed where folks are more interested in making money and watching their stocks go higher, to fear where folks are worried about losing that money and therefore you are seeing the selloff in techs. back to you in the studio.
>> anthony massucci. now, the recent rise in bond yields and interest rates may make some investors change their investment strategy for stocks .
