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Lou Dobbs Moneyline
Dow Declines 165.24 to 10,293.50; Nasdaq Tumbles 61.43 to 1,966.36; Withering Heat Putting Strain on Nation's Power Supplies
Aired August 08, 2001 - 18:30 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.
ANNOUNCER: From the heart of New York City, this is LOU DOBBS' MONEYLINE. Here now: Lou Dobbs.
LOU DOBBS, CNN ANCHOR: Good evening. In tonight's headlines: Stocks plunge across the board, the Nasdaq plummets for a fourth- straight session, withering heat has power companies all across the nation scrambling. We'll be tracing the heat wave and its effect from California to the Midwest to the Northeast. And at long last Genesis blasts off, out to capture solar wind. Nearly a quarter-million miles from Earth already; a million miles from its rendezvous.
We'll check in with our reporters now for a look at what they're looking on -- Christine.
CHRISTINE ROMANS, CNN CORRESPONDENT: Hi, Lou. The Dow today took a triple-digit dive for the second session out of three, ending at its lowest level in weeks.
GREG CLARKIN, CNN CORRESPONDENT: And the Nasdaq tumbles back below 2000. It's now lost four sessions in a row. That's the first time it's done that in more than a month.
HILLARY LANE, CNN CORRESPONDENT: No relief from a brutal heat wave. I'll look at how power companies are coping with explosive demand.
KITTY PILGRIM, CNN CORRESPONDENT: Bayer pulls its blockbuster anti-cholesterol drug, Baycol, from the shelves after it is linked to 31 deaths in the U.S. -- Lou.
DOBBS: Well, all of those stories and more are coming right up on MONEYLINE.
We begin tonight with a disturbing report on the economy. The Fed today released its latest beige book regional economic survey, showing that retail sales were sluggish and below expectations. Manufacturing activity declined further in recent months. And the Fed has found the chronic weakness in manufacturing is spilling over to other industries. One bright spot in that report: residential real estate remaining stable and even expanding in some areas of the country.
Taking a look at the bond market reaction today, prices soared as yields fell. The beige book report released just after 2 o'clock Eastern Time this afternoon. And the stock market, which was already weak, headed sharply lower. By day's end, nearly $220 billion of market cap was erased, the Dow fell 165 points, and all but one of the Dow 30 ended the session lower.
Christine Romans at the New York Exchange with the report -- Christine.
ROMANS: Lou, all the action was in the afternoon after that beige book report, and it was selling that ruled the day on Wall Street, sending stock investors fleeing to the relative safety of the bond market after a successful 10-year note option. The Dow Jones Industrial Average falling 165 points.
Very active here. In fact, active on the day when it had started very quiet in the morning. That beige book -- folks saying that shows there's no sign of bottoming at least in June or July, and that spooked a lot of these bulls that want to see signs that things are getting better.
One of the stocks we followed here today, Aetna, this is the nation's number one health insurer, and it reported a wider than expected loss for its most recent quarter. In fact, the loss was more than double from the first quarter. Folks there talking about higher medical costs, rapid expansion, all these things analysts say this company continues to grapple with. The stock is down some 64 percent over the past 52 weeks, and volume there in that stock was triple its usual levels.
In the Dow Jones Industrial Average only Coke closed higher. When you look at the losses in some of these sectors, it was pretty much across the board. And one thing that has spooked the bulls and emboldened the bears, is the fact that the volume picked up here on a typical summer trading day -- volume picking up to be more than a billion shares, and it looks like that volume came with the market was moving lower, Lou.
DOBBS: OK, Christine. Thank you.
The Nasdaq under pressure all day as well. Cisco last night warning its quarterly sales may disappoint. That index ended down better than 3 percent; its worst performance in a month. In just four sessions the Nasdaq has now fallen 6 percent.
Greg Clarkin at the Nasdaq market site -- Greg.
CLARKIN: Lou, it was really no contest today. You know, there's still just no good news out of technology companies, as witnessed by Cisco. And then you had the beige book with the lousy economic picture that painted, and basically what we saw was a quiet day with a negative bias just turn into a all-out selloff in the afternoon.
