Market briefing---Lane(medium)
NYSE---Deb (fast)
Nasdaq---Anthony (slow)
Dell---Bob (fast)
>> welcome to “world financial report”. i’m lane bajardi in new york. well, let’s get to the numbers for you on the day. the dow jones industrial averages ending out the week up 137 points at 9,188. the s&p 500 better by 1.5 at 993. the nasdaq up 10 points at 1,708. big board volume, 1.3 billion shares, and advancers outpacing declines by a two-to one margin. take a look at the nasdaq volume at 1.5 billion shares. 18-12 in favor of the advancers. wilshire 5000 up on the day.
>> 10-year note down on the day, 20/32, the yield now 4%. five-year note off 13/32. a quick look at the three-year note and a yield of 1.89%. the two-year, 1.5%. just below that. looking at currencies the way they finished on friday. morgan stanley cyclical index is at a one-year high. deborah kostroun is at the new york stock exchange with more.
>> in fact, if you are looking for evidence that investors are looking at a second half recovery, you can look at the cyclicals. in fact, over the past week they were up 2%. investors kind of looking at buying into an area of the market where they nk as we are headed for a second half recovery, you can see how they did so well. caterpillar, a big part of that story. they reported yesterday their second quarter net doubled on currency also their sales increased. their profit forecast for the year as well. shares of caterpillar now at a four-year high. johnson control, so they get a quarter of their sales from devices that regulate lights and temperatures in office buildings. they reported their third quarter earnings, an increase of 8.4%. johnson controls also at a 52-week high even in friday’s session as we are talking about the earnings and how much impact they had, let’s take a check of where they stand right now. according to thompson financial, growth in the s&p 500 companies for the second quarter, we are looking at growth of about 6.9%. just last week, the second quarter growth we are expecting 5.2%, so it really tells you that a lot of the companies that have already reported, those numbers coming in a little better for the third and fourth quarter coming in better as we are talking about the second half recovery. growth expected, third quarter 13%, fourth quarter 2 13r7b9. as we are talking about earningss rm suit call companies will be in the spotlight next week. on monday merck will be reporting their earnings. in fact we are expect ag higher profit thanks to one of their new anti-nausea treatments.
>> deborah kostroun at the new york stock exchange. microsoft raised its revenue forecast for the year and that has a lot to do with the nasdaq’s move on the day. anthony massucci tells us what traders were saying.
>> when we started the day all eyes were focused on microsoft. microsoft raised its revenue forecast for the year. at one point the nasdaq traded lower, finishing up 10 points on the day. let’s talk about microsoft. the company will not raise its dividend. some folks expected it would. the company saying it wants clarity on the impact of antitrust cases. the c.f.o. saying they hear the anxious of shareholders but they are looking for patients here. some fund managers like mark herskovitz not agreeing with that. saying the company should give the money to the shareholders before any losses can take the money away from the company. daniel morgan over at noble financial sums it up well. he’s a fund manager saying it’s still a growth company, just not at the pace that wall street is used to seeing from a company like microsoft. he said that’s why you are just seeing the stock sit there.
>> the good thing he said from the company, an improved forecast for fiscal 2004. looking back on the week, positive things from intel. joe osha at merrill lynch said earlier in the week investors should be cautious because intel’s rising sales are not a signal of a broader recovery. it really is a specific story for intel. we heard that a few times about microsoft today as well so the stronger companies getting stronger here, improving their sales. able to cut costs. able to get gross margins increase. able to improve their quarters. but it’s not seen as being a widespread thing, so it will be interesting to see if the nasdaq can sustain its gains into next week. remember, we had a 10 point gain today, but down for the week, the worst week we’ve had in two months. we arele looking at gains of 28% for the year. so the week in review, good news from microsoft and intel.the rest of the nasdaq waits for more good news.
>> dell computer chief executive michael dell said it may take a couple more quarters before there is a bigger pickup in sales of computer related gear. at its annual shareholder meeting investors voted to change the name of the company. bob bowden has not changed his name but he has been following the dell story. he joins me with details.
>> lane, good to see you on friday. if you are looking for a significant increase in technology spending in the second half of the year you may bes appointed says michael dell. it will take a few more quarters for dramatic improvements and for information technology budgets to really grow, mr. dell said at a meeting of shareholders in austin, texas. there is not a tremendous uptick and kbid requests from large corporations. dell is still growing despite stagnant industry sales because it’s grabbing market shares from foreign rivals, fujitsu, siemens and n.e.c. dell’s second quarter market share rose to 17.8% from 14.9% in the same qurpt a year ago. number two player hewlett-packard also increased its share in the second quarter to 16.2% from 15.4%. the concern for many is dell’s valuation, the stock currently trades at 33 times this year’s earnings. that compares to a forward p.e. of 19 for both h.p. and i beach m. analyst paul meeks says dell is overpriced.
>> i think investors are clearly paying too much for this company. over time this company’s average sales growth of about 18% and earnings per share growth of about 11%. i think the stock is probably only a bias it approaches $20 a share.
>> despite its eye valuation, analyst gary lowconsiders delve shares a buy.
>> the further out one goes on dell’s growth rate, the more attractivity valued it is. so as a long-term investment i’m totally comfortable buying the shares here because i think dell is the premier company in the i.t./networking universe.
>> we should say mr. lowy nor mr. meeks personally own dell shares. news of dell’s name change is less than dramatic at the annual meeting in austin, texas. shareholders voted to change dell computer corporation to dell, inc.. michael dell explained the change, saying the new name was catching up with the company’s evolution from supplying strictly computer hardware to providing a diverse range of technology products and service services.
>> dell shargs finished on the day. they finished mostly unchanged. they rallied 24% year to date. the company will announce fiscal second quarter earnings in about a month on august 15th.
>> bob bowden. ford motor company will cut spending on its salaried workforce by 10%. the fourth largest employer in the s&p 500 will eliminate jobs, reduce overtime and use fewer contract workers most of the savings squeezed from the company’s 79,000 salaried employees won’t come until next year. ford began negotiating today with the united auto workers union on a labor contract to replace the one expiring september 14th. net losses totaling $6.4 billion the past two years the automaker’s goal is to save $2.5 billion this year. defense contractors say the “buy america” bill would boost costs. executives of lockheed martin, boeing and raytheon say legislation to require more american parts in weapons will be expensive for business and for government. the proposals included in a defense budget measure being negotiated by congress. it would boost the minimum american made content in military purchases to 65% from 50%. it would also require more systems to be completely american made president bush and foreign allies oppose this measure.
>> the price of crude oil in new york rose to the highest in a month on speculation inventories will continue to fall behind year earlier levels. closed almost 2% higher at $31.96 a barrel. gold futures rose to a third straight session in new york closing at $347 an ounce.
>> the most widely held russian stocks by foreign investors are facing an investigation by tru shan government in the wake of a potential acquisition of another company. our next guest says this has wide implications.
