After the bell -- Lori (slow)
NYSE --- Deb (fast)
Computer sciences --- Bob (fast)
day on wall street. five fed governors spoke today, saying inflation not a huge concern. that, along with falling oil prices helped stocks rally. here are the closing numbers with the dow jones industrials up 58 points to close at 11,203. the s&p 500 rose eight points to close at 1305 and the nasdaq nasdaq also rose 8 points. recapping news earlier we brought you on tenet healthcare. a federal judge has declared a mistrial in a criminal case against a tenet subsidiary. the unit was accused of paying san diego doctors to spur referrals to a company hospital. jurors had been deadlocked after three months of deliberations. shares of tenet healthcare spiked higher after the announcement and at the close, shares were up more than 8%, $7.90 a share. deborah kostroun is at the new york stock exchange with more on what was behind today’s trading action. a lot of themes at play here, especially rates and the fed.
>> and so many things going on. it seems like everything in play today and we saw a lot of records in today’s session. look at all the records we saw. transports at a record, and we did see crude oil a little bit lower today but it was surprising because we did see the transports at a record, even yesterday. and that was even as crude oil was going higher. but, of course, the idea on the transports, and especially crude oil, we can see crude oil coming lower tomorrow with the inventory reports. the midcaps, the amex broker/dealer index at a record in today’s session. many stocks in that index also at a record. if you look at the 10 economic groups in the s&p 500 and really show what was leading in today’s session, kind of surprising because energy, in the last 30 minutes or so, taking off and taking the leadership position because all day today we’ve been talking about the utilities and financials and, yes, they were strong performers but by the close of trading, energy stocks put in a very impressive performance. remember that crude oil dropped today to $66.23 a barrel. that helps out a lot of retailers in the session. it―if you look at the triple-a index―the retail index, we saw a nice gain today. retailers have been under pressure as crude oil prices have been going higher along with the concern about inflation. a lot of those concerns alleviated today by comments from fed officials. industrials also putting in a pretty good performance. caterpillar and honeywell among the biggest gainers in the dow jones industrial average, along with 3m. caterpillar may gain as much as $5 billion in sales as a boom in oil squeezed from canadian sand boosts demand for things like mining trucks and parts. so positive comments about caterpillar. also 3m may be considering a sale of its pharmaceutical unit to focus on products that take less time to develop and market . goldman sachs has been hired as a consultant for that. and merck higher on the day after their first-quarter profit did beat estimates. so merck higher, as well. lori, back to you in the studio.
>> thank you, deborah. a rally today in shares of computer sciences. the company put itself up for sale and announced 5,000 job cuts. stocks editor bob bowden has been following this story. bob, it seems the company has nibbles of interest.
>> part of the story, not just that it’s up for sale, but a particular statement that computer sciences gave that it’s “received expressions of interest.” goldman sachs will advise computer sciences in a transaction should one occur. they also said that earnings -- are saying now that earnings almost doubled in the past two years as the company won more u.s. government contracts, bolstering cash flow and prompting interest from potential buyers. the “wall street journal” reported last year that november discussions with lockheed martin and private equity firms broke down. by the way, about 1/3 of computer science’s revenue comes from government accounts. want to show you how the stock has been trading today and also of late. we see on the bottom, here, a five-day intraday showing the jump up of today’s session, bakley from around―basically from around $57 from the close yesterday to just under $60, the closet. but look at the 12-month column here, a number of other companies in that sector, that is, computer services. court sciences up 4.3 8% today, the fifth best stock in the s&p 500. but the entire group doing very well. even affiliated computer doing better than the s&p 500 which is up less than 12%. but these other names up better than 30% for -- 25% or better for five of these six names. to show you the line for the past year on computer sciences, a big rally underway as it’s possibly up for sale. back to you.
>> thank you. news out of the airline industry. delta may be a step closer to a strike by the people who fly those planes. the pilots at the bankrupt airline have voted to give their union leaders the option to call a strike if the company scraps their contracts. the pilots voted 95% in favor of the ballot. delta asked the bankruptcy court for permission to impose new terms on the pilots if they do not agree to an 18% cut in pay and benefits. the cuts delta wants from the pilots would save the company $305 million each year. an arbitration panel scheduled to decide april 15 whether to allow the company to void the current contract if both sides do not reach agreement by then. a lot of news from the federal reserve for investors to digest. new documents are giving us a look into the central bank’s thinking when it raised rates six years ago. today, a number of federal reserve officials discussed the economy. we’ll look at what policymakers are trying to tell us, with jay mueller, portfolio manager at wells fargo advantage funds. that’s next on bloomberg “after the bell.”
