Market briefing --- Matt (slow)
NYSE --- Julie (slow)
Fedex beat --- Su (fast)
welcome back to "world financial report." i am matt nesto. crude oil soared, no question about it, after a report showed that u.s. inventories declined for the eighth straight week. supplies fell over nine million barrels to 270 million last week according to the department of energy. analysts expected them to drop, on average, by about seven million. there were estimates up to an 11 million barrel drop but seven was the median. the damage from hurricane ivan was worse than first thought. seven platforms were destroyed, according to the u.s. minerals management survey, up from a previous forecast of four. all of this adds to concerns about supply.
>> the problem is we have this strong global demand picture that's only getting stronger and just a continuing myriad of supply problems from literally around the world that contributes to a extreme tightness in the market causing the price spikes we're seeing.
>> price check, aisle one, 3.4% higher for nymex oil futures. unleaded gasoline, 4% higher and heating oil 3% higher today and natural gas little changed. natural gas was up 8% yesterday. disruptions from hurricane ivan pushed the oil inventory lower, a risk that analysts at energy merchants says that refiners are buying everything in sight on supply worries. diving into the bloomberg terminal, if we can, we'll look at the work i did today on oil and the various things. there's a zigzaggy line and you see the department of energy and american petroleum weekly oil inventory data, juxtaposed, the white line is the d.o.e. what you see is the fact that oil inventories, at least by the d.o.e., are just about less than 3% above their all-time low or about three million barrels. the oil inventory number at 269 million today. if i stretch out the graph, it has a different look and gives you an idea of the down trend that we have been seeing. you can see five years' worth of data and it shows you from the high we set in the middle part of june to where we are today. so seasonally, some traders say this is not normal for inventories to be at this level this time of year but others are concerned as we approach that all-time low in inventories, especially with the situation far from resolved in the middle east and new problems arising in other parts of the world, namely russia and south america. also worth looking at today, is the precipitous rise in the price of oil and also how oil stocks have performed but interestingly, worth looking at, is the fact the yellow line is the s&p 500, how it really hasn't been beaten up as bad as some might have expected. you hear a lot of times traders saying oil prices are killing the market . folks, we're back almost to the all-time high. the white line is nymex crude, 80% higher in 12 months. the amex oil index below that, 40% higher in 12 months. the s&p 500 eight% higher in 12 months. the case that oil prices are killing stocks is hard to make when you look at this chart. last but not least, another of the reasons the oil stocks are attractive are high yields and low p.e.'s. the highest dividend yielding of the 13 stocks in the amex oil index, all 13 of which traded higher today. estimated p.e.'s, all about 30% below the average, 16.5% of the s&p 500 companies. stocks fell after a disappointing forecast from fedex and we mentioned the surge in oil prices. people trying to sell that. the indexes, 1.3 for the dow, 1.4 for the s&p and 1.8% lower on the nasdaq. treasuries rose with the yield on the 10-year note below 4%. we haven't seen that since april fool's day. the yen, euro and pound all fell. stock markets had their biggest drop in six weeks today in a broad-based decline. the breadth in the s&p 500 was 10 to one negative, 10 stocks fell for each that rose. julie hyman has more along those lines with this report from the big board.
>> the dow and s&p both experiencing their biggest drop since august 6 in today's session. it was, indeed a broad-based decline and all 30 companies in the dow jones industrials fell today, 455 in the s&p 500 stocks declined and about 1,745 stocks declined within the russell 2000. we want to note that all 24 industry groups within the s&p 500 were trading lower today. really hit by a double whammy today, we had higher oil prices, again getting near the $50-a-barrel range and we had a number of companies coming out with disappointing results. the high price of oil hitting the semiconductors in particular today, seen as vulnerable to economic weakness and that could be caused by the recessing price in oil. we saw teradyne, micron, analog devices and texas instruments trading lower today. noting with regards to oil, this morning i spoke with todd lioni, head of listed trading at s.g. cowen and he said we haven't been trading on oil so much as of late but as it reaches $50 a barrel, it's a concern. we had earnings from morgan stanley that were disappointing, pushed down the group and other brokerages declined today, as well. we saw everything from merrill lynch to a lot of the brokers and dealers today declining, companies like merrill lynch, as well as some of the other morgan stanley competitors like jeffries and legg mason falling today. and also finally wanted to touch quickly on wendy's. that company came out today with the third-quarter earnings forecast missing analysts'% l estimates and other fast food chains fell, as well, including mcdonald's, yum brands, both declining today. i'm julie hyman.
>> fedex says rising demand for package delivery service helped it double quarterly profit, citing a surge from business in international clients. su keenan on the fedex beat% l today talking about the trend for these companies.
>> well, matt, the nation's second largest package carrier sees a steady increase in global demand after air shipments from china rose by more than half last quarter, fedex boosted flights there more than 50%. the c.e.o. says that gives his company more opportunities to grow in the future. this also indicates that fedex is taking market share from united parcel service. ground shipments rose 16%. net income in the fiscal first quarter more than doubled to $330 million or $1.08 a share, meeting analysts' estimates. even so, shares took their biggest fall since december. you see the one-year chart with shares down 4% after trading at an all-time high of $88.90 on monday. fedex helped lift the dow jones presentation average to five-year highs earlier this week. a.g. edwards donald broughton says investors may have expected an increased outlook after the company boosted its forecast four times in the past year.
>> this company has great expectations raised consistently and the stock, let's face it, has outperformed the overall market , up over 30% for the year and the s&p is relatively flat so you have fund managers% l looking at a chance to lock in profit and momentum players that decided to leave.
>> morgan keegan's analyst says fedex is part of a bigger story, on the strength of the economy despite rising oil costs.
>> the bottom line is business is good for virtually every freight company right now. volumes are very strong and the need to get product into the customers' hands right now is generating good revenues and good profits for transportation companies despite the fact that oil is higher, i think and customer demand is so strong, businesses need to pay the higher prices.
>> the story of businesses paying higher prices to ship goods includes united parcel service which raised its third-quarter outlook in july and also yellow roadway. fedex boosted full-year earnings last august but a penny below the thomson financial estimate. >
> thank you. allan dodds frank back next with more of his interview with u.s. attorney david kelley.
