Market Briefing---Lane (medium)
NYSE---Deb (fast)
Nasdaq---Anthony (slow)
welcome to “world financial report”. i’m lane bajardi in new york. federal reserve policymakers cut the u.s. benchmark interest rate to a 45-year low. the federal funds rate now stands at 1%. that’s a quarter of a percentage point drop. the president of the federal reserve bank in san francisco, robert perry, wanted to go further by cutting rates half a point. in its statement the federal reserve’s open market committee said recent signs point to a firming in spending, markedly improved financial conditions and labor and product market better stabilized. the economy, nonetheless, has yet to exhibit sustainable growth. the fed also says the risk of falling inflation is minor, but outweighs the risk of rising inflation.
>> i thought the paragraph describing what’s going on in the economy is a little bit more optimistic than the comparable paragraph in the may 6th announcement, as it should be. because we have seen signs that the economy is stabilizing, and indeed may be on the cusp of an improvement. but the next paragraph is almost identical to the one they put out in may, and it signals markets that the fed continues to keep interest rates and short-term securities at low levels for an extended period of time. and that’s really the most important message.
>> this was the fed’s 13th rate cut since the beginning of 2001. deborah kostroun is at the new york stock exchange where all afternoon she’s been watching the traders react to the fed’s decision. deb.
>> well, that’s right, lane. in fact, some of the things that traders really talking about, the fact that this is actually a pretty positive for the equity markets to have a fed rate decision, although you really can’t tell or couldn’t tell by today’s closing prices and how the dust really settled. the money manager with j.p. morgan fleming asset management oversees $495 billion, saying it’s a definite positive for the equity market because the fed is taking the right action to help stimulate corporate profits. that’s what traders are focusing on here going forward is corporate profits as we close out the end of the second quarter, the end of the second quarter closing out monday. we’ll be waiting on the earnings reports t biggest drag in the s&p 500, we saw the market turning around in that last hour. pharmaceuticals, one of the areas in the market that we saw a lot of weakness. controversial hormone replacement therapy from wyeth, the fed says it increase ts risk of breast cancer with short-term use and makes it harder to detect those diseases. wyeth one of the biggest losers in the s&p 500. we saw many of the bank stocks performing quite well, even though bank of america really the big winner, that as they increase their quarterly dividend to 80 cents a share to 64 cents a share. lane, now to you in studio.
>> deborah kostroun at the big board. the nasdaq is up nearly 20% this year but is on a bit of a losing streak in the past week. anthony massucci tells us about it.
>> before the fed made its rate cut, the nasdaq looked like it would break its four-day losing streak, while in fact it fell off in the past hour and 20 minutes of trading, wound up closing the day down three points. let’s talk about the nasdaq bank index actually. it was up almost 1% before the fed rate cut. after the cut it actually closed the day lower. remember, the banking stocks , the bank index specifically up 10% year to date, 15% since the nasdaq lows back in march. let’s check in on a few of those stocks . fifth third bank and southern trust, south trust, actually were both higher, traded lower. northern trust closed with a gain. the banking stocks overall showed weakness. networking stocks were up nearly 4% ahead of the fed decision, closing the day still up 1.5%. but cisco, juniper and foundry coming off the best levels of the day. let me show you internet stocks . they were up about 3%, looking pretty strong. in fact yahoo and amazon both closed the day down just a penny each, but were up earlier. ebay closed down more than a dollar. internet stocks gained as a group just 1% on the day. biotech stocks maintained their levels, though came off their best levels, closing the day higher 1.5%. let me show you some of the movers including gilead and idec pharmaceuticals which traded higher on the biotech index. one comment from allen lemonson from t. rowe price. he said it was not the fed cut rate he was looking for. he wanted to make sure the fed keeps its push to keep money flowing into financial markets. he said that’s exactly what the equity market needs right now. back to you in the studio.
>> anthony massucci. freddie mac is going to restate three years of earnings to fix accounting errors. the second largest u.s. mortgage financier says the restatement may lift profit by $4.5 billion. carmen roberts has this story.
