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America's New War: A Look at the Markets

Aired September 21, 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: I'm Lou Dobbs in New York, and it is apparently a bitter end to what has been a devastating week on Wall Street, fears that the economy will slip into recession as a result of last week's terrorist attacks helping to drag the market to three-year lows. The Dow today suffering its fourth triple-digit loss in the past five sessions,

Rhonda Schaffler is at the New York Stock Exchange, Greg Clarkin at the Nasdaq marketsite. Let's begin with you, Rhonda -- Rhonda Schaffler.

RHONDA SCHAFFLER, CNN FINANCIAL NEWS CORRESPONDENT: And, Lou, about the best we can say about this particular trading session is that the market will not close at its lows of the session. But still, we will see another sharp loss for the Dow Industrials and for the S&P 500, in what was an extremely busy trading week at the New York Stock Exchange.

The chart, again, tells the story of where these markets have headed throughout the week. There was a little bit more buying here, Lou, than what we saw in the past couple of session, but really that is a small victory when you are looking at the Dow, which at this point is down about 14 percent on the week.

DOBBS: Rhonda, very quickly, what is the advance-decline line there?

SCHAFFLER: Right now, it's about four to one, decliners over advancers -- a little bit more than that, but that's actually an improvement over what we saw yesterday.

DOBBS: Good, and we talked about a triple-digit loss, and as we approach the close, it looks like the Dow has perhaps a chance of closing off its lows, perhaps getting into a double-digit loss.

A terrible day on the Nasdaq as well. The technology sector, again under severe pressure. The Nasdaq just above 1,400, its lowest level since October of 1998. Greg Clarkin at the Nasdaq marketsite -- Greg.

GREG CLARKIN, CNN FINANCIAL NEWS CORRESPONDENT: And Lou, earlier this morning, right after the beginning of trading, the Nasdaq actually dipping below 1,400. Got as low as 1,387 before bouncing back, then settled into a real quiet mode of trade from about 12 noon on.

And for the week, the Nasdaq looks like about the third largest percentage look in terms of weak periods, down 16 percent on the week. Now, the second largest loss was back in October 1987, so severe losses this week on the Nasdaq. Right now, the composite down 46 points, that's about a 3.2 percent loss, and it sits right now at 1,424.

All the usual suspects under a lot of pressure today -- the big- name technology shares, the airline stocks on the Nasdaq ending a horrible, horrible week -- Lou.

DOBBS: And the software companies, Greg, any relief today?

CLARKIN: We saw a little bit of an uptick in some of those software companies toward the end of the trading, Lou -- BEA Systems, Siebel Systems, PeopleSoft a little bit on the feeling that possibly there is some bottom fishing going on.

DOBBS: OK, Greg.

Let's go back, if we may, to the New York Stock Exchange where we are awaiting for the closing bell. There is the balcony, and there is the closing bell.

Well, the Dow off about 1,400 points for the week. That is the biggest weekly point decline for the Dow ever -- $1.4 trillion of market capitalization erased this week. That is, to put it in some perspective, more than four times the entire economies of Afghanistan, Pakistan, and Iraq combined.

Let's go back to Rhonda Schaffler on the floor of the exchange.

Rhonda, your thoughts as we wrap up this week.

SCHAFFLER: Well you know, Lou, it's hard to find perspective on this particular trading week, a week that began with the biggest point loss ever for the Dow Industrials, a week that began with an emergency rate cut by the Fed.

Traders here are just relieved, quite frankly, that this week is over, because it has been a large, emotional toll on the people here, as we are so close to ground zero, and so many people here personally were affected by those attacks. And the problem with the market, of course, is uncertainty remains.

What we want to do now is take a look back at some of the individual issues that were hit hardest this week. They tell a very big picture about what's going on with the economy. The airlines, of course, have been in the news between the layoffs and concerns about their businesses.

U.S. Airways getting hit very hard. Hilton Hotels, the travel industry now suffering. Boeing down sharply, as is Walt Disney. There were some market leaders this week, and they include some defense stocks, as America prepares for war. Raytheon and Northrup Grumman, among those moving higher. Barrick Gold, which is a safe haven play was up.

And Verizon was up. Some of the telecom stocks did well. Remember, Verizon basically had to repair telephone situations here at the New York Stock Exchange to get this Exchange up and running this past Monday -- Lou.

