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Stock Markets Still Under Pressure on Wall Street

Aired September 19, 2001 - 15:57   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU DOBBS, CNN ANCHOR: Stock market continue under pressure on Wall Street. The Dow, the Nasdaq both moving lower, suffering steep triple-digit losses today, but bouncing well off those lows. The Dow Jones Industrial Industrials falling better than 400 points earlier in the session. The Nasdaq down over 3 percent on the day as we approach the close of trading here in New York.

Let's go now to our correspondents following these markets, a volatile session, Christine Romans at the New York Stock Exchange -- rather Rhonda Schaffler at the New York Stock Exchange, Greg Clarkin at the Nasdaq marketsite -- Rhonda.

RHONDA SCHAFFLER, CNN CORRESPONDENT: Lou, at this minute people are rushing to put in buy orders after what was a dramatic comeback here. You mentioned at its worse, the Dow was down more than 400 points. The market found support, and the buy orders started to come in.

In fact, about 2:30 this afternoon the tone on this floor was so negative because of the selling. And then the chart will tell you what happened. People started to get a little bit of confidence back, and they stepped up to buy, and there's a buzz on the floor. It feels like the buzz you get in a rally, and that's what it was. We will still end down with a triple digit loss, but it was a rally, significantly, from those lows -- Lou.

DOBBS: OK, Rhonda. Let's go to Greg Clarkin at the Nasdaq marketsite where also a substantial rally at the close.

GREG CLARKIN, CNN CORRESPONDENT: Lou, heading into that last hour of trading was a fairly harrowing trading climate. We saw the Nasdaq down more than 100 points, more than a 6 percent loss at that time. Some of the sectors especially hard hit: The chip stocks off more than 11 percent collectively, and then we got that bounce as well and the Nasdaq coming very, very strongly back.

Right now at the moment we have it down just 1.8 percent. And keep in mind about an hour ago or so, it was down better than 6 percent. The groups that were leading it lower led it higher. Chip stocks and biotechnology stocks specifically, they both bounced very sharply and very strongly putting the Nasdaq back over 1,500 -- Lou.

DOBBS: Greg, thanks. The Nasdaq obviously coming back, as is the Dow, the New York Stock Exchange composite. Let's go back to the New York Stock Exchange, where the trading has been really frenetic through the day, heavy trading. We have got just about two billion shares changing hands as we approach, about 30 seconds to the close of trading.

There you are looking at the balcony, live pictures of the New York Stock Exchange as they prepare for the closing of the third session since the terrorists attacks on the World Trade Center and the closing of the U.S. equity markets.

(BELL RINGING)

And with the closing bell, this session ending significant losses feared today and certainly there were early session losses that would substantiate those fears. The Dow up (sic) more than 400 points, the Nasdaq off again well over triple digit losses earlier in the session but an incredible rally here in the final hour or so of trading.

Let's go back to Rhonda Schaffler there. Rhonda, you said that it felt like a rally. What was driving this the rally in the judgment of the floor traders, the specialists there?

SCHAFFLER: There were a couple of things, Lou. First of all, on a technical basis the market found support for a while. The S&P 500 traded below 1,000. That was seen as a key level. There was also a suggestion by some here that the latest announcements on the U.S.'s next step on a military bases did help to remove just a little bit of uncertainty.

And this was a day filled with so much of it. As the afternoon went on you could see was technical basis for it as well as just a sense that there is somewhat less uncertainty in the market. Lou, it was a situation here for a while where people were very nervous that the market was really going to sell-off even more than down 400. So a sense of relief on this floor even though we are looking at significant losses.

We want to take a look at some of the Dow losers here, and that would including Microsoft, United Technologies, Exxon-Mobil among the few that we've been tracking as you can see there. And we are showing a couple more for you there, American Express, GE, IBM, Johnson & Johnson.

We also had some profit warnings in the market today. We have companies who are laying off people, but some of those stocks also fell.

DOBBS: Rhonda, thank you very much. Rhonda Schaffler. Let's turn to quickly if we may to Greg Clarkin at the Nasdaq. A lot of pressure today over there on the software companies.

CLARKIN: Exactly, and that comes in the wake of Adobe, the software company coming out and issuing a warning for the fourth quarter. So that really set kind of a negative tone this morning. If we take a look at Adobe shares you can see what they did on the day, but at one point the software stocks were incredibly weak today as a whole.

Adobe, along with some of the other technology companies coming back. Also we were watching shares of Priceline.com. They came out, they cut their third quarter revenue target from 345 million down to 280 to 300 million. You can see what Priceline did on the day, down 32 cents. Travelocity on the other hand was up 59 cents a share.

I mentioned the semiconductor stocks. They had a real nice bounce this afternoon and that Philadelphia Semiconductor Index coming back very sharply this afternoon, that was the group leading the Nasdaq lower during the middle of the day into the early afternoon hours. It turned it around when the Nasdaq settled around the 1,450 level, bounced off that along with the semiconductor stocks. Lou, back to you.