Let's take a look at the Nasdaq, what it did on the day, and take a look at that 2 o'clock hour. That's when the bottom really just, kind of, caved in here at the Nasdaq; down 3 percent on the day. All the sectors were hit; you name it, it was down. Chips, networkers, hardware, software.
Here's a sampling of some of the losers: Let's start with Cisco, which we should point out was down about 2, 2 1/2 percent before the beige book. It ended up with a 6 1/2 percent loss; down $1.28. Microsoft began the day on the upside; it lost ground in the afternoon as well, down almost $1.50. Siebel Systems was down better than $3.75. We have BEA down 2 1/4. And Veritas down better than $4.
So the one thing that some technician took some solace in, by the end of the day was that the Nasdaq found some support at, kind of, a key support level, right around 1965. It hit that level and just, kind of, sat there for about the last 45 minutes of trading. What is key now is that tomorrow morning's opening, they'll want to see the Nasdaq hold those levels and possibly build of that. But that was one, kind of, bright spot, the very end, though. They found some support there again, Lou.
DOBBS: Greg, thank you. Greg Clarkin.
The beige book, as Greg mentioned, is just one report that investors and policy-makers use to assess the health and direction of the economy. They also wade, of course, through an alphabet soup of other traditional economic indicators such as GDP, CPI, NAPM. But some economists are turning to unconventional indicators to measure the market and the economy, some at your local convenience store.
Tim O'Brien reports from Arlington, Virginia.
(BEGIN VIDEOTAPE)
TIM O'BRIEN, CNN CORRESPONDENT (voice-over): Time was ladies' hem lines were the near-perfect economic indicator. They always came down when the economy was down and up when it wasn't. But fashions have changed, and the hem line has been replaced by a whole new set of criteria like beer.
UNIDENTIFIED MALE: I don't compromise on my beer consumption; that's one of the things I have in life that I look forward to.
O'BRIEN: 7-Eleven says beer sales in its 5,300 U.S. stores are up by 8 percent.
JAMES KEYES, CEO, 7-ELEVEN: One could argue that the economy is also encouraging people perhaps to drink a little more beer.
O'BRIEN: And it would seem to smoke more cigarettes. Sales are up; prices too. And for Philip Morris, maker of the Marlboro, so is the stock; 46 percent so far this year.
And get this: Krispy Kreme Donuts trading at an astounding 75 times earnings.
Perhaps less surprising, hard economic times have also been good for the home video business; buying or renting a movie is a lot cheaper than going out.
Another sign of bad times: freight trains. If they're empty, you may be witnessing the pending recession riding in.
Other variables must still be factored in: the rate cuts by the Fed and the tax rebates now going out, making accurate predictions still difficult.
(on camera): Put it all together and what does it mean? As Yogi Berra once put it, "Every situation is different, and this one is no exception."
Tim O'Brien, CNN Financial News, Arlington, Virginia.
(END VIDEOTAPE)
DOBBS: Well, no indicators about the state of the personal computer industry needed for Gateway, the PC maker saying today it's beginning the process of closing its international operations. Gateway shutting its European headquarters in Dublin, Ireland. It has about 850 employees there. Gateway is also closing its businesses in the United Kingdom and Japan. Last month, the company said it would concentrate operations in the United States, where it sells most of its business products.
Gateway shares falling fractionally today. The stock is down more than 80 percent over the past year, trading near a five-year low.
Ahead here on MONEYLINE: record high temperatures are battering the entire nation. We'll cut across the country live to gauge the impact. And Genesis on its way to the sun; blasting off finally out to collect solar wind one atom at a time. And Bayer's blockbuster to be pulled off the shelves; an anti-cholesterol drug linked to dozens of deaths. Those stories are next.
(COMMERCIAL BREAK)
LOU: Record temperatures reach from Detroit, Michigan, to Rochester, New York, to Atlantic City, New Jersey. With the national heat wave scorching most of the country, utility systems are scrambling to keep up with demand.