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Listen Interview: Portfolio Manager at Wells Fargo Advantage Funds
>> we’re just about 20 minutes away from “money & politics.” michael mckee is here to tell us what’s on tap, michael?
>> lori, today, a bloomberg exclusive. we have an interview with retiring house ways and means committee chairman bill thomas. he has a lot to say about the economy, trade and taxes. we’ll also get the latest on tom delay’s resignation from congress and a look at the nation’s budget deficit with former federal reserve vice chair, alice rivlin. we invite you to stay tuned.
>> if that’s a personal invitation, mike, i will be there. a lot of news coming from the federal reserve today. central bank releasing transcripts of old meetings, giving us new insight into the fed’s thinking when it raised the benchmark rate half a percentage point in may of 2000. at that time, the fed’s chief forecaster warned of an economic deluge from the collapse of a stock market bubble of extraordinary proportions. at the time, chairman alan greenspan said the risk of raising rates was not very large because the economy remained very strong. now, fast forward to today. jeffrey lacker, the president of the richmond federal reserve bank, spoke about the economy and inflation. there were a number of fed speeches today. here to tell us what to extract from the speeches and what it means for the economy and where interest rates are going is jay mueller. mr. mueller is a portfolio manager at wells fargo advantage funds and joins us from menon me falls, wisconsin. welcome.
>> thank you.
>> plenty of fed speeches today, little movement in the bond market . most people not expecting anything new. any talk in your shop about the commentary?
>> the most interesting part about mr. lacker’s comments were the interplay or relative importance of the housing slowdown versus capital spending ramping up. those are two items i’ve spent’s lot of time looking at. i think there’s general agreement that housing is slowing down. the question is, how much does it matter, how big a chunk will that take out of growth? and on the positive side, to the extent that we do see cap-ex rising in corporate america, will that be sufficient to offset what we think will be the slowdown from housing.
>> cap-ex to offset a housing slowdown, as you laid out. and of course we have the jobs report, covering a tightening labor market . to what degree could a tightening labor market offset slowing housing?
>> i think that’s the other big factor. the two positives on the economic ledger are the improvements in the labor market we’re seeing and the likely increases we’re going to see in capital spending. and the two black marks to worry about are the slowdown in housing and energy prices. it will be a tug of war among those forces to determine the course of the economy over the rest of this year.
>> let’s talk more about -- let’s go ahead and get your outlook on inflation. we had commentary in the market . the stock market seemed to react positively to the idea that inflation was in check. but we had little movement in the bond market . you run this wells fargo advantage government securities fund, up 2.2% over the last year, 80% comprised of government bonds or agencies. how are you viewing the threat of inflation with regard to your portfolio?
>> our attitude has been that core inflation is moving modestly higher, not to disasterous levels but coming off the lows we saw a a few years ago, one reason among several that we’ve been shorter than our benchmark targets for duration and average maturity. i think that core level inflation is likely to continue to tick up a bit more from the present levels. we saw the references by mr. fisher to the p.c.e. at 1.8 at the core level. i think that can tick up a little higher. but i think overall stays relatively close to the fed’s comfort zone.
>> what did fisher mean when he said there had been an explosion in global capacity when it came to the inflation threat?
>> i think that’s a very interesting point. what he’s saying is that the fact that the u.s. market is no longer insular, that we have supplies coming around both of material and of labor, from around the world, means that domestic bottlenecks are a lot less significant than they used to be in terms of pushing up prices. if you can source things from around the world, the fact that you might have a bottleneck or supply constraint somewhere in the u.s. just isn’t going to have the same impact in a globalized marketplace so i think it’s an accurate observation and it’s one of the reasons that inflation has been lower over the last 10 or 15 years than most people valid expected given the unemployment rates we’ve seen and other measures of capacity use we’ve seen domestically.
>> jay, we’re just about out of time. thank you very much for your insight.
>> thank you.
>> our thanks once again to jay mueller, portfolio manager at wells fargo advantage funds. productivity will finally slow and undershoot, that’s according to morgan stanley economist. what could it mean for fed policy? find out in the “chart of the day” next.
