Market briefing --- Bob (fast)
Merrill Lynch --- Allan (slow)
NYSE --- Julie (slow)
welcome to final hour of “world financial report.” i’m bob bowden.% it is a big week for corporate earnings. 37 members of the s&p 500 are out with quarterly results. merrill lynch will be one of them. the worst slump in the new york stock exchange trading in almost three years may have affected its results. allan dodds frank has that story.
>> two big factors in the third quarter, the fed beginning to raise interest rates and continually rising crude oil prices probably hurt earnings at merrill lynch, analysts say. those factors drove down trader at the new york stock exchange by 9% and diminished trading at the world’s largest retail brokerage, too. consensus estimate from 16 analysts surveyed by thomson financial is that merrill’s third-quarter net income will drop 7% to $928 million. that works out to 92 cents per share. analyst richard bove thinks that number could be lower.
>> it was a disappointing quarter element by element. you didn’t get the new issue offerings you might have preferred to have gotten, second, there wasn’t as much m&a activity and volatility was low in the bond market .
>> analyst brad hents of sanford bernstien estimates that in the first half, merrill earned 30% of its revenue trading stock and expects that number to fall in the third quarter, adding that merrill’s revenue from trading commissions probably fell 9% last quarter. analyst richard hanson figures merrill will earn 95 cents a share.
>> we expect a significant slowdown at competitors like schwab or ameritrade or e-trade which focus simply on the retail client, whereas with merrill, we think their brokerage business will hold up better than their competitors.
>> the third quarter also marked a shift in merrilla c.e.o.’s stanley o’neill strategy after three months of heavy cost cutting. the move marked a return to a business merrill exited more than 300 years ago. merrill lynch is a passive minority investor in bloomberg lp, the parent of bloomberg news back to you.
>> ahead of its earnings reports, merrill lynch shares finished the session lower by 12 cents. merrill’s earnings are the tip of the iceberg. intel is also doe out tomorrow. analysts look for the company to say profit rose to 27 cents a share, up a penny a share from a year ago. on wednesday, we’ll hear from apple computer, expected to have earned 18 cents a share last quarter. citigroup reports thursday and analysts looking for the bank to say profit rose to 99 cents a share from 90 a year ago. let’s get to the closing numbers on this monday trading session. it was a stocks only day as the bond markets were closed observing columbus day. green arrows across the board with the dow up .27% -- stocks gained today as fewer than a billion shares changed hands at the big board as we showed you. for more on the day’s trading action, here is a report from julie hyman, at the big board.
>> this was the slowest trading day on the new york stock exchange, the slowest columbus day trading day since 1999 in terms of trading volume. also, only the fourth day this year that we’ve had fewer than a billion shares changing hands. it looks like it will be the third slowest day of the year in terms of volume. we did have gains in the markets , ending the day higher, but not at the highs. folks looking forward to earnings coming later in the week, including citigroup, bank of america and general motors coming on thursday. we saw mixed trade in those stocks. investors today seemed fairly optimistic about what they’re expecting this saerges -- earnings season for the third quarter, analysts’ estimates for 13.6% earnings growth in s&p 500 companies. limiting gains today, oil stocks. isgatingesting, given the fact that oil itself rose to another record high in the session, nevertheless, oil stocks as a group, the energy group, has gained 28% for the year to date, compared to a 1% gain in the s&p 500. so it looks like a lot of these outperformers pulled back today. also on the gaining side, we had home depot and a number of retailers. home depot gaining on a report in “barron’s” where home depot said they expect the global home improvement market to total $900 billion by 2008. that helpsed those shares today and retailers in general. wanted to note that we saw calpine as the biggest decliner within the s&p 500 after comments by an analyst at wachovia that said near-term earnings will be limited by depressed power prices. i’m julie hyman, newomberg news at the new york stock exchange.
>> today, the u.s. senate approved changes at the corporate tax laws removing the so-called foreign sales corporation rule, a provision that spurred european tariffs on american goods. it has primarily benefited a dozen large u.s. exporters. by directing special tax breaks to exporters that did not apply to non-exporting companies, the world trade organization ruled it unfair and said it gave an advantage to u.s. firms and the e.u. slapped a 12% tariff on some u.s. goods. iowa senator charles grassley says, in a news conference today, that the new corporate tax bill would likely satisfy e.u. complaints.
>> we never get a definitive statement out of them but through our trade consuls that both senator bachus and i have, plus talking to our people in the administrative branch of government, we think this will do away with the sanctions.
>> apart from removing the provision that the e.u. found objectionable, the new bill contains up to $145 billion of new tax cuts to replace some of those taken away such as a one-year tax break for multinational companies to return foreign profits to the u.s. at a tax rate of just 5.25% instead of the usual 35%. repatriation. the bill requires the tax savings to be used to create jobs rather than directed in other ways such as shareholder dividends. the bill reinstates a pre1986 law allowing people who live in states without state income tax to deduct state and local sales taxes on their federal tax return. senator grassley says these breaks are balanced by other tax increases that render the bill neutral, such as raising $26 million by banning depreciations claimed for public infrastructure leases. also, it ends a tax break for small business owners who buy luxury sport utility vehicles. there has been evolving administration response to the bill since last week -- now, secretary snow’s spokesperson says he finds the final bill acceptable. well, moving on, another part of the corporate tax bill involved payments to u.s. tobacco farmers from tobacco companies. $10 billion is the figure. u.s. cigarette makers may raise prices to cover the $10 billion buyout of tobacco farmers mandated in the bill today approved by the senate. one analyst says makers of cigarette brands may increase prices three to four cents a pack. the measure would end the 6-year-old quota program. when we return, a closer look at the $32 billion pizza industry. domino’s is trying to grab a bigger slice of the pie.