Hillary Lane with the story.
(BEGIN VIDEOTAPE)
LANE (voice-over): The heat is on Jason Brassero (ph) and his team, workers with New York electric company Con Edison out on extra long shifts in 95 degree heat. But even with record demand for power during this week-long heat wave, Con Ed stock, like most utilities, is trading lower.
STEVEN FLEISHMAN, MERRILL LYNCH: The hot weather certainly helps a little bit, but we've had mild weather for the last two months, so it really doesn't make a tremendous difference. Secondly, the group remains under pressure from concerns over new supply coming into the market the next few years.
LANE: Power companies say they're prepared to handle the increased demand, but there's a caveat: Reserves are less than half what's considered to be a safe margin. So if a big plant or major cables were to fail, shortages could occur.
MICHAEL CLENDENIN, CON EDISON: Well, we think the supply situation will be OK. But with the heat and the build-up, humidity, the moisture that gets to electric cables can really cause problems on the electric lines.
LANE: Like these damaged cables which caused three New York City buildings to lose power for hours this morning.
To cut down on usage cities from Chicago to Washington, D.C. are asking consumers for what could be called compassionate conservation, and some companies are taking rebates in exchange for turning down lights and others even cutting the number of elevators in use. Many large firms have backup power, including most trading firms, ensuring that the lights won't go out on Wall Street even if the power does.
(END VIDEOTAPE)
LANE: Even though most utilities plan for and buy power well in advance, most do wind up buying some on the spot market which, at times like this, becomes very expensive. Those utilities hedge strongly to protect themselves -- Lou.
DODD: Hillary, compassionate conversation? I like that.
LANE: Well, thank you. I hope Mr. Bush does, too.
DODD: OK. Hillary Lane, thank you.
To give us a sense of just how bad this heat wave is, we are going to go all across the country, talking live with those who know best about what is happening in their regions: California, Chicago, Oklahoma, New York City.
We begin tonight in Sacramento, California, with Scott Matthews, who's with the Californian Energy Commission.
Scott, good to have you with us. At this point, how serious are things in California?
SCOTT MATTHEWS, CALIFORNIAN ENERGY COMMISSION: Well, actually they're amazingly OK, I'd say. Last time I looked, we're about 2,000 megawatts of demand below peak resources. So we're getting by, mainly because Californians are doing such a good job in conserving. And so we're 10 to 14 percent below what we would have consumed last year in the same kind of a heat.
DOBBS: And this heat wave is a result of the temperate temperatures you've gotten away with, if you will, over the course of the past month or two?
MATTHEWS: No, the conservation actually has occurred even on those hottest days, and so that's helping us hot today. And it's hot throughout the West, so this is a concern we have because we're all interconnected here in the West, and when Arizona gets hot, it affects how California reacts.
DOBBS: So after all of the hoopla about the energy crisis in California, and all of the misadventures and the administration out there of energy policy, maybe the payoff has been that you don't have a problem now.
MATTHEWS: Well, we still have to worry because, like you said in your earlier story, a major power plant going down would put us in trouble. So Californians and the rest of the West still need to conserve. But that effort has paid off.
DOBBS: Well, good for Californians and the rest of the folks who share that power out there in the West.
We're going to go now to Chicago. We're joined by Jon Davis. He is meteorologist at Salomon, Smith, Barney. And it is good to have you with us, Jon.
JON DAVIS, METEOROLOGIST, SALOMON SMITH BARNEY: My pleasure.
DOBBS: You follow this, obviously, as the professional you are, looking for opportunities economically for your firm. How bad is this heat wave?
DAVIS: Well, really this heat wave over the last couple of weeks has really been centered really in the middle of the country, and the interesting feature about this heat wave is the fact that it's really been centered across more the northern U.S. than the southern U.S., of course in areas that aren't typically used to having heat like this. Cities such as Minneapolis, Detroit, Milwaukee, they've been the hottest in this situation, and we looked back through some data this afternoon and found that Minneapolis hasn't had a period this hot since 1988.
