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CNN LIVE EVENT/SPECIAL

America's New War: Dow and Nasdaq Fall

Aired October 1, 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. The markets falling on the first day of the fourth quarter. The Dow and Nasdaq giving back some of last week's gains one day before the Federal Reserve will meet to determine the direction of interest rates.

The Fed is expected widely to cut interest rates by at least a quarter point tomorrow. That will be the ninth cut in just 10 months.

Christine Romans is at the New York exchange, Greg Clarkin at the Nasdaq marketsite. They've been following all the day's activity.

Christine, we go to you first.

CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, let me tell you, many traders here trying to figure out how you come off the best week in stocks since 1984 and the worst quarter in stocks since 1987. And when you look at a chart of the path of the Dow today, you can see they met those two facts with a lot of indecision here.

The market drifting lower in the first part of the day, hitting its worst levels of the day by about 11 o'clock, but then the selling really dried up, and there still was kind of a lack of buyers. So the market drifted higher again by about 2 o'clock. It's been very choppy since then.

The market in the past about 20 minutes or so actually cutting some losses again and bouncing from its second low of the afternoon. Now, the Dow down about 10 points: 8,837 is the level. A lot of traders have been saying 8,800 was the level that the market was sort of magnetized around.

But they say overall it feels pretty fragmented. You have some safe-haven type buying in Merck and Philip Morris, in the utilities. The transports are lower -- Lou.

DOBBS: Christine, thank you. We want to go to Greg Clarkin. We've got less than two minutes, Greg, before the closing bell.

GREG CLARKIN, CNN CORRESPONDENT: And Lou, I tell you, tech stocks really kind of stumbling into the fourth quarter. What we saw today was just really no reason to buy for anybody. So we saw a lot of folks focusing on that Fed meeting tomorrow, just kind of keeping on the sidelines. The Nasdaq hitting its session low at about 11 o'clock this morning. It was down about 40 points. From there, a similar pattern of what you saw on the Dow, really just very choppy trading. It made a run toward break even about midafternoon or so, only to give back some of that. So it's ending right now kind of on a mediocre note, down about 22 points. That's about a 1 1/2 percent loss.

We did see a little bit of a pop in some of the biotechnology shares today. Other than that, the weakness again in the semiconductor stocks still persisting there, and that was one of the drags on the Nasdaq.

But right now, down about 20 so. It's cut its session lows in half. basically -- Lou.

DOBBS: And Microsoft I see behind you there, Greg: moving up on the day.

CLARKIN: Exactly, the big names, rather, were a real mixed bag today. We saw some research notes out on semiconductors: Intel, Cisco were lower. Microsoft was around break, slightly higher throughout much of the day.

DOBBS: Thank you, Greg. Let's go back to the New York Stock Exchange. We're juts seconds away from the closing bell. There is the floor of the New York exchange, the trading post, as we are about to wrap up the session.

(BELL RINGING)

There is the closing bell. Both the Dow and the Nasdaq posting double-digit losses early in the session but recovering. Market breadth today decidedly negative, decliners nearly doubling advancers over on the Big Board and the Dow cutting its losses.

Let's go back to Christine there on the floor of the exchange -- Christine.

ROMANS: Lou, you're right -- cutting their losses pretty well here. The Dow down about 13 points, unofficially, to close at 8,834. I want to take a look at some of the Dow movers here today. There were a few names moving higher that sort of underpinned the Dow performance throughout the day. Citigroup, up about $1.30. Some of the banks doing well, here today, but Citigroup in particular, upgraded by CSFB. IBM, "Big Blue," getting some buying in here today as well. A lot of folks have been talking about bargain-hunting in IBM. It's a big, liquid name and if they want to buy tech stocks, some people say look for IBM.

Philip Morris up about 96 cents. You've got tobacco stocks, drug stocks doing better here. Merck was another big mover. But 3M on the downside. Some of those big heavy industry stocks moving lower.

Want to quickly touch on the transports. The transportation index here at the Dow down about 54 points on the day. But some of the airlines actually getting a little bit of a lift. AMR, UAL, Continental, all moving higher. What traders are talking about is the fact that some of that federal money is now landing in the airlines coffers. They can pay some of their bills. Delta on the downside, though. That one really couldn't shake it. There's also some bargain-hunting here in those stocks -- Lou.