DOBBS: And of course, also involved at the Pentagon, certainly in a less public role, the Pentagon in restoring their wiring.

Rhonda, let me ask you, how much of the selling, as you watch the activity today, how much of the selling today appears to be institutional versus individual investor, small investor?

SCHAFFLER: What we've heard here is actually, it's a little bit of everything. We've heard that hedge funds have been in the market. We have seen investors move into money market funds over the last couple of days. And we have seen big, block trades, which would tell you that that is also institutional selling -- Lou.

DOBBS: OK, Rhonda, thank you very much.

Let's go over to Greg Clarkin at the Nasdaq marketsite. Again, Greg, your thoughts?

CLARKIN: And Lou, I'll you, bit bout of selling of selling early on. And that's what we saw everyday this week. And the traders tell us, you know, if you're a portfolio manager facing mutual fund redemptions, you come in the morning and you've got to raise that capital, where do you go? To those big name tech shares that are very easily tradable, the big Microsofts, the big technology names. And that's what took the biggest hit this week.

Here's some of the weekly percentage losers. Dell, down 27 percent. Intel, 24. Microsoft, 16. Cisco, 15. Some of the other big technology losers on the week included shares of PMCS. That was down 40 percent. Applied Materials, down 27. And Sun Microsystems, down 23 percent. So those big name technology shares really being hit hard early today. And after that, the Nasdaq really just settling in a very quiet trading pattern, but adding really lousy week, Lou, down to 1423.

DOBBS: All right, Greg, at this point, what do you see as potential strength as we head into next week, if any?

CLARKIN: Tough to say, Lou. At this point bright spots this week, occasionally we saw some buying in some of the biotechnology shares, but no real sector experience. Any kind of real uptick. A lot of folks just at this point, just kind of standing back, wait to see what events go and what kind of news events happen over the weekend before they make any kind of moves towards next week.

DOBBS: And we should point out it is triple witching, so the market is weathered triple witching, as well as all of the, as they say on the Street, the externals.

Greg, thank you very much. Mutual fund investors pulling more than $10 billion out of the market this week, but that net outflow isn't even in the top 10 week, suggesting that while worried about near-term prospects, investors for the most part are staying the course.

Joining me now is a legend in the business, Vanguard Group's founder Jack Bogle. Jack, good to have you with us.

JACK BOGLE, VANGUARD GROUP: Hi, Lou. Good to be with you.

DOBBS: Jack, with all of your experience, with all of your knowledge, it really doesn't prepare anyone for what we've had to contend with over the past two weeks. What is your sense of the market?

BOGLE: Sure. I've been in this business now 50 years. Sounds like a lot of time to me. And I saw it go up 50 percent in '73/'74. And this one's now off 40 percent.

I've never seen fear take over a market like this one in my whole career. And I suspect in all the history of America, fear hasn't taken over. We've got more investors than ever, they've been more exposed to stocks than ever. And fear is in the driver's seat and riding the market.

DOBBS: Have you seen, Jack, in this market behavior, the markets have been orderly, but they've been decidedly committed to one direction. And obviously, that is lower. Do you see anything in this market activity that suggests to you that we're near a bottom?

BOGLE: Yes, I do think there are some signs of that. I don't mean to be a Pollyanna about it. There's a point in which emotions are going to be driven out of the market and economics are going to takeover. I think that's the big issue facing the market today, Lou.

And after all, American business made $574 billion last year. And that certainly would support a $10 trillion market. It's just people are concentrating too much, I think, on the wrong things.

DOBBS: And with just a few seconds left here, Jack, your best, if you will, best advice to investors in all of this?

BOGLE: Keep the emotions out. Keep your eye on the long-term prosperity of America, which I'm sure is unshaken and stay the course. I've said that a lot of times and I'll say it once more.

DOBBS: Right. And I always like to hear you say it, Jack.

BOGLE: I'll say it again. Stay the course.

DOBBS: You got a deal. Jack Bogle, thanks for being us.

Well, that is a look at the markets. The Dow, these are still preliminary numbers, nonetheless, sustaining another triple-digit loss. 140 points lower. The Nasdaq off 47 points, a week in which we saw these indexes and markets they represent -- strip out $1.4 trillion dollars in market cap.

I'll be back at 6:00 Eastern time with "MONEYLINE". Please join us then.

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