DOBBS: And, Jon, when you look at those temperatures through the northern tier of the country, you would swear you were looking at the southwestern part of the country.
DAVIS: Absolutely. And that's really the key feature of this. It's actually warmer across the northern population centers than it is across the Deep South.
DOBBS: And in terms of what you follow, you're looking for opportunities for your firm. What are the impacts in terms of agriculture in the country?
DAVIS: Well, certainly, in agriculture, the area that we're most concerned about, of course, is the corn and soil bean belt here across the Midwest. Not only are we having some heat stress over the past couple of weeks, we're also having some dryness problems across areas of the Midwest, and this is causing a decline in crop conditions and it looks like that general trend will continue.
DOBBS: And your guess about the future in terms of both the temperatures and the potential for further crop damage? DAVIS: Well, the eastern U.S. is going to have a dramatic cooldown coming up this weekend, as temperatures drop some 20 to 25 degrees across much of the region.
DOBBS: Can you could hear the cheering out there from everybody in the Northeast?
(LAUGHTER)
DAVIS: In Midwest and Northeast. But the one thing that you're not going to get much of in the Midwest is rain. So you're going to cool things down, limit heat stress, but you're not going to get much rain out of this change.
DOBBS: Jon, thank you very much. Jon Davis from Chicago.
DAVIS: My pleasure.
DOBBS: Now we're going to Tulsa, Oklahoma, going to Tim Beggans -- natural gas and energy trader with Energy News Live.
Tim, good to have you with us.
TIM BEGGANS, NATURAL GAS AND ENERGY TRADER, ENERGY NEWS LIVE: Thank you, sir.
DOBBS: You're trading energy, natural gas -- a lot of demand on product right now?
BEGGANS: Well, we're certainly going to see some very warm temperatures in the Northeast tomorrow. Boston is going to be possible as high as 99 degrees; it's going to feel about possibly 104, 105. And so tomorrow is going to be the biggest test of the system so far this summer.
DOBBS: For the Northeast?
BEGGANS: That's correct. We have cooler temperatures, as Jon Davis was happily announcing just a few seconds ago, in the Northeast this weekend, and so if we can just get by for the next two days I think we'll do just fine.
DOBBS: And prices right now on all energy products?
BEGGANS: Well, we're looking at prices in New England -- we're very moderate today. We had some very healthy imports, both from Canada and from the New York power pool. We also got lucky with a little ocean breeze into Boston this afternoon, but tomorrow we're not going to get that. We're going to see some very high prices in New York. PJM, New York day-ahead market for the city was about $420. So very, very strong.
DOBBS: Wow! And the price would be if there's such a thing as normal these days?
BEGGANS: Well, much lighter prices. Normally if we have some moderate weather, New England would be trading somewhere between $35 and $45; today it's probably going to average somewhere around $75. And that was a good day.
DOBBS: OK. Tim, good to have you with us.
BEGGANS: Thank you.
DOBBS: Tim Beggans of Energy News Live.
And from New York, we welcome Kevin Burke. He is the man responsible, making sure everything works at -- obviously at Con Edison, and keeping about 10 million customers happy. These temperatures in New York, of course, are the most brutal in the nation, because that happens to be where we are, Kevin. How's Con Edison holding up?
KEVIN BURKE, PRESIDENT, CON EDISON: To this point, our reliability's been doing very well. The system's been holding together. As you know, we supply electricity to 9 million people in New York City and Westchester County, which is north of New York City. And we've had some, you know, scattered outages: they're isolated, they're temporary. We've got a lot of extra crews on to get the power back as soon as we can. And our customers have really been helping to conserve.
DOBBS: Kevin, I've always found it interesting that the utility or the power companies says the outages are temporary, but if you're the consumer temporary isn't much of a help. How extensive have the outages been?
BURKE: Well, we had one outage this afternoon I can remember. It was about 30 minutes long. So you know the customers were out, the people were right on the job. They got the power back right away. It really worked well.
DOBBS: Now we have just heard from other folks all across the country that tomorrow is going to be the peak demand so far this summer. Are you ready for it?
