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Markets Unable to Sustain Rally

Aired September 25, 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. An early rally on Wall Street turned into small gain for the day. The markets unable to powerfully extend yesterday rally, instead lingering around the break-even level, during most of the session and certainly the final hour of trading.

The Dow Jones Industrial on track post the worst monthly point decline ever. Rhonda Schaffler is at the New York Stock Exchange. Greg Clarkin at the Nasdaq market site. Rhonda, this looks like, even though the numbers are not impressive, just what most investors might have been hoping for, a relatively calm, orderly day.

RHONDA SCHAFFLER, CNN CORRESPONDENT: That's it exactly, Lou. Trading volume, one and a half billion shares. That would be heavy but after last week it feels light. The market was more indecisive today than it was volatile -- people wanted to see follow through after yesterday's big gains, and they did get it.

The market as you made reference to, selling off for a while, but it did manage to turn around and even when the Dow was trading lower, the broader market was holding up with advancers leading decliners -- Lou.

DOBBS: Rhonda, thank you. Let's turn to Greg Clarkin, worries about the economy weighing on the Nasdaq today. Greg, from the Nasdaq market site, what have you got?

I'm sorry Greg, we are going to Secretary of Defense Donald Rumsfeld, Secretary of State Colin Powell. They are on Capitol Hill where they have just briefed a number of Senators. Let's listen in.

(INTERRUPTED FOR CNN COVERAGE OF A LIVE EVENT)

(JOINED IN PROGRESS)

COLIN POWELL, SECRETARY OF STATE: ... terrible tragedy. We are very pleased at the support we received from the Senate. And now we are heading over to the House to do the same thing -- Don.

DONALD RUMSFELD, SECRETARY OF DEFENSE: We just, as Secretary Powell said, had a most unusual top-secret, classified meeting with almost all of the members of United States Senate. And had a very good discussion and briefing, and exchange, and we are very grateful for the terrific support that the Republicans and Democrats on a bipartisan basis have given the president and the administration.

POWELL: One question, then we have to leave.

QUESTION: Did you discuss at all how close you might be to rounding up Osama bin Laden? Is any of that about to take place?

POWELL: No, thank you.

DOBBS: Secretary of State Powell saying one question, and then they had to leave, and true to his word, one question, and the secretary of defense and secretary of state departing Capitol Hill where they have briefed, as Colin Powell said, most of the U.S. Senate.

You are looking at the balcony at the New York Exchange where the closing bell is about to ring, just seconds away.

The market today unable, as I said, to...

(BELL RINGING)

... there is the bell -- unable to extend with any great power, yesterday's strong rally, but nonetheless, a day of stability and certainly a day in which investors watched a relatively calm and orderly market.

Greg Clarkin, if I may return to you at the Nasdaq, Greg, your take on the day?

GREG CLARKIN, CNN CORRESPONDENT: I tell you, Lou, after the sharp selling last week, the powerful runup yesterday, this is the kind of day that a lot of folks welcomed. Basically kind of a stable, quieter day.

We saw the Nasdaq up as much as 28 in the earlier part of the day. It gave back all of that and at its low point was down about 18 points. It finishes with about a 2 point gain, 1,501 is the level. A real mixed bag in terms of the performance of the technology shares.

If you take a look at some of the big cap technology stocks you will see sine decent gainers, and you are going to see some weakness as well: Microsoft was down, Cisco, Intel, Dell Computer higher. But if you take a look at the movers, there were some real individual stocks that really lost big amounts today.

We saw Exodus shares down sharply. This was the number one most actively traded issue on the Nasdaq. On any given day it trades maybe 32 million shares. It did 175 million today, that after "The Wall Street Journal" reported the company is preparing a bankruptcy filing. Could be as early as this week. Exodus calling that report speculation. Either way, a lot of folks got out of it.

Second day in a row, Charter Communications real active. The cable company losing ground. JDS Uniphase the second day in a row gaining ground. We saw weakness in the communications chip stocks as witnessed by PMC-Sierra. DOBBS: And Greg, we should point out, Exodus, very little surprise here. Their CEO departing the company under tremendous pressure for some time.

