Market briefing---Mike (medium)
NYSE---Deb (fast)
Valuation---Carmen (fast)
>> welcome back to “world financial report”. i’m michael mckee recapping the day on wall street the dow jones industrial average the only one of the majors to lose ground. stocks mixed on the day. the dow finishing down almost seven points. however, the s&p 500 finished up fractionally while the nasdaq finished up almost 12 points on the day. most actives on the new york stock exchange today, nokia which announced a new video game agreement, pfizer and motorola. deborah kostroun is down at the big board with more on what traders had to say about today’s session. deb. anything interesting on a very slow day volume-wise?
>> well, actually yes, mike. there is always something to talk about in the market, especially with economic numbers always coming out. in fact i was talking with pooter henderson of fleet specialist. he says right now we have a lot of different views on the economy. he says some economic numbers come coming out pretty favorably. while the economy definitely is showing signs of improvement, really not a robust improvement. he says this week definitely very tough to figure out. he says really don’t place a lot of emphasis on this week because the market can be so easily moved because there are so few players in the market. he says not a lot of institutional activity going on. i was talking to kenny polcari of palcari weicker. he says you can’t really read too much into this market. he says once we get into september things could be heating up again because the market needs to find a place to go. says we are building that base for the market to move a little higher. once again he says really not a lot of players in the market. we did see gold stocks performing quite well in today’s session, along with the semiconductors. gold performing quite well. not only did we see the semiconductors, but we also saw some of the integrated oil stocks like exxon mobil gaining. this after bank of america upgraded the stock , saying exxon can afford to pay a special dividend of $1 to $2 a share over the next couple of years. in fact, they say that they are likely to start doling out that cash as their business improves. also the analysts at bank of america boosting its forecasts for oil prices not only for 2003 but also for 2004 by a dollar a barrel. in fact, crude oil coming in right around $31 a barrel, at least in today’s session. also oil services. this is one area of the market that showed a little bit of strength early in the session, but then by the closing bell we did see a little bit of a mixed market. back to you, mike.
>> deborah kostroun. speaking of commodities, the price of crude oil in new york did fall after word of a slight decline in u.s. inventories. futures dropped 74 cents or 2.3% to $31.21 a barrel. gold reached its highest price in more than six months. the record budget deficit is setting expectations for a falling dollar. gold futures gainedded 7.30 or 2% to $374.10 an ounce in new york. motorola, the second biggest maker of cell phones, was among the most actively traded u.s. stocks today after shares were downgraded by morgan stanley. the analyst says he made the cut strictly on valuation. carmen roberts joins us with that story. carmen.
>> mike, valuation has become a top issue over the past few months. are stocks fairly priced? over priced? are their gains since february and march priced into expect d recovery in earnings. morgan stanley thinks that’s the case and their analyst downgraded shares from equal weight to overweight. that downgrade based on valuation follows others we’ve seen over the past months. analysts have concluded some shares have become overvalued and have lower ratings on companies including intel, general electric and gillette. mark hertz go vits who oversees $1 billion for dreyfuss technology fund says many stocks are expensive.
>> my perception is tech investors for the most part don’t focus as much on valuation. as long as they continue to see revenues and earnings increases. when they become really concerned about valuation is when the growth stops. then all the sudden people are panicked. they say what do i own and look at the valuation.
>> motorola’s estimated price to earnings ratio has risen to 64 while the s&p stands at 18. in a note to clients, he writes that he’s cautious of the wireless infrastructure industry partly because new product innovations such as cameras and cell phones and weak consumer demand cause an oversupply of handsets. that he says may deteriorate more in the second half if conditions don’t improve. despite abundant risks, he did not cut motorola to underweight. he says it’s done a good job in restructuring its overall business and should enjoy a significant operating leverage as the market recovers. james kel la her cites the behind the scenes efforts of c.f.o. david devonshire to sell various stakes in other businesses to reshape motorola’s portfolio, clean up the balance sheet, as that’s an important factor for the stock . he says motorola’s decision to sell its 35% stake on the be lithuanian cell company pushed shares higher yesterday. dreyfuss technology fund owns motorola shares because hertz go vits says they present a good opportunity over the next six to nine months.
>> they are coming out with a whole host of new handsets that tends to drive initial sales. also we think they continue to do well in the united states. >> expect to hear more on the v word, valuation. some investors say that in this new environment where regulators are pushing to have clear separation between analysts and investment bankers, analysts are a little more willing to hold negative ratings on stocks and prove they are independent. mike, back to you.
>> carmen roberts. michael’s store out with results for its latest quarters. the company reported 35 cents a share, two cents above the consensus estimate. revenue came in a little below the estimate. in the regular session the stock gained $1.10. in after-hours trading the stock is now up $1.53, almost 4%. recent economic data has come in more positive. our next guest says employment is the only missing part of the economic pickup story. richard dekazer, chief economist at national city corporation tells us why he believes recovery in employment is just around the corner.
