Interview: Martha Stewart---Allan (slow)
white collar crimes and trials in the news in 2004. martha stewart convict and and serving time if prison. john rigas and his son, timothy, found guilty of fraud and conspiracy. they could be sentencedext week. allan dodds frank has more on why 2005 could be bigger for the courts.
>> in 2004, martha stewart dominated many headlines from federal court although the money involved in her crime was small next to the accounting crimes that were centerstage with enron and worldcom and healthsouth.
>> in the public’s eye, the success of the corporate fraud prosecutions may well be measured not by the martha stewart conviction or the conviction of the rigases in 2004. instead, it will be what happened in the scrushy trial, the ebbers trial and enron cases.
>> former tyco c.e.o. dennis kozlowski and his chief financial officer mark swartz will be retried in new york state court. in a few blocks, bernard ebbers goes to trial. in alabama, richard scrushy of healthsouth goes to trial. in texas, enron executives will be appearing in federal court.
>> these people in trial in 2005 are the c.e.o.’s, the top people in the corporation. it’s really going to put the prosecutors to the test to see if they can make their cases stick against the top people. we’ve seen lower level managers pleading guilty and cooperating. now the tough test is coming to see if the prosecutors can hold the top people liable.
>> one trial carried over the holiday in hartford, connecticut, the jury enteringed the second―entering the second month of deliberations in the trial of walter forbes and shelton.
>> thank you very much. as for stocks, a large part of how things will do in 2005 has to do with how things went in 2004. so, let’s take a look at a few comparative worksheets that rank, well, the benchmark indexes. you can see the first chart that we look at here shows so much of the move that we’ve seen in the fourth quarter really turn things around. you can see 7% spread for the dow in the fourth quarter gave it a 3% gain for the year. s&p, up almost 9%. so we’re talking about indexes that were down that managed to turn themselves positive year to date thanks to the fourth quarter. 14%, almost 15% rally. the nasdaq 15% fourth quarter really dug it out of a hole, giving it an 8.5% gain for the year. looking at it group by group, same story. what were these fourth-quarter winners? 10 1/2 months of this year, the markets really were nowhere. they were down. but hotel, restaurants and leisure stocks catching fire in the fourth quarter, almost 20% here. a mixed year on wall street. one thing about 2005, consumer confidence has been riding as he head into it. why isn’t wal-mart celebrating? we’ll look at wal-mart’s and its recent woes.
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Listen Market briefing --- Matt (slow)
NYSE --- Julie (slow)
Nasdaq --- Bob (fast)
>> welcome to “world financial report.” i am matt nesto. u.s. stocks excreted a second year of gains spurred by a big rally in the fourth quarter in technology shares, companies like apple computer leading the way higher. we’ll be talking about apple in our report from the nasdaq marketsite coming up shortly. for the day, there you see it, the stocks stumbled over the finish line in the last few minutes of trading. down .1% down the board. this is the year-to-date talwith the s&p 500 up 9%, the nasdaq, 8.5% higher. and the dow, the loser by a long shot, in fact, with only a 3.1% gain for the year. before we get off to julie at the new york stock exchange, let’s check on the volume this final trading day of the year, volume at 787 million shares. stocks capping off a two-year rally. julie hyman has some of the year’s winners and losers.
>> stocks finishing 2004 on a slightly down note. stocks had been higher much of the session, relatively unchanged before eroding gains in the final half hour of trading. it was the lightest volume full day of trading today. only 787 million shares trading hands in the session. although we ended the day on a down note, it was a good year for the dow and s&p. the dow the laggard with the gain of 2% and the s&p with a gain of 9%. much of those gains coming in the last quarter of the year. mcdonald’s up almost 30%, a company that gets much of its sales overseas when we had a declining dollar, boosting its profit. merck, the worst performer on the dow in the in year, down 30%, most of the declines coming in the last quarter after the company pulled vioxx from the market . in terms of groups, hotel, restaurant and leisure stocks up almost 38%, led higher by starbucks, the big percentage gainer within that group. steelmakers doing well on the year, up 60% with a good run there, although in the past few sessions, they’ve eroded that gain a little bit. homebuilders doing well on the year, up in the neighborhood of 36% as we’ve had home sales breaking records month after month through the year. on the downside, we didn’t have many losers group-wise on the year. semiconductors were the poorest performers by far, down 22% with concern of rising inventories at many of these companies. intel leading the way down. only four groups within the s&p 500 ended the year lower. that was the year that was. i’ll see you in 2005. i’m julie hyman, bloomberg news, at the the new york stock exchange.