CLARKIN: Exactly, Lou and that has been among the most actively traded issues throughout the summer on the Nasdaq as speculation swirled about the company -- would it be bought, would it file for bankruptcy? What report in the "Journal" today really sparking just the latest round of profit taking, selling kind of getting out of the stock.

DOBBS: Greg, thank you. Greg Clarkin, from the Nasdaq. Let's go now to Rhonda Schaffler over at the New York Stock Exchange -- Rhonda.

SCHAFFLER: Lou, it looks like we are going to settle upwards with about a 50 point gain on the Dow Jones Industrials. Let's take a quick run through of some of the Dow movers on the day even though we have a decent moderate advance here. We did see a couple of Dow stocks show weakness and that included Dupont, GM and Merck, down, even though pharmaceutical stocks were strong because of concerns about an FDA warning letter on an arthritis drug, Vioxx.

SBC Communication putting a good performance, though, up more than 2. Let's take a look at some Big Board movers: Advance Microdevices coming out with news this afternoon. It is going to have to lay off more than 2,000 workers and close two plants. It will take a charge due to that.

Boeing still bouncing back, up better than a dollar. Cocoa-Cola down 14 cents even though it did affirm earnings guidance for the rest of the year. Wal-Mart is up $1.23. UBS Warburg making positive comments.

DOBBS: Rhonda.

SCHAFFLER: Yes, Lou.

DOBBS: Cocoa-Cola much higher earlier in the session on that continued firm earnings and revenue guidance. What happened here, do we know?

SCHAFFLER: There was a little bit of move out of some of the food stocks, and some of the more defensive stocks. Nothing changed fundamentally with Cocoa-Cola, so that was one of the stocks that people seized on right away.

As the market broadened out people started selecting some other stocks.

DOBBS: Rhonda Schaffler from the New York Stock Exchange.

Consumers, of course, who have kept recession at bay through the past difficult year, may not be able to hold the economy up much longer if the most recent reading on consumer confidence is an indicator. Confidence falling sharply this month in fact, the biggest decline in more than a decade. Economic correspondent Kathleen Hays is here, and has the best reading on this report on consumer confidence -- not good news.

KATHLEEN HAYS, CNN CORRESPONDENT: No, and you know, Lou, it is especially interesting about this is the conference board nearly surveys 5,000 households every month, so because their survey results are mostly in by September 10th they did a second survey.

They didn't get very many responses back, peoples' minds on other things, so this sharp decline we saw even before the attack. That is a big worry. Let's look and see how severe this was. The index of consumer confidence fell to 97.6 from 114. As we just told you, the biggest drop since the last time the economy was in recession. What is going on? The jobs outlook deteriorating. Jobs seeming harder to get, more people saying, not as plentiful.

People see business conditions worsening but many economists we talked to today, including a former fed governor, say it's really that jobs outlook that is uppermost driving this report.

(BEGIN VIDEO CLIP)

WAYNE ANGELL, CHIEF ECONOMIST, BEAR STEARNS: We still have some downside in regard to employment security. So the whole job picture could weigh on it. Of course, another factor is how does the stock market do between now and the next survey?

(END VIDEO CLIP)

HAYS: Again, if the stock market keeps recovering that is good for confidence. Maybe we will keep spending. The opposite, of course, would not be good. Mr. Angell and others expect the Fed to cut rates again on October 2 another half a percentage point. It would be the ninth rate cut this year and even more after that perhaps.

Meeting in Washington we had Senator Breaux on our air just now, Lou, and he said the Fed and everyone there continued to say Alan Greenspan of course, the chairman of the Fed there, go slowly. We have already cut taxes, cut rates, and we are pumping a lot of money into the economy. They seem to think a little caution maybe a little step back and see how things look before we take any more steps as called for.

DOBBS: And it appears that we are going to be bumping more money into the economy through whatever actions are taken by the United States and its war against terrorism.

HAYS: Absolutely.

DOBBS: Kathleen, thank you very much. Kathleen Hays.

That's a look at the markets for now. We will be back at 6:00 Eastern with "MONEYLINE" here on CNN. Our coverage of America's New War continues.

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