BURKE: We're ready for it. We've been spending a lot of time and a lot of effort and a lot of money getting the infrastructure in the city in pretty good shape. It's going to be a hot day. It's going to be a tough day. But we have the people there, and the customers have been conserving today and really doing a great job helping keep the total demand down.
DOBBS: Your best judgment in terms of demands on the power grid and the system and, of course, your company, are we in pretty good shape in terms of continued sustained service for the next month or two?
BURKE: I think we're in good shape. The generation supply is there. What we're focusing on more now is these isolated distribution problems, you know, in the system. But the transmission system's in good shape, and the generation system's in good shape.
DOBBS: Kevin Burke, Con Ed, good to have you with us. Thank you.
BURKE: OK, thank you.
DOBBS: It wasn't hot weather, but rather storm clouds in Florida that delayed the launch of a NASA probe to capture a wisp of the sun's wind. But those delays today ended, when the Genesis solar probe lifted off aboard a Boeing Delta II rocket. Its two-year mission: to fly between the Earth and the sun and collect elements of the solar wind, composed of gases and dust, and return them to Earth.
Scientists hope that this will provide clues about the origin of the universe and the solar system. Today's launch comes one day before the space shuttle Discovery is scheduled to take a brand-new, fresh three-person crew to the International Space Station.
Balloonist Steve Fossett is also at altitude, making his way across the Pacific, trying to become the first person to complete a solo flight around the globe. Fossett took off from Western Australia Saturday. He is currently near the Pacific island of Tonga. He's a little better than a sixth of the way to his goal. He's hoping to reach Chile in another four days, and, of course, he is entirely dependent on the weather.
This is Fossett's fourth attempt to set the solo balloonist record, this time with a larger balloon and twice the fuel. And he is using less oxygen as he is acclimated to the altitude, increasing his chances for making it all the way back to Australia, and completing his around-the-world quest.
In Houston today, firefighters rescued two window washers stranded 12 stories up on the side of an office building. The accident occurred after cables holding one side of the scaffolding gave way. Firefighters used a tower ladder with a bucket on top to reach the man hanging from harness, then another rescue worker rappeled from the top of the building to reach the other worker on the scaffold. The rescuers strapped the man into a harness before the two were pulled to safety.
Well, the United States is now planning to reimburse China for costs incurred in April's spy plane incident. Pentagon sources tell CNN that the United States will pay about $34,000 as what is considered, quote/unquote, "reasonable reimbursement." This for services provided by the Chinese after a Navy EP-3 surveillance aircraft collided with a Chinese fighter jet.
Beijing had submitted a $1 million bill for housing and feeding the EP-3 crew, and for helping return the plane. That might be considered a significant discount.
Well, the maker of a powerful pain medication is now looking to change the opiate-based formula of its drug, Perdue Pharma saying it's working on a new patent for OxyContin to make it less addictive. The widely prescribed painkiller has become popular as a street drug, and that has lead to several deaths all across the nation.
Also claiming lives of dozens of people Bayer's cholesterol drug, Baycol. The FDA today announced that Bayer is voluntarily recalling that drug.
Kitty Pilgrim looks at what this means for Bayer and an entire class of cholesterol drugs.
(BEGIN VIDEOTAPE)
PILGRIM (voice-over): Bayer, the inventor of aspirin, withdrew its anti-cholesterol drug Baycol voluntarily. The Food and Drug Administration says the side effects from the drug are linked to 31 deaths in the United States, sometimes, but not always, when used in combination with the drug Lopid.
Baycol was approved in 1997 in the United States, and some 700,000 people take it. It was expected to generate $875 million in sales this year. Because of the withdrawal of the drug from the market, Bayer issued a profit warning for the year, and its stock, which trades in Europe, fell heavily.
Stocks of other drug manufacturers rallied early on the day on the news, but then sold off. Drug marketing company Professional Detailing, which has a big contract with Bayer, also fell heavily. Other drug companies are likely to benefit.