DOBBS: A powerful final hour of trading on both the Nasdaq and the big board. I'd like to turn now to Commerce Secretary Don Evans, who has to be gratified by the resilience that we've all witnessed today in these markets.

Mr. Secretary, good to have you with us.

DON EVANS, COMMERCE SECRETARY: Thank you, Lou. Good to be with you.

DOBBS: These markets, in the first three days of trading following the four-day shut down, what is your reaction to the performance of the markets?

EVANS: Lou, I was glad to hear you say the market did come back some today. I spent most of my day in Detroit today getting together with labor leaders, and business leaders, but to answer your question as to the first three days of this market, I would say that we should have expected it to be somewhat choppy, and I'm just glad to see it operating cleanly and freely.

Monday as you know, is the largest day ever on the New York Stock Exchange in terms of volume without a glitch. So I felt very good, quite frankly. You don't like to see the prices go down, but I think it is operating smoothly.

DOBBS: Mr. secretary, you just mentioned the automobile industry and the labor organizations in the country, the airline industry, a number of industries hard-pressed here, including the insurance industry.

What is your plan, the administration's plan, the president's plan to get the country moving as swiftly as possible in the most positive direction possible?

EVANS: Right, Lou. Lou, as you know, the president has been focused on the economy for a long time. When he stepped in the office he realized this economy was slowing down. He's been taking steps over the course of the last 7 or 8 months to get this economy moving again. We have had a tax cut that is beginning to flow through the economy. Interest rates as you know have come down now some 350-basis points in the last 7 or 8 months. He has put an energy policy out there that's very important to the ongoing strength of this economy. I hope we can get that passed in Congress.

But more to your point of what the immediate last week, and what you do to react to the event, the tragic event of last Tuesday, I mean already president has shown his leadership working with the leadership of Congress to pass a supplemental bill to the budget of $40 billion. That money will begin to move into the economy as an economic or fiscal stimulus.

It is clear to us that the airline industry needs some help and support through here. I don't know what that number will be, but I think it is likely they will have some support. We will see that stimulus flow into the economy. I was pleased to see what the SEC did with respect to corporate buyback programs. I think that's helpful to the economy.

So, you know, there are a number of steps that have been taken already and the president, along with the leadership of Congress, will look at additional measures to add stimulus to this economy.

DOBBS: Mr. Secretary, it is good to have you with us here on CNN. Commerce Secretary, Don Evans.

EVANS: Thank you, Lou. You bet.

DOBBS: Joining me now to take a further look at these markets, these incredibly resilient markets, joined by Joe McAlinden. Joe, the death that we saw these markets drop to in afternoon trading, did you think we would see far more significant losses on the day?

JOSEPH MCALINDEN, MORGAN STANLEY INVESTMENT GROUP: It was scary, although actually I was kind of hopeful that we would get an intraday reversal. There is good reason to think that we have triple-witching coming up on Friday. Very often traders set themselves up.

We heard anecdotally, a lot of shorting by cowboy-type fast-money guys and they only have so much shorts they can put on.

DOBBS: What about, not margin calls here, we also heard a lot about there was some pressure there as well?

MCALINDEN: There was some pressure for margin calls, but I don't think that was a huge factor in this market. Certainly the mutual fund industry is not seeing a panic at this point. There has been redemptions, there's no panic by the individual investor.

DOBBS: The individual investor here, not panicking as you say and some sell off by the institutions, but those people who are having to manage their 401(k)'s, who are watching their personal investments, your counsel to them in this volatile market?

MCALINDEN: I think it is safe to say that seasonally, we are at a period when major lows are often made, number one. Number two, we have had an 18-month bear market. They have not, since before the 1950's lasted more than 20, 21 months. Number 3, you mentioned what the federal government is doing, but the Fed is hard at work here. The Fed fund rate, spot rate, dropped to 5/10 of a percent today. The official rate is 3 percent. They are pumping in money left and right and that usually sparks a turnaround in the market.

DOBBS: And much of that the result of last week's liquidity injections.

MCALINDEN: Yes, they have had to pump out lots of cash, but they are also providing lots of bank reserves.

DOBBS: Stay the course here?

MCALINDEN: I would stay the course. I would be fully invested, and I would reposition a little bit to take advantage of big bounce I think is going to come in technology.

DOBBS: Joe Mcalinden, thank you.

MCALINDEN: My pleasure.

DOBBS: Well, the market coming back off its lows, we'll be taking an in-depth look at that, and what investors should be concerned about here in these highly volatile sessions.

The fact is that we will be examining all of that tonight, and what all is happening in Washington on MONEYLINE, 6:00 p.m. Eastern time right here on CNN.

For now that's it from NEW YORK. I'm Lou Dobbs.

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