Market briefing---Bob (fast)
The Chairman's $140 million pay package---Su (fast)
NYSE---Deb (fast)
>> welcome back to the final hour of world financial report. i am bob bowden. the latest now on the growing fewer roar surrounding richard grasso’s $140 million pay package. former new york stock exchange chairman james needham is calling for the resignations of grasso and the entire board. according to a broadcast report the exchange’s board members are considering dividing the chairman’s duties. su keenan has more on the grasso story. su.
>> bob, new york stock exchange board members, including j.p. morgan’s william harrison, goldman sachs’s henry pal son and morgan stanley’s phillip purr sell met over the weekend, according to cnbc. that network sites persons familiar with the exchange saying the members are considering splitting the office of the chairman into two and allow grasso to continue in his job. the latest to call for the resignation of grasso and the entire board is james needham, the 77-year-old former new york stock exchange chairman. he says, “everybody has to go.” needham is a retired accountant who served as an s.e.c. commissioner before heading the new york stock exchange from 1972 to ‘76, as the exchange’s first time paid executive he received half a million a year in salary. needham says grasso’s $140 million pay package, which the directors approved, creates a perception that board members are as negligent as the directors of enron and worldcom. meanwhile former s.e.c. chairman harvey pitt tells bloomberg news he thinks grasso has been unfairly criticized. he tells bloomberg news, “i don’t see anything based on compensation that would suggest he resign. yet another view comes from treasury secretary john snow. he says questions about grasso’s pay and possible resignation are a matter for the exchange’s board of directors, not the treasury department. that said, securities executives and attorneys say the growing controversy may cause the s.e.c. to cut the exchange’s enforcement power. the new york stock exchange currently acts as a self-regulatory organization, setting the listing standards for companies and can fine brokers. the s.e.c. allows the exchange to set rules, as long as it also follows them. former medtronics c.e.o. william george says the current situation challenges the whole situation of self-regulation. he says this could be, “the beginning of the end for that role.” grasso was unavailable for comments on this story last week. he vowed to renot in the job until his contract ends in 2007. some traders are betting against that. they are taking positions on a website that allows users to gamble on the likelihood of grasso’s resignation. last week the site listed the odds for resignation by year end at three to one. as early as yesterday they were listed as two to one. we’ll continue to follow this story.
>> industrial production in the u.s. rose for a second straight month in august. the first back-to-back gain since february, led by gains in equipment such as computers. the federal reserve says the outputs of the nation’s factories, utilities and mines rose 1/10 of a percent in august. economists had expected a gain of 3/10 of a percent. the a industrial capacity in use was unchanged last month at 74.6%. it was forecast to rise by 2/10 of a percent. separately another fed report showed manufacturing in new york state expanded for a fifth straight month in september. new orders, prices and the number of hours worked all increased. a factory index registered 18.4 in september. that compares to 9.9 8g for august. values greater than zero signal a majority of manufacturers said that business had improved. inventories at the nation’s businesses declined in july, as companies used stockpiled goods to the an increase in demand. the commerce department said the value of goods on hand at manufacturers, retailers and wholesalers fell 1/10 of 1 percent in july. sales jumped 1.6%. meantime the u.s. current account deficit is still at record levels, now running at an annual rate more than 5% of the g.d.p. the commerce department says the second quarter gap widened to $138.7 billion. at the current pace the u.s. needs to attract more than 1.5 billion a day in foreign capital to fund that deficit and keep the value of the dollar steady. well, on the day stocks fell for the first day in three as hurricane isabell approaches the east coast of the u.s., and it may cause billions in damage. that helped push insurance stocks such as american international group lower, though it boosted home improvement retailers such as home depot and lowe’s. let’s get to the closing numbers as they finish on this monday afternoon. the dow down 23 points to 9,448, s&p down four points, 1,014 on the day. the biggest percentage loser on the day was the nasdaq, down 9.3 points to close at 1,845. checking volume on the day, it was light. nyse volume down around 1.1 billion shares traded, one of the five lightest trading days of the year. and that includes some of the holiday shortened sessions. checking over at the nasdaq, volume light there as well, over you see there, 1.46 billion shares traded. and you see decliners outpacing advancers by a ratio of about 8 to 7. checking the wilshire 5000, the broadest look of the u.s. markets, down about 1/3 of a percent, down 34 points to 9,832. shares of treasuries rose on speculation the federal reserve will leave interest rates unchapgd at a 45-year low of 1%. however, the 10-year note fell 4/32, bucking the trend of the shorter end of the yield curve. the dollar strengthened versus the yen on optimism about economic expansion in the u.s. you see there $1, equaling 117.44 yen. not too much action on the euro, euro now at 1.1283. with more on hurricane isabell’s impact on stocks we’ll check in with deborah kostroun, who as always, is sitting at her post, sometimes you are on the floor.
>> sometimes on the floor, but after the close we like to come up here to our booth. thanks a lot, bob. as we closed out today’s session obviously a lot of talk about hurricane isabell. i was talking with kenny polcari of palcari weicker. and he says with this hurricane coming up, he says a lot of derivatives trading, a lot of options trading going on. he says it’s some of the reason we did see muted action in actual equities in today’s session. also he points to the fact edo have a fed meeting tomorrow. all eyes definitely going to be on that as well. as it relates to hurricane isabell, we did see insurance names some of the worst performers in the s&p 500. semiconductors also as well, some of the worst performers. those insurance names, a.i.g., allstate sharply lower. of course, the big concern is if this hurricane which is already about a category four hurricane, could be the worst since hurricane hugo in 1989. depending on how it comes out and if it hits the east coast it could crimp into the profits of many of these insurance companies. lehman brothers saying allstate could take the biggest hit for profits from the storms. they said earnings this quarter could be 13 to 65% lower depending on the severity of the storm. on the other end of the spectrum we had retailers, some of the best performers in today’s session, the best performers in the s&p 500 really being led by home depot and also lowe’s, and this is anticipation of this storm seeing many people actually going out and preparing for the storm. james luke overseeing $12 billion at bb&t asset management. he says it will be a big hit for insurance companies if the storm is like hugo, but home depot and lowe’s benefitting from the preparation, and the aftermath from the merc should it hit. in addition to those names in the retail area, we saw other retail names performing well. wal-mart coming out saying their september sales likely to be on their high end of their range. pier 1 imports report earnings before the opening bell of trading. home builders, we have earnings after the close of trading tomorrow. that is centex andly nar reporting their earnings after the close of trading tomorrow. back to you in the studio.
>> moving on, the price of crude oil in new york fell to a four-month low after opec’s president said the group will attend a meeting next week and that iraq―iraq will attend a meeting next week for the first time since the fall of saddam hussein’s regime. checking crude oil there. gold futures fell in new york to a fourth straight session―on a fourth straight session on signs of speculators selling contracts to trim holdings that had soared to the highest in at least two decades. well, the performance of the russell 2000 this year has been twice that of the s&p 500. our next guest runs a small-cap fund mirroring the russell’s impressive gains. he is up next with some names to watch this year.