DOBBS: Christine, in the advance-decline issue, the breadth of the market today?

ROMANS: The breadth of the market was negative for much of the day, and down volume handily beat out up volume.

DOBBS: And what was the ratio on declining issues to advancers?

ROMANS: We had about five decliners for every three advancers. It was mostly like that throughout the session.

DOBBS: OK. Christine, thanks. Christine Romans.

Let's go back to Greg Clarkin, where the big issues, as Greg said, holding steady ahead of tomorrow's Fed meeting -- Greg?

CLARKIN: Yes, they were, Lou, and it was one of those fairly quiet trading days, where the market internals, the dynamics of the market really didn't change much throughout the day. In terms of the breadth of the marketplace, you had about two stocks losing ground for every one stock that was gaining ground. Volume, lighter, as it usually is ahead of a Fed meeting, about 1.4 billion shares traded.

Take a look at how the big cats did. You see a bit of a mixed bag, there. Again, Microsoft kind of at the close, giving back just a little bit. We had it higher, actually, just before the close. Cisco Systems lost 40 cents. Dell Computer was up 6 cents at 1,859. That's one of those technology teenagers, as traders are referring to them now, trading at 18 and change. Some other ones, Intel is down 46. You had Oracle down 16, Sun Microsystems giving back 18. So a fairly quiet trading day, and a lot of folks obviously focusing on this Fed meeting tomorrow. But today, one of those days where there just really wasn't any reason to kind of get involved and step in, Lou.

DOBBS: Big names and little moves. All right, Greg, thanks. Greg Clarkin.

Well, manufacturing slowed again in September, the 14th consecutive monthly decline. But the figures stronger than expected, actually, and that could be an encouraging sign for the economy. And to tell us whether that is actually the case, here is Kathleen Hays to tell us all about it.

KATHLEEN HAYS, CNN CORRESPONDENT: Thanks, Lou. Well, you know, this is the National Association of Purchasing Management. They talked to manufacturers across the country, 20 industries, over 300 companies in their membership. And it's a very closely watched survey on Wall Street because it's the first report every month that looks across the entire country. It only covers manufacturing, but it's not just a particular region -- it's everyone. The index stood at 47 even in September. Now, that's just below 47.9 the previous month. Put this in context. This index is constructed so that any number above 50 means net-net expanding. Anything below 50 means contraction. You can see from the chart we're well off the low, around 41, hit in January. That was the weakest reading since the last recession. Heading back towards 50, the question is will it hold there and stay.

Let's look at a couple of the components, because the purchasers are asked about a lot of different things. New orders and production both held about 50 or slightly higher level. That's good. Export orders, not surprising, with weakness overseas, fell far below 50, to 45.9. Now, employment was still below 50. It's at 41. But it was down around 36, so this is another slightly encouraging sign.

You remember we were talking about the consumer sentiment survey from Michigan on Friday, the official results out today. And Richard Crow (ph) heads that survey, saying that people very cautious after the attacks. Say they're going to look more to save their money than spend it. And in fact, apparently, that's what many people have done with their tax rebate checks. A lot of caution, a lot more pressure now on the Fed and the federal government.

DOBBS: But we're getting some contradictory evidence on that, too. Suggestions that those tax rebates now actually helped sales, perhaps not to the degree that some expected. So we're getting all sorts of conflicting reports.

HAYS: At a time like this, every little bit helps though, doesn't it?

DOBBS: Absolutely. Kathleen, thanks. Kathleen Hays.

Well, that's a look at the markets for now. Please join us tonight for "MONEYLINE," 6:00 Eastern here on CNN. Our guests tonight include: former Defense Secretary William Cohen, Henry Kissinger on the state of this new war and what we can expect; and the president of the World Bank, James Wolfensohn, will also join us to talk about the possibility of a worldwide recession. That and a lot more coming up on "MONEYLINE," 6:00 Eastern.

Until then, I'm Lou Dobbs here in New York.

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