Market briefing --- Matt (medium)
NYSE --- Julie (slow)
Hurricane --- Su (fast)
welcome to “world financial report.” i am matt nesto. let’s give you the closing numbers today, dow, s&p and nasdaq finishing very close to their best levels of the day, 1.3% higher for the dow and s&p. nasdaq a bit better here today. common theme aside from the intraday trend was lighter-than-average volume. materials and retails stocks led the dow and s&p higher today. for more on the day’s action, julie hyman has this report from the big board.
>> the dow and s&p 500 both having their best sessions in about two months’ time since july 7. the gains were on light volume, about 8% below the average for the month, 13% below the average for the july and 17% below the average for the year as many investors and traders go on vacation in august. however, the rally was broad-based in the session due to a number of factors. one, we had news from the treasury department that foreign investment in u.s. treasuries, securities, equities, was on the rise in june for the first time since back in january. statement, we saw the price of oil stabilize and we heard from the home improvement retailer lowe’s that while they saw a slowdown of sales in june, they picked up in july and continued in the month of august. that showed some investors that they thought the weak economic data from june was an aberration, borne out by what we hear from lowe’s. we saw several groups gaining today. retailers doing well, materials stocks doing well, linked to the stabilization we saw in oil. we also saw healthcare stocks doing well today as well as diversified financials. as for the retailers, lowe’s said second-quarter earnings up 18%, less than what some analysts forecast, on the other hand, they said august looks strong. home depot is out with its numbers tomorrow and it was on the rise as well as wal-mart today.
>> crude prices in new york fell a little more than 1% today, retreating from the record high set last week. oil for september delivery fell 53 cents to $46.05, notable in that it did not breach $46. supply concerns eads as―eased as hugo chavez reclaimed the presidency in venezuela. and opec at the same time pledged its members will pump at full capacity to try to bring oil prices down further. in other commodities markets , gold closed at a four-week high in new york on a drop in the value of the dollar and orange juice prices in new york with their biggest gain in almost three years. hurricane charley destroyed parts of the orange crop in florida, world’s second biggest fruit grower after brazil. orange juice futures for november delivery rose the exchange limit of five cents, or 8%. google announced late this afternoon that the securities and exchange commission has begun an informal inquiry into its options policy. it also says some states have requested added information, including california. google may close bidding on its share auction as soon as 5:00 p.m. tomorrow. the company says on its i.p.o. website that it planned to ask the s.e.c. to declare its share sales effective at 4:00 p.m. tomorrow. underwriters would accept bids as soon as an hour after that. the internet search engine compan’s plans to sell as much as $3.4 billion in initial public offering. the company arranged for interested investors to bid through an online auction for the shares. google also released its first quarterly earnings report, the company earning 30 cents a share in its second quarter. sales more than doubled to $700 million up from $311 a year ago. as florida officials assess the damage caused by hurricane charley, insurers could be facing as much as $14 billion in claims, this as the strongest storm to hit the u.s. since 1992 continues to raise the estimates and hundreds of adjusters are there about to start paying claims to policyholders. su keenan has details on that.
>> as a result of that this, we have a rally in insurance stocks. shares of many insurers rising on expectations the industry will now have more power to raise rates or scale back price reductions. analysts say these companies, in an attempt to recover from 9/11 losses, have lowered prices for the past three years, putting profit at risk. smith barney’s analyst says shares of allstate, st. paul travelers and hartford financial could rally as much as 35% in the next year. according to kevin callahan, bad news is good news for insurers. hurricane charley is blamed for at least 16 deaths so far and has left tens of thousands homeless. 25 counties have been declared federal disaster area, making residents eligible for low-cost loans and direct grants. total damages from charley, including uninsured losses, could exceed $15 billion, according to the florida division of emergency management. joseph allbaugh, former fema director, says the damage costs could be far greater.
>> normal normally i don’t pay attention to initial estimates. fema disaster teams are walking from house to house right now reviewing with state and local officials the damage estimates. that $15 billion came out of a fema model in 1992 with hurricane andrew. it was significantly less than that and then ended up almost $21 billion when it was all said and done.
>> industry officials say charley will probably not cause florida homeowners’ insurance premiums to skyrocket as hurricane andrew did. one specialist says one or two small insurance companies may fail but for most companies, the premium increases because of charley will help pay for chillier.
>> -- charley.
>> they’ve done a better job not concentrating risks in one area and are are better at handling the claims faster, a key factor in determining how much the cost ultimately will be. they’ve created teams where they bring claims adjustors to the area, settle the claims faster, minimizing the total cost.
>> the s&p 500 property and casualty insurance index rose 1.5% today, the biggest one-day gain of the summer. the biggest gain since early april.
>> thank you very much. we have some headlines we want to bring to you about krispy kreme, the donut maker, saying its chief operating officer, john tate, is leaving the company. tate accepted the position elsewhere. chief executive scott livinggood assumed the duties. tate’s departure comes amid an investigation regarding tate’s earnings forecasts. tate left williams-sonoma in 2000 to join krispy kreme. trading on the stock not showing reaction so far. some analysts believe it’s only a matter of time before we see $50-a-barrel oil prices. peter buteau of cameron hannover brings us his view coming up.
