Market briefing---Bob (fast)
NYSE---Deb (fast)
>> welcome back to “world financial report”. i am bob bowden. the broader stock market was already heading lower this afternoon when news broke of a videotape allegedly made by osama bin laden and his deputy. and it was aired on al-jazeera today. this being the eve of the second anniversary of the september 11th terrorist attacks it raised concerns there could be more assaults. bin laden is blamed by u.s. officials for those attacks. let’s get to the numbers as they finished on this wednesday afternoon. the dow jones industrial average down 86 points to 9,420. the s&p down 1.2% or 12 points to 1,010 on the day. the nasdaq was the biggest percentage loser down 50 points or 2.6%. checking volume on the nyse, 1.5 billion shares traded, declines beating advancers by a better-than-two to one ratio. over at the nasdaq, less than two billion shares, rounded off two billion shares traded at the nasdaq. declines beating advancers by an even larger ratio, almost three to one. checking the wilshire 5000, down 1.4% on the day, slightly worse than the s&p 500, but not as bad as the nasdaq. and checking on treasuries for the day, we saw buying. we saw the 10-year and five-year notes surging 22 and 15/32 respectively. on the shorter end of the curve similar action as we see the three and two-year uch eight, and 3/32. moving on to currencies, the dollar rose in new york trading as investors said its recent decline versus the euro was overdone. we see the euro now at $1.1214. more reaction on the osama bin laden tape and its impact in the market. for that we turn as always to deborah kostroun at the big board who is standing by. deborah.
>> obviously, bob, we started out the day with a lot of concern about texas instruments, and that really caused the initial weakness. but late in the days we heard more about this osama bin laden tape. a lot of traders like jeff swenson and john hancock, david briggs at federated, tim he ken at thomas weisel, they point to that new osama bin laden tape as the reason for the market falling off even further late in the session. and in fact, nick angel lety, head trader at salomon smith barney saying the bin laud tape spooked the market. he said there was some profit taking. he mentioned tech, that’s the part of the market that led us up from the low from march 11th, and now kind of leading us down. he says after the tape the market certainly did sell off. in fact, as we’ve been talking about, technology leading us up. it was the semiconductors since the low on march 11th that has led this market higher. in fact, that s&p semiconductor and semiconductor equipment index, what great looking chart, up 68% over the past six months. however, today it was the worst performer. in fact, down about 5%, far and away. texas instruments, obviously the big story as they came out and said that it looks like their sales probably are going to be a little bit lighter, about a 6.3% increase in the third quarter. many investors had thought that maybe it would be a little bit more, given the news that intel last week forecast a 17% jump in their sales. so that really kind of calls into question as well what will we be seeing for the third quarter profits. we have these lofty expectations that third quarter profits are going to be increasing by 15%. and this is some of the first times that we are kind of hearing maybe a few questions about can we achieve that, given the sales may not be there. in addition to what we saw in the semiconductors, also a big story in today’s session. rising interest rates and rising mortgage rates, and what that is going to do to the bottom line of many banks and mortgages. another big drag on the s&p 500. national citicorp, they cut their 2003 profit forecast. washington mutual did the same thing yesterday, and it was all on the heels of rising interest rates for mortgages. in addition, golden west, they do quite a bit of mortgage work as well, countrywide financial another mortgage lender that actually cut their forecast as well. back to you, bob.
>> i noticed it says something about valuations and expectation when t.i. can raise their sales―correct myself, t.i. says sales will be up 6.3% yet their stock falls 7% because i guess that’s not enough.
>> not enough. not only that, a lot of concern about many of these―about other technology companies, and is this the frontrunner. a lot of investors saying it wasn’t really all that bad of news, but it just really couldn’t keep this market up.
>> ok. thank you, deb. let’s get to more on t.i. the company led the semiconductor group lower after updating its sales and profit targets. sales will rise 6.3% in the quarter. operating profits might actually fall. that’s the distinction between sales and profit. specifically t.i. said sales will be 2.39 billion to $2.49 billion. even at the $2.39 billion level, that will be better than a year ago. the third quarter forecast it gave back in july was different on the low end. the company moved up the low end by $100 million in the new forecast. it is the profit forecast that was not raised. t.i. says operating earnings will be seven to nine cents a share, the same mid point at the six to 10 cent profit range it gave back in july. it’s now clear that t.i. will not surpass last year’s third quarter operating profit figure of nine cents a share. t.i.’s chief financial officer said orders are climbing for semiconductors used in fancy cell phones, the kinds with added features like cameras and m.p.3 audio players. but investors expected more after robust forecasts from intel and national semiconductor. the expectation was they’d guide to a higher number, and after intel, everyone is a little drunk on expectations, said david wu, an analyst at wedbush morgan securities. taking a look at the t.i. shares down exactly 7.5% on the day, down $1.90 to $23.42, the third biggest drag on the s&p 500. there are more chip stocks . you see they were all headed lower on today’s action. well, adobe systems said third quarter profit and sales increased. this was after the closing bell. net income at the world’s largest maker of publishing and graphic design software increased to $64.5 million or 27 cents a share. excluding certain items profit came in at 28 cents, that three cents better than wall street expected. checking revenue numbers, it came in at $319 million. and that was also above estimates. the company also expects fourth quarter earnings and sales to beat wall street forecasts. in the regular session we saw adobe system shares falling $1.64, over 4% in anticipation of those earnings. but since the earnings were announced, that is the result in extended hours, up over 6% to $38.60. well, corporate ethics took center stage at a panel discussion in washington today t panel included securities and exchange commission chairman william donaldson and new york stock exchange chairman richard grasso. mr. donaldson is reviewing details of grasso’s $140 million pay package, which has prompted criticism from exchange members. bloomberg news caught up with the s.e.c. chief this morning to ask if he was satisfied with disclosures by the exchange about grasso’s compensation.
>> we’ve received the materials. we haven’t digested them.
>> are you going to have anything further, any further demands from the stock exchange? we are just not commenting on the whole situation. we have the whole corporate governance thing under review.
>> when the nyse chairman was asked whether he would resign amid criticism from some exchange members, he said he would not.
>> i have a great belief in the future of the institution that i’m privileged to work for, and its enormous success which lies ahead. i’m excited about the next four years. so the answer is i think you heard at the panel discussion this morning, no one is unanimously supported in any walk of life, mine included. i’m very blessed to have so much of the membership so responsive and so supportive.
>> the morning panel discussion was hosted by the business round table. well, treasury secretary john snow says his department should take charge of regulating fannie mae and freddie mac. secretary snow presented the administration’s first public response to the call for greater scrutiny of the two companies. ing the they own or guarantee 42% of the nation’s mortgages. freddie mac’s accounting is under investigation by the justice department and the s.e.c. and secretary snow says the two companies need to be regulated by a cabinet level department.
>> at a minimum the new agency should be required to clear new regulations and congressional testimony through the department. if that combination of operational independence and policy over sight―oversight is provided in the legislation, the administration would be willing to support putting that new agency in the department of the treasury.
>> congress has been waiting for secretary snow’s comments before drafting new oversight rules. when we come back we’ll talk with james glassman, senior economist at j.p. morgan.
