Market briefing --- Bob (fast)
NYSE --- Deb (fast)
Grasso's pay --- Allan (slow)
Airlines --- Carmen (fast)
welcome to “world financial report.” i’m bob bowden. let’s get to the numbers as they finished on the day. a mixed market on the day with the dow down eight points or almost .1%. s&p 500 and the nasdaq were up, though. the nasdaq, the winner of the three, up .6% on the day. moving on to volume. we told you new york stock exchange volume at 1.22 billion shares traded and advancers far outpacing decliners despite the fact that the market was little changed in the s&p 500 overall on the day. volume was down for a lot of reasons according to deborah kostroun who watched the trading from the big board and has the wrap-up.
>> as you mentioned, 1.2 billion shares and things slowing down although there was much activity in energy and commodities. remember, next monday is the memorial day holiday and many trarteds―traders are not putting bets on the table ahead of that holiday. and the employment report due out next friday. remember in the last two reports, very strong reports. we’ll wait and see how that report comes out and in addition, the opec meeting is next week, june 3. much speculation about what will come from that, likely increased production but all of the concern about demand may not help with those increases in production. economic releases due out tomorrow that the market will watch closely―consumer confidence, existing home sales. it looks like sales of previously owned homes probably held close to their second highest pace on record in april. the 10-year bond holding steady and that yield 4.7%. earnings due out tomorrow. we have several of them, in fact, krispy kreme, heinz, williams-sonoma, and computer associates reporting tomorrow. and stocks today, it was all about energy as crude oil closing at its highest since futures began trading in 1983. also, tobacco, telecom, consumer staples all lower on the day. and industrials and cyclicals higher. boeing and caterpillar upgraded, the two biggest gainers on the dow and altria, the biggest drag.
>> former new york stock exchange chief dick grasso responds to new york attorney general eliot spitzer’s suit against him for more than $100 million. allan dodds frank has the latest. he was at the spitzer news conference and spoke with the attorney general.%
>> the state attorney general accused former new york stock exchange c.e.o. dick grasso of getting approval for a staggering and unreasonable pay% -package worth $188 million by% -deceptive and misleading means. new york attorney general eliot spitzer says he is suing grasso for the return of more than $100 million he earned while running the non-profit stock exchange.
>> we seek for the return from dick grasso against the improperly obtained fund. we do not put a specific number in the damages clauses but when this case comes to trial, we will seek well over $100 million back from mr. grasso.%
>> spitzer’s complaint says grasso improperly influenced the amounts awarded to him by the stock market―stock exchange’s board of directors. grasso started a as―as a clerk in 1968. in a statement just released, grasso said he was disappointed% -by spitzer’s intervention in what grasso called a commercial scput dispute and he expects to% -be vindicated in court. spitzer said grasso repeatedly gave the board materially incomplete, inaccurate and misleading information. spitzer said grasso had serious conflicts of interest as a regulator on the exchange. by the attorney general’s calculations for the years 2000 through 2002, grasso’s pay amounted to more than 99% of the profit earned by the exchange. spitzer is seeking $18 million from former new york stock exchange director ken langone who headed the compensation committee during the period when grasso managed to more than quadruple his pay. in a statement, langone said there are honest, dill dent and sound compensation decisions that were thoroughly researched and supported by 100% of the board. spitzer announced that frank ashon, former director of human resources with the exchange, settled charges for over $1 million. he said he did nothing deliberately misleading, although mistakes were made. the human resources consultant from mercer consulting also agreed to return his fees. spitzer decided not to sue other exchange directors as he said they were misled. grasso was so bold, according to spitzer, that when he was suppose to do a self evaluation from one to 10 he gave himself a 13.
>> moving on, crude oil and gasoline futures surged to the highest since futures began trading 21 years ago. the price of crude oil in new york rose 4.5% on the day to close at $41.72. gasoline futures rose 2.9%. concern that saudi arabia’s pledge to boost oil production by nine million barrels a day will still not meet rising demand. limited u.s. refining capacity% and fighting in iraq have pushed prices to records this month. investors are concerned that the record-high energy prices will hurt corporate profit and derail the u.s. recovery. carmen roberts has been checking to see how prices are affecting companies.
>> the companies hurt the most by all of this are the ones using the most and largest amounts of fuel. those are companies from the airline industry, trucking, chemical companies and utilities. a.m.r.’s american airlines and competitors had nearly $1.5 billion in increased costs because of surging fuel prices.
>> i think there will be airlines that will pucker if fuel prices get to $50 or $60. there are big airlines around the world that are already in chapter 11 or in dire straits. united airlines, for one.
>> the impact of prices today is different than those in the 1970’s and 1980’s. standard & poor’s economist says america relies less on oil and people spend a smaller percentage of disposable income on gasoline. you can see evidence of that as there are no long lines at the gas stations and people have not changed buying habits. in 1981, sales of fuel-efficient compact cars more than doubled as light truck sales fell. daimlerchrysler said rising fuel prices have yet to slow demand.
>> we think it would take $3 for six months to a year before you get the kind of change in consumer behavior that you got in the last half of the 1970’s.
>> harley-davidson’s c.e.o. says there may be a psychological effect to the higher prices that could help sales of the fuel-efficient motorcycles.
>> motorcycles are fuel efficient and if these prices persist, you may see guys making the case with their significant others that they ought to buy that harley-davidson to conserve fuel.%
>> they may have to if prices get up to $3 a gallon. >> thank you. when we return, william sonoma’s earnings are out tomorrow and our next guest says he’ll be cautious on the group, even though he likes the company. we’ll speak with the retail analyst of lehman brothers coming up.
