Market briefing --- Lane (medium)
NYSE --- Julie (slow)
Marsh & Mclennan --- Bob (fast)
welcome to “world financial report.” i’m lane bajardi. we start off with crude oil, which plunged nearly 5%, the biggest decline in four month after an energy department report showed inventories rose more than expected. supplies climbed by nearly four million barrels. still, distillate fuel including heating oil and diesel declined more than expected last week. crude oil at the close on the move lower by nearly 5%, $2.71 at $52.46. gasoline down 5.5%, heating oil down 4.63% and natural gas futures down 6.28%. some analysts believe prices will decline further.
>> i think everybody is continuing to underestimate the damage that high crude oil prices will do to our economy and more industrialized economies particularly in asia. they’re built on doing things on the cheap, whether labor and raw materials and they’re hammered on the raw materials front and to the extent the energy prices work their way into those systems, you’ll see the demand contract.
>> opec’s president says the u.s. should tap the strategic petroleum reserve to lower prices. falling oil prices helped create the biggest rally in two months for the dow and s&p. the industrial average above 10,000 by two points, up 113 on the day. the s&p better by 14 at 1125 and the nasdaq checking in at 1969, up 41 points. the dow crossed above the 10-k level as the index rallied for the second day. for more, we have a report from julie hyman at the new york stock exchange.
>> the dow had its biggest two-day rally in a year in today’s session and closed above the 10,000 level for the first time since october 14, the day before new york attorney general eliot spitzer announced his investigation of the insurance industry which set off a decline in those stocks and in the market generally. it looks like we are returning from those levels. in terms of what gained today, a broad based rally because of the declining price of oil. semiconductors and technology generally did well. pharmaceuticals, healthcare equipment as well as auto stocks did well. oil having a good effect, specifically on the technology stocks as they are seen as economically sensitive. this was not good for energy stocks, energy stocks declining in the session. the energy group declining the most within the s&p 500. some of the stocks that declined the most within that included amerada hess. that company released earnings and said third-quarter net income was up 22%, but that did miss analysts’ estimates. we had a couple of highs for various groups in the session. the s&p 500 retail index closing at a record high today. we also had the dow transportation index doing well as it had been for the past couple of months. today, it once again closed at a five-year high. today, we had company specific news from cardinal health, that stock gaining after the company reported finally their fourth-quarter results after they restated their year earlier results and there was optimism about that. that’s back up 20%. i’m julie hyman, bloomberg news, at the new york stock exchange.
>> j.c. penney has named myronole ollman as the company’s new chief executive. ullman will replace allen questrom as new c.e.o. shares of j.c. penney down 3% on the announcement. biogen idec reported third-quarter profit of $36.8 million, a dime per share net. excludeing items, it was two cents better than estimates. sales rose on demand for the avonex multiple sclerosis drug and rituxan cancer medicine. it awaits approval of the new multiple sclerosis drug called antegren. that medicine is expected to be profitable. shares of j.d.s. uniphase falling sharply after they said sales in december may fall as much as 8% from the quarter that just ended. analysts expected an increase in that number. j.d.s. uniphase lost two cents i share in its fiscal first quarter which ended in september in u.s. economic news, september durable goods orders rose for the third time in four months. the commerce department says the gain was driven by military equipment and computers but the increase was less than half what most economists expected. in august, the decline turned out to be twice as bad as originally reported. excluding aircraft and other transportation equipment, orders rose for a third month in a row and the gain was six times what was forecast in a bloomberg survey. the housing market is also stronger than expected. sales of new homes rose to the third highest total on record as low mortgage rates encouraged americans to buy houses. the median selling price dropped 8.4% to just under $198,000. higher energy costs constrained economic growth in september and early october according to the federal reserve’s beige book regional survey that says consumers and businesses reined in spending because of the higher energy costs and higher prices boosted prices for some goods and services as manufacturers tried to pass on cost increases to customers. still, retail inflation is “largely subdued.” looking now as energy prices tumbled, the bond market did, as well, treasury notes falling the most in eight weeks as concern is easing about slowing economic growth worked its way into the market and demand of the government’s monthly sale of two-year notes was the weakest since january. there’s continued fallout from the bid rigging scandal in in the insurance industry. bob bowden has been falling the story and joins me with more.
>> thank you. the latest in new york attorney general eliot spitzer’s insurance investigation, ace, a property and casualty insurer, admitted wrongdoing about two weeks ago. spitzer had named ace as one of the companies that colluded with marsh & mclennan to provide fake quotes to customers. in a conference call today, ace chief executive evan greenberg acknowledged that improper conduct took place in one unit of his company. he said one employee had pleaded guilty to a criminal misdemeanor in connection with bid-rigging activities. evan greenberg is the brother of jeffrey greenberg who resigned as c.e.o. of marsh & mclennan. ice investors were―ace investors were digesting the earnings news reported yesterday call calls for hurricane claims produced a net loss for the company. ace shares, which fell more than 9% on the day the spitzer investigation was announced, today fell .2%. maryland insurance commissioner says he will investigate more wrongdoing.
>> we will go back up the food chain to look at the activities that took place that led to the purchase of the insurance and any inappropriate, illegal activity will be dealt with swiftly.
>> while ace was alleged to be colluding with marsh & mclennan, chubb was not mentioned in the probe. chubb vice president said in a conference call today that his company has found no evidence of participation by chubb underwriters in the types of activities alleged against other companies. chubb reported operating earnings that beat estimates. chubb shares gained .7% on the day, wednesday, and checking shares of other insurance companies mentioned in the spitzer report, a.i.g., run by hank greenberg, father of jeff and evan, lost .5% on the day while hartford shares gained .5%.
>> dow chemical is expected to post a 76% surge in quarterly profit tomorrow. analysts surveyed believe the nation’s biggest chemical maker earned $583 million. after two years of cutting prices, chemical makers have been boosting prices charged for chemicals used in plastics, paints and textiles. but now, with world economies growing, analysts say a recovery cycle is underway. chemical companies are running plants at close to capacity to meet rising demand, especially from china. shares of qualcomm have gained over 50% this year. we’ll hear from the chief executive about his strategy for continuing growth.
