Market briefing---Bob (fast)
The Chairman's $140 million pay package---Su (fast)
NYSE---Deb (fast)
>> welcome to “world financial report”. i’m bob bowden. more people are discussing whether richard grasso should resign as chairman of the new york stock exchange. floor brokers at the exchange today circulated a petition calling for a special meeting where they would call for grasso’s ouster. floor traders will meet next thursday with exchange directors to discuss the chairman’s $140 million pay package. we go to su keenan for the latest developments. su.
>> the new round of criticism about richard grasso’s pay by lawmakers, by corporate leaders and by exchange members intensified today when james mcguire sr., a managing director of le branch and company called for grasso’s immediate resignation. this prompted the exchange to issue a statement after today’s closing bell that the chairman, “will not quit his post.” the critics say exchange chairman richard grasso’s pay package is excessive and could hurt his ability to lead the exchange. only four of the 27 exchange board members have publicly endorsed grasso who renounced an additional $48 million payment on tuesday. and new york stock exchange floor traders say 200 of the exchange’s 1366 members were willing to sign a petition calling for a special meeting to consider new management. the board of the new york stock exchange has always come under fire with critics saying it failed to apply the same standard of management oversight that’s required of listed companies when it granted grasso’s compensation. and federal records show that since 1998 new york stock exchange chairman richard grasso and the exchange’s political arm gave more than $420,000 in campaign contributions to congressional candidates. candidates that included the committee chairman who oversee the financial industry. two new york stock exchange members, james rutledge and george morris have written to s.e.c. chairman william donaldson, asking for him to intervene and calling for grasso’s resignation. documents filed with the s.e.c. show that grasso’s pay package included three bonus plans that pushed his compensation 10 times higher over an eight-year period. grasso began his career at the exchange earning $88 a week. senator byron dorgan, a democrat from north carolina said, “that doesn’t sound like a pay package. that sounds like he’s owning part of the vault.” now, earlier this week grasso tried to quiet the controversy by renouncing another payment of $48 million. we mentioned that earlier. but the existence of that payment caught some board members by surprise. there was no new comment today from carl mccall who heads the new york stock exchange compensation committee. you see him there heading for the elevator. that’s where bloomberg news caught up with him. he said, “not today,” when he was asked to talk about grasso’s pay. bloomberg contacted more than 40 c.e.o.’s of companies listed on the exchange. most did not want to comment on the controversy. the exception, the chairman of apache, raymond plank. he said grasso should not be paid more sthan $5 million a year for the work he does, he calls the $140 million pay package a very bad reflection on grasso and the governance of the exchange. a story we’ll continue to follow.
>> thank you, su keenan. a afternoon rally lifted stocks in friday session, but the broa broader indexes fell for the week, the first weekly decline in more than a month. we saw the dow jones industrial average up 11 points to 9,471, a gain of .12%. s&p up two points to 1,018, nasdaq up a half a 1%, up eight points to 1,855. checking volume, nyse volume at 1.24 billion shares, that below the 1.34 billion three month average. advancers beating declines 19 to 13. at the nasdaq the volume was ahead of the three-month average 1.7 billion, their three month 1.65 billion and advancers beat decliners. checking the wilshire 5000, the broadest look of the u.s. market up 1/4 of 1% or 24 points to 9,877. in fixed income treasuries gained on today’s economic news, sending yields at one point to their lowest since july. still, yields fell to their lowest point since august 7th. you see there the yield of the 10-year down to 4.25%. you see both the 10 and five-year gained a half a point on the price of the bonds. the three and two-year had buying action as they increased 10 and 5/32 respectively. the dollar fell against the euro reaching its lowest in a month. in new york trading you see the euro at $1.1291. the weak job market and the troubles the u.s. is having in postwar iraq are bothering americans. the university of michigan september survey shows fully a point drop decline in the gauge of consumer sentiment. economists in a bloomberg survey had expected an increase in this preliminary reading for the month. earlier today we got a weaker than expected retail report for august. a slump in demand for building materials helped keep sales to 6/10 of a percent last month, less than half of what most economists forecast. charles due mao of lombard street research in london was among those who expected only a modest increase.
>> you had a big increase in july because there was a large tax cut that went straight into people’s incomes. but that 1.4 number in july came down to 0.8 when you looked at total smory spending because service spending was almost flat. that 0.8 was 0.6 after allowing for price increases. there wasn’t that big a pop. the tax cut came through in july. in august there was nothing but weak development of labor income.
>> excluding automobiles august sales climbed 7/10 of a percent, retail sales figures after an upwardly revised 1% gain in july. producer prices rose 4/10 of a percent last month led by energy and food costs. taking out energy and food and the core rate at the wholesale level crept up 1/10 of 1%, which was what economists had expected. our deborah kostroun is at the big board with more on today’s session, given those weak economic reports, we nevertheless staged a rally. deb.
>> in fact, bob, that’s something we did see in the last hour of trading, things kind of moving higher. but i should mention it was done on lighter than average volume. in fact, we were below average with our volume, 1.2 billion shares. however, jeff swin son, trader at john hancock advisors in boston saying he thinks the consensus is that equities still have room to move higher. he says we draw strength from those continued optimism on the expected economic recovery. he also says expectations among money managers is that the third quarter earnings will beat analysts’ expectations. that is also lifting stocks . however, that was something that was called into question this week. can companies meet those third quarter expectations, given that thomson financial, what we are looking at, a 15% increase in third quarter earnings growth. this week we heard from companies like texas instruments saying that sales are going to be up 6.3%, but investors a little dispoypd in that a lot of concern as well about rising mortgage rates and what that could do for not only many mortgage lenders but also home builders as well. also still a lot of concern as mu tu funds close out their year on october 31st. we usually typically see quite a bit of selling as many mutual funds try to take their losses in september. of course, historically is the weakest month for the year for equities. one of the things we did see as we are talking about this economic recovery, however, the material stocks , the best performers, cyclical stocks that do well, economically sensitive that do well when the economy is getting ready to recover. so we did see many of the materials performing well. in addition, those cyclical stocks leading the dow jones industrial average, expecting this economic recovery. that’s alcoa, also dupont, two biggest gainers in the dow jones industrial average. in addition, utilities, some of the biggest gainers in the s&p 500. and in fact, utilities, some of the old names, defensive-type names that perform well. that was pharmaceuticals. eactually saw pharmaceuticals performing well this week. and those bank stocks , really saw them performing well. earlier in the week there was a lot of concern about the rising mortgage rates that we talked about. national citicorp, one of the companies that reduced their 2003 earnings forecast earlier this week because of the lag in some of those mortgage applications. however, banks ending out the week quite well. semiconductors, very interesting when this market goes up, since the low of march 11, the one area of the market that goes up is semiconductors. when the market goes down as we did see this week, it was semiconductors that led us down. so definitely in the leadership position for this market of semiconductors, one to watch. back to you.
>> thank you.deborah kostroun. the price of crude oil in new york fell to a four-month low on speculation u.s. refiners will cut purchases in coming weeks as they slow down for maintenance. crude fell to $28 a barrel, and moving to gold, gold futures fell for a third straight day, retreating from a seven-year high. that’s on concern speculators might begin to reduce their holdings in the metal, that are the largest in at least two decades. when we come back, stocks broke their four-week winning streak, but barely.