>> let’s take a peek at the nasdaq, a quiet week pretty much all around this holiday week, the nasdaq volume at 1.3 billion shares, too, too, finishing down .1%. bob bowden wraps up 2004’s best and worst performing stocks from the market site report.
>> it was a photo finish but the nasdaq composite index did not quite meet the s&p 500 for 2004, but a lot of nasdaq stars in the year, such as this, the top-performing nasdaq 100 stocks, kmart holdings, those shares up over 300%. the company acquired sears towards the end of the year, although the gains of quadrupling the stock happened before that swition was -- zivings was announced. acquisition. autodesk makes three-d architectural design software, up over 200%. and apple computer up over 200% on the sales of ipod digital music player. the worst nasdaq 100 stocks include level three communications, positive news about selling services to france telecom in north america, but the stock down 41%. chiron shares, the maker of the flu vaccine pulled due to production problems in the u.k. plant. the worst performing nasdaq whond stocks, synopsis -- synopsies. still, it was an up year for 2004 with tech stocks generally finishing higher. that’s it from the nasdaq marketsite, wishing you a happy new year, i’m bob bowden, bloomberg news.
>> let’s look at the currency markets here because the dollar fell today to a three-week low against the yen. it also locked in its third consecutive annual drop against the yen on expectations japan will let the yen continue to strengthen. so you bought less yen, 103 yen per dollar. however, the euro and pound fell, so the dollar gained there. mixed session for the dollar. on to bonds, we go, the bonds up, 10-year yields falling to 2.22. the five-year also inching higher. two-year note is wrapping up, we should point out, its worst year since 1999 as a result of five federal reserve rate increases. andrew harding, overseeing $6 billion in fixed income assets at national city, expects the fed to raise rates a couple more times in 2005 but is bullish for bonds.
>> i just don’t see people backing out of the bond market . when the 10-year note gets to 4.5 or if it gets to 4.75, i think you’ll see money pouring into it. the technicals are very good for the bond market ex-the federal deficit.
>> if you have to buy the bond market , bill fitzgerald favors municipal bonds, tax-free bonds and says that in 2005, state and local governments are in better financial shape than they were a few years ago.
>> at a time when the federal government is issuing more and measure treasury securities, with the supply municipal bonds declining, they should outperform in 2005.
>> he says one state that is still struggling is california because it has about a $6 billion budget deficit. j.p. morganchase led the pack among banks that lent a record $2.3 trillion in 2004, spurred by a surge in mergers and acquisitions and decline in borrowing costs. the amount of loans made this year was up 53% year on year. j.p. morgan arranged 32% of the 1.26 trillion in loans made in the u.s. bank of america and citigroup, second and third. in europe, barclays, the biggest lender. in the u.s., executives and directors were just as impressed with the stock market ‘s rally in the final two months of the year. corporate insiders were so impressed, they sold $51 billion worth of shares in their own companies this year, the largest amount since 2000 when shares of internet-related companies plunge. purchases also rose, up 13%, to $2.11 billion. executives at technology companies top the list of corporate sellers. bill gates from microsoft sold close to 82 million shares of his own stock for about $2.2 billion. michael dell at his own company sold 32 million of his own stock, working out to a little over $1 billion. and larry ellison of oracle sold 87 million shares. we’ll talk about a fund making noise. investors poured $1.3 billion into the streettracks gold fund last month, the largest inflow into an exchange-traded fund. streettracks gold trust is the first fund traded on the new york stock exchange to be a proxy for gold. it enables investors to buy gold without the risk and volatility of futures contracts and options. demand has been spurred by fund managers barred from owning physical commodities who want to bet this year’s rally in the precious metal will continue into 2005. if you thought 2004 was busy with the martha stewart trial, wait until you see what’s on tap legally speaking in the new year. we’ll look at the high-profile cases centerstage in 2005. that’s next.
