Market briefing --- Bob (fast)
Corporate earnings --- Greg (slow)
NYSE --- Julie (slow)
welcome to “world financial report.” i’m bob bowdon. the oil markets dominated investors’ attention today. crude oil prices fell in new york trading after a standoff in the iraqi city of najaf ended peacefully. prices hit $49.47 early in the session. let’s get a check of how the energy markets finished the week. down off the absolute highs. finishing at $47.86 a barrel. crude oil for september delivery shown on the chart. oil prices managed to gain nearly 6% for the week. gasoline for september delivery slipped nearly 6% in the last five trading sessions. gas prices fell 4% today alone as traders speculated the u.s. has ample fuel supplies for the remainder of the summer travel season. heating oil for september delivery gained 1.25% on the week as indicated by that chart. downward move on friday. in the natural gas futures pit, you see on a one-week basis, a gain of .3%. not as dramatic for natural gas at $5.55 per million b.t.u. gold prices in new york rose 3.5% on the week, most in five months. traders speculating that surging energy costs will slow economic% -pgrowth. that may boost gold’s allure as% pa hedge against declines in other srefpls. well, to give you some perspective on how far oil prices have risen, take a look at this. light sweet crude stayed above $35 a barrel every day since april 6 of this year. that’s a duration of 136 days. oil above $40 a barrel since july 13 or 38 days. much of the climb comes from unusually tight inventories around the world magnified by violence in iraq and questions about supplies from the russian company yukos. we thought we’d take a look back at oil markets in 1990’s, comparing current prices after iraq invaded kuwait and shortly before the first gulf war with those we are seeing now. crude oil in 1990 remained above $35 a barrel for 29 days and closed above $40 a barrel for just two days. those levels are unadjusted for inflation. in today’s dollar, $35 a barrel for oil in 1990 would equal close to $50 today, $40 back then translates to $57 a barrel today. well, concerns about slowing economic growth, record high oil prices and other factors are prompting many on wall street to trim third quarter profit estimates for dozens of u.s. companies. c.e.o.’s are doing the same. so far in the third quarter, the number of companies lowering forecasts is 439. that’s 32% higher than the same period during the previous quarter. here’s bloomberg’s greg miles with this report.
>> corporate earnings will probably rise by around 15% in the third quarter, healthy by most standards. sectors such as basic materials and industrials posting strong gains. yet that pace will be slowest in the last five quarters. many analysts are beginning to shave profit forecasts for some companies in the transportation, industrial, consumer and technology sectors. one concern is oil prices which have risen by more than $10 a barrel or 26% since july 1.
>> earnings are facing several head winds, facing higher energy prices, facing decelerating economy, they’re facing growing geopolitical concerns and they’re facing tougher year over year comparisons. the third quarter and fourth quarter will be much tougher than in the first and second quarters.
>> a number of developments are making wall street and c.e.o.’s more cautious. some strategists say higher oil prices and interest rates are curving consumers’ buying power and also boosting costs also for many companies. manufacturers are also being hurt by rising costs for steel, rubber and shipping. in the consumer decision cessionarys, analyst vs. cut forecasts for may department stores, pulte homes and goodyear tire & rubber. estimates have been trimmed for caterpillar and ingersoll-rand and cummins. worries about terrorism, the economy and job growth may cause c.e.o.’s to hold back capital spending, hurting technology companies.
>> well, there’s definitely a reluctance from a c.e.o. standpoint to invest, to take that excess cash flow that a lot of companies are generating and spend it on i.t., especially in the second half of the year.
>> those concerns are one reason analysts have reduced forecasts for texas instruments, national semiconducter and intel since july 1. intel’s profits, of course, are also being hurt by high inventories. peter boockvar says many companies may overcome the head winds in the quarter. industrial companies like alcoa, he says, may be able to raise prices faster than rising energy costs. that could help them meet profit targets.
>> thank you, greg miles. well, a mega deal to tell but in commercial real estate. general growth properties is buying rouse for $7.2 billion. the all cash acquisition will add properties to general growth’s portfolio such as boston’s marketplace and the woodlands in houston. shareholders in rouse will receive $67.50 a share, a 33% premium over thursday’s closing price. second largest u.s. owner of shopping malls will assume about $5.5 billion of debt. let’s get to the numbers as they finished on friday afternoon. we saw a rally, actually the fourth rally out of five for the week. dow jones industrial average up 1.7%. s&p 500 up .66% finishing 1,098. nasdaq up 1% finishing at 1,838. checking volume at big board, 1.12 billion shares traded. advancers beating decliners somewhere around 3-1. nasdaq, volume of 1.32 billion shares. light for the nasdaq. light volume there which you expect on a friday in august. advancers beating decliners also 3-1. moving 20 performance of major indexes for the week. dow up almost 3% for the week. s&p 500 up 3.1% for the week. nasdaq the winner of the big three indexes up 4.6% for the week. well, moving to other major market averages. nyse composite up .66%. amex up .3%. russell 2000, a measure of small caps up almost 2%. checking the broadest measure, wilshire 5000, up .8% on friday’s trading. now moving to treasuries. we see selling action on the 10- year as stocks rallied. we saw treasuries sell off to the tune of 5/32 for the 10-year and yield up to 4.23%. at the shorter end. curve―there’s the five-year. down 5/32. moving to the two-year, down 3/ 32. that yield up to 2.43%. checking the day on currencies, euro finishes at $1.23. not much change in the yen on the day. 109.12 yen to the dollar. well, stocks rallied for both the day and the week as we just indicated leading to the biggest gain in 10 months. for more on today’s trading action, julie hyman from the big board. perhaps we’ll have that later. moving on, oil companies are not the only energy-related companies that enjoyed rising share prices. investors have poured money into stocks that deal in coal and also alternative energy technologies. two analysts who cover the companies that those industries represent will be here to discuss those groups right after the break. stay with us.
