Market briefing --- Lane (fast)
NYSE --- Bob (fast)
The economy may be slowing down a bit --- Su (fast)
>> welcome back to “world financial report.” recapping the day on wall street, the dow jones as well as the s&p 500 and the nasdaq. the dow and s&p up .8% and the nasdaq with a 23% gain checking in with 1.3% at 1860. u.s. treasuries, the 10-year on the move slightly higher, 2/32 yield of 4.26%. not as much activity for the five-year. you see it unchanged on the day. and the two-year note actually slipped a bit late in the session down 1/32, yield of 2.47%. bear stearns says the recorded music business may be coming out of a four-year slump. analyst mark harrington says in a note to investors that music sales in the largest markets rose almost 1% from january through june. the rebound was paced by the u.s., the world’s biggest market for recorded music. bear stearns saying sales also climbed if britain but they fell in japan which is the world’s number two market as well as dropping in france and germany. nasdaq stocks put in their best performance in a week and our bob bowdon has a report on some of the biggest movers today from the marketside in times square.
>> the nasdaq rose on wednesday, up for seven of the last nine sessions but it was on low volume just 1.3 billion shares traded and the low for the year 1.2 billion shares back on july 2. one of the big stories was chip stocks which sold off broadly yesterday after piper jaffery lowered his semiconductor sales estimate for 2005 and also gardiner release ad report spreading a somewhat cautionary note on the semiconductor group. today intel down 1% yesterday. today up 1%. broad com in fact was down strongly yesterday about 7% after csfb lowered the third and fourth quarter profit estimates but the stock rebounded almost 3% today. invidia was the second best performing stock in the nasdaq 100. it was down 3.7% yesterday and up 4.3% today. one of the semiconductor stocks that particularly rallied was simtech corporation up 6% on the day. the company makes semiconductors, circuits and assembly products and said in the second quarter its new orders exceeded shipments and last quarter earnings came in a penny ahead of estimates. retailers rallied on wednesday such as bed, bath and beyond and amazon up between 3% and 4%. restoration hardware up almost 7% and friend stores up almost 5% -- fred’s stores up almost 5% today. also there was big news in fiber optic stocks. a number of them rallied. ditech communications reported that its fiscal first quarter operating profit was 28 cents a share. analysts only expected 22 cents and the stock was up almost 15%. look at the other fiber optic and telecom gear stocks like tellabs, juniper networks, comverse and adtran all strongly rallying on wednesday.
>> more details now on the slowing pace of new home sales. housing stocks closed lower on the day as a report showed new home sales fell a greater than expected 6.4% last month. this together with last week’s drop in mortgage applications are new signs the economy may be slowing down a bit. sue keenan has more.
>> july’s drop in sales of new homes exceeded every forecast from the 60 economists surveyed by bloomberg and it means that new homes are now selling at the slowest pace of the year. economists say it would have been difficult to exceed may’s record home sales which some believe satisfied pent up demand. jay brinkman says the market remains strong.
>> june had an all-time record in the number of home sales closed. july was down a little bit but again july was second from the all time record and both numbers exceeded the record set last year. we still see strong demand for housing, particularly in starter homes, people looking at, for alternatives to apartments, and that is really supporting the market right now.
>> still this latest data adds fuel to the bubble debate. fed chairman alan greenspan is now saying it is not clear a housing bubble hasn’t formed. dean baker codirector for the center for economic and policy research in washington says housing prices have outpaced inflation by 45% over the past nine years and that’s after keeping pace with inflation in the four prior decades.
>> we suddenly get this big run-up in home prices coinciding with the run-up in the stock bubble as happened in japan in the 1980’s. we’re seeing an increase in vacant units at the rate of 700,000 a year. we have a divergence of home prices and rental prices. in short, all the makings of a speculative bubble.
>> a different view from richard peach vice president of the new york federal reserve bank. the new houses being added to the stock are considerably larger than the older homes. we’re putting over $60 billion a year of additions and alterations into the stock. when you look at a constant quality price, they’re not rising nearly as rapidly as the prices that dean is referring to.
>> well, builders such as toll brothers are reporting record profit in the july quarter and they say they’re still benefiting from strong demand. the c.e.o. of thornberg mortgage says it’s a healthy environment.
>> our borrowers certainly appear to be very comfortable and capable of paying or making their mortgage payments down the road so we don’t see this sort of supposed reaching for mortgage payments or a housing bubble quite frankly.
>> well, regarding the drop, the biggest drop in last month’s sales was in the northeast. a drop of 24%. sales in the midwest on the rise.
>> su keenan, thanks. consumers are starting today back to school purchases as well and the chief executive of federated says fall sales may be softer than those seen in the spring. we’ll hear from terry lundgren about that, coming up next.
