Market briefing --- Matt (slow)
Nasdaq --- Julie (slow)
Merrill lynch --- Su (fast)
>> welcome to “world financial report.” i’m matt nesto. first things first. 1.3% lower for the dow. similar declines, little bit worse for the s&p, 1.4%. and the nasdaq, the worst of the three, we could put it that way, 1.7% lower. bonds down today for the same reason really. stronger than expected retail sales stoking concerns that rates are going to rise sooner than later. look at the 10-year yield. 4.35%. that is three basis points of its year-to-date high of 4.38%. similar moves in the shorter end. currency, latest trade shows not a lot of action there. 5 little bit of giveback. the new york trade was all dollar as investors rejoice on that strong economic news. financial and bank stocks led the nasdaq lower today. interest rate concerns dominated there, as well, despite better than expected earnings reports. julie hyman has this wrap-up from the nasdaq.
>> the nasdaq financial group today lost 2.7%, the biggest decline in about 2 1/2 months time. again, it was the interest rate concerns plaguing the market today. concerns that came after that better than expected retail sales report. we also saw the nasdaq bank index leading the downward trend today. down 2.4%. that index, fifth third bancorp was the leading decliner. in financials, ameritrade led the declines. i talked to the head of trading at schwab soundview e. said this resail sales report brought in concerns inflation would rise and the fed would raise rates sooner than expected. he said even though we saw better than expected earnings today, people are looking for more. we had gains within stocks. we had quite a run. he says we need something exceptional to have more gains. he thinks we’ll go sideways in the near term. as for earnings we did see stocks today that managed to gain throughout the session, even though we saw the overall market decline. one was tractor supply, a company that retails farm and ranch supplies. it had first quarter earnings per share of nine cents a share. that beat the analyst estimate of five cents and rose 2.7%. another company today, fastenal the company said it had first quarter earnings per share of 37 cents, three cents ahead of what analysts expected. also its revenue rose about 20.5% in line with what analysts were expecting. an indian company rising on earnings expectations today. info sis technology rising and said would it pay out a one-time dividend, even after its fourth quarter profit did disappoint some analysts. back to you.
>> merrill lynch’s first quarter profit almost doubles to a record 1.3 -- $1.3 billion for 90 days of work. the world’s biggest securities firm saw revenues from global markets and investment banking soar as it continued to cut costs and close offices. bloomberg’s su keenan now with the devil in the detail.
>> a combination of―a combing of details here. they boost fees from stock sales and mergers and stanley o’neill’s three-year effort to lower costs played a strong role. first quarter profit rose 95% or $1.3 billion. in the words of tim woolston at boston advisors, o’neill is the right man in the right place at this time. merrill’s earnings suggest that the first quarter of this year was probably the most profitable in wall street history. goldman sachs, morgan stanley, lehman brothers and bear stearns, all these rivals last month reported record combined earnings of more than 3.5 -- of more than $3.5 billion. richard bove predicted that merrill would, “blow the estimates out of the water.”
>> what is really driving the numbers is the number of new issues and secondary offerings in the market . they were both―there were about 300 in the first of this year. that raised if you take onto account the convertible bonds that. raised about $71 billion. if you’re raising $71 billion as an industry, and of course merrill lynch is number four in the industry, you’re going to make an awful lot of money.
>> taking a closer look at revenue, it climbed almost 30% from a year earlier. this as bond trading and underwriting soared. earnings came in at $1.22 a share. that exceed bias 15 cents. average estimate of analysts surveyed by thomson financial. investors say merrill’s move to start rehiring, traders and bankers last quarter is paying off. federated’s mark halpern has merrill lynch and says merrill is shooting the lights out with this report he thinks the entire industry will do whole. bove disagrees. he expects merrill shares to move lower from here.
>> i realize we new year a short-term rally in the market . i believe inflation has come back. i believe interest rates are going to be rising sharply. i think, therefore, the second half of this year the market is not going to do well. if the market doesn’t do well, then i guess there is some 30 new issues that are slated to come to market . they won’t come to market and merrill’s earnings will go down as opposed to maintaining where they are.
>> a quick note of disclosure, merrill lynch is a passive minority owner of bloomberg l.p., the parent company of bloomberg news. merrill closed 2% lower as the entire group on interest rate concerns.
>> thank you, su. another question. is the economy poised for stronger growth and has a rate increase moved closer due to the latest data? we’ll get an outlook from ed mckelvey senior u.s. economist at goldman sachs when we return.
