Market briefing---Lane (medium)
US manufacturing index---Su (fast)
NYSE---Deb (fast)
>> welcome to “world financial report”. i’m lane bajardi in new york. general electric is one step closer to owning the sixth largest media and entertainment company in the world. the company has agreed to enter exclusive talks with vivendi to merge its universal film and television studios into nbc. g.e. would own 80% of the venture which would double nbc’s 2000 revenue to $13 billion. vivendi would receive 3.8 billion, giving up 1.6 billion in debt, and have the option to sell its 20% stake to g.e. as early as 2006. vivendi’s entertainment assets include the universal film studio, production company responsible for such tv hits as law & order, and a library of movies that includes e.t.. the top security cop in the united states wants more details from the chairman of the new york stock exchange about his pay package. the exchange revealed last week that chairman richard grasso will get a $140 million payout from retirement accounts. securities and exchange commission chairman william donaldson said in a letter to the exchange’s compensation committee chairman, “mr. grasso’s pay package raises serious questions regarding the effectiveness of the nyse’s current governance structure.” the letter asked the new york stock exchange for a copy of grasso’s contract, minutes of board meetings where the contract was discussed and the impact of the pay package on the exchange’s revenue and earnings figures. speaking of numbers, the latest report on factory production was out showing u.s. manufacturing expanding at the fastest pace in eight months. this is the second straight month the institute for supply management’s factory index rose above 50, which signals expansion. while the index number came in higher than the consensus, economists surveyed by bloomberg news expected a reading of 54, not as high as some had forecast. at the same time the institute’s employment index fell in august to 45.9 from 46.1 the month before, representing almost three years of reports in which there have been no signs of job growth. su keenan is here with that more on that side of the story.
>> thank you, lane. many economists and investors view the u.s. manufacturing index hitting an eight month high surf after four p months of contraction as yet another sign the economy is on the road to recovery. the c.e.o. of u.s. steel, that’s the world’s largest steel maker, says he can see the orders picking up. orders for consumer items such as autos have been strong, he says, but now he’s starting to see a rebound in orders for industrial equipment the.
>> we have been running for most of the year at about 85% to 90% of capacity, but for the last six to eight weeks orders have been coming in where we are pretty much now at about 100% of capacity. so i would say there has been a definite strengthening here beginning in july.
>> the c.e.o. of delphi also tells bloomberg news he’s seen production pick up in recent months. yet the strength in u.s. manufacturing has yet to translate into hiring. r.b.c. dane rousher’s convince vaverski while the factory index signalled expansion for several months last year the economy struggled.
>> stronger second half, no question about that, but calling for 4% or 5% expansion is probably just a little too early.
>> you get a different view from jason trent, a market strategist with the i.s.i. group which is predicting 4% to 5% g.d.p. growth toward the end of the year. he says this report some more evidence that this economy is indeed growing, and in his view stocks are not overvalued. taking a look at reaction in the u.s. bond market, five-year and 10-year notes fell, their biggest losses since july as many investors switched assets from bonds into the stock market. jack mall vee, lehman brothers chief grobl fixed income strategist says the drop in bond prices is unequivocal acknowledgement growth is under way.
>> su keenan. as we noted earlier, the s&p 500 is at its highest level in more than 14 months. let’s run through the closing numbers for you, s&p up 14 points, 1,021. dow better by 107 points, 9,523, nasdaq up 31 closing at 1,841. big board volumes, 1.4 billion, advancers outpacing declines by a two to one margin. nasdaq volume, 1.7 billion shares as we get through the august months well below average for volume. the volume is ticking up once again at the major exchanges. the wilshire 5000 is the broadest measure of the market and it was up 1.4% at 9,905. the dollar had its biggest one-day advance versus the euro in eight days of new york trading. the u.s. currency has risen about 9% from a record low of 1.1933. that amid evidence that the world’s largest economy outpaced the other seven nations last quarter. we head to the new york stock exchange. deborah kostroun is standing by with more on the market day there. deb.
>> lane, obviously breaking all kinds of records in today’s session, with, as you just mentioned, the dow and s&p 500 at its best level in 14 months. and in fact, some of the things that we saw so many new highs. and, of course, the big story is the fact that the s&p 500 able to close above this 1,015 level, the level it hit so many times. final lid not only getting through it but closing well above that. so many indices also hitting 52-week highs along with the dow and s&p. but we did see in the s&p 500 the industrials. take a look at some of the industrials. as you can see, this index hitting a 52-week high. some of the industrials, g.e. a part of this. of course, they had a different story, granger, honeywell, parker, hannifin, also norfolk southern railroad company there also hitting some new highs there. also materials. the s&p materials index hitting a 52-week high in today’s session. some of the components of that, obviously you would expect materials to perform well as we are talking about a recovery in the second half, not only of earnings but also in the economy. louisiana pacific, inc.le hard, georgia pacific and boise cascade. in addition, technology. of course, technology, this is the second largest group in the s&p 500 behind the financials. some of those technology names, obviously i.b.m., the biggest gainer in the dow jones industrial averages, and the biggest part of the s&p 500 is financials. financials did not make a new high in today’s session, so the new highs that we did see really on the back of a lot of cyclical stocks , including technology. and, of course, that makes a lot of sense as we continue to talk about this economic recovery. also consumer durables performing quite well in today’s session. this index, the consumer discretionary index hitting a 52-week high as well. some of those stocks , good year tire, eastman kodak, the second biggest gainer in the dow, ford hitting a 52-week high, along with dillard’s. in fact, we saw many retail names all performing quite well. some of the biggest individual movers that we saw in the s&p 500 coming out of the auto and the auto component index as that has been performing well. really comes on the heels of that i.s.m. manufacturing number as well. back to you, lane.
>> deborah kostroun at the new york stock exchange. shares of mandalay resort group reached a seven-year high today. the stock has gained 24% so far this year. the owner of the luxor and mandalay casino said profit in the second quarter jumped 44% from a year earlier, $44.3 million or 67 cents a share. mandalay resort is also boosting its quarterly dividend to 25 cents a share payable in november. casino owners said the rise in profit was helped by its new convention center in las vegas. mandalay resort group shares in extended hours are better at $38.40. worldcom’s attempt to exit bankruptcy by next month is in jeopardy. at&t filed a federal racketeering lawsuit claiming the company improperly routed calls. it accused worldcom of mail and wire fraud in u.s. district court in virginia. accusations have pushed back worldcom’s bankruptcy hearing once before. a new one is set for monday. competitors including verizon are stepping up pressure on the company, saying it’s not being adequately punished for an $11 billion accounting fraud. after the september 11th terrorist attacks destroyed its home, the new york board of trade returned to manhattan today. it’s now sharing space with the new york mercantile exchange. we’ll talk to harry faulk, president and c.e.o. of the new york board of trade about their new headquarters.