These drugs, called statins, reduce the so-called bad cholesterol in the blood, and are used widely. Analysts say with lowered guidelines on cholesterol, the drugs that are on the market are likely to be used more, not less.
LIN JAFFEY, BANC OF AMERICA: The statins have done an incredible job at being able to help Americans be treated to goal when it comes to cholesterol. And people, in our opinion, should feel very comfortable at staying on these medications.
PILGRIM: Pfizer's Lipitor, with about 45 percent market share, has about $4.2 billion in sales in the U.S., as does Merck's Zocor. Pravachol, by Bristol-Meyers Squibb, has about $1.2 billion in sales.
(END VIDEOTAPE)
PILGRIM: The potential for this market is huge. Now analysts say the projected market is 13 million Americans, and with new aggressive guidelines just released on cholesterol levels, that market could jump to 36 million people on cholesterol-lowering drugs, Lou.
DOBBS: And for Bayer, I mean, this is a huge impact.
PILGRIM: There is not much in the pipeline. Analysts are quite concerned about the future of the company now that they've lost this drug. This was the engine of growth for Bayer.
DOBBS: OK. Kitty, thank you very much.
Well, ahead here on MONEYLINE: the president takes his share, of course, of satirical punishment; now his daughters appear to be fair game as well. We'll take a look tonight at whether the media is playing fair. We'll also take a look at the flip side of the remarkable boom in the housing market. Two retailers define the dismal trend in corporate America, reporting profits actually rising from a year ago. We'll tell you all about the winners and the worst session in a month in the markets. We'll be talking with a top player on Wall Street about the direction he sees the market going in.
ANNOUNCER: Up next: Lou talks with stock strategist Todd Eberhard.
(COMMERCIAL BREAK)
ANNOUNCER: LOU DOBBS' MONEYLINE continues. Here again: Lou Dobbs.
DOBBS: Topping tonight's headlines: a blistering heat wave gripping much of the nation. From the plains to the Northeast, power outages in several states reported, making life miserable for millions of people. Stocks overall today closing sharply lower, not helping their condition any, led by a Federal Reserve survey indicating widespread weakness in the economy. And the Fed's so-called beige book showing slowdowns in both retail and manufacturing for the months of June and July. And coming up: stock strategist Todd Eberhard on why he's expecting these markets to bounce back by at least year's end.
First, more on today's market slide. Both the Dow and Nasdaq closing sharply lower; that after the Fed's report on regional economic activity showed signs of further weakness. The Dow today falling 165 points, losing more than 1.5 percent. That marks the Dow's lowest close, 10293, since July 24th. Year to date, the Dow has lost more than 4 percent.
The Nasdaq taking a bigger hit, dropping more than 3 percent, settling at 1966; also the Nasdaq's lowest close since July 24th. Year to date, the Nasdaq has lost more than 20 percent. Taking a look now at some of the widely helds, 3M amongst the biggest losers, closing down $2.66 a share and Cisco, ending down almost 7 percent, losing $1.28, not a day after reporting a huge drop in its fourth- quarter profits. Market breadth on the big board negative today, decliners beating out advancers by a margin of better than three to two. On the Nasdaq, decliners bidding advancers, again by a huge margin, two to one, in point of fact.
Now for a look at what traders and investors should be expecting tomorrow. Christine Romans has the look-ahead from the big board.
ROMANS: Hi there, Lou. No summer doldrums here today. We'll see if continues into tomorrow's trading session. A few things on deck before the bell. A couple of different economic reports to look at. We're going to be looking at the July import/ export prices, also the latest weekly jobless claims. And chain store sales -- these are from retailers for the month of July. They'll be coming out all session. Before the bell we'll hear from Limited, Ann Taylor and Gap. We just heard from Guess; they reported that July sales fell more than 20 percent. That, believe it or not, is a little bit better than they had been predicting earlier.
But by all accounts, July is supposed to be tough for the retailers. Watch to see what the guidance is for August and whether there are any hopes that perhaps those tax refunds are going to be helping some of the retailers. Also watch Nortel Networks. I'm guessing the one's going to be on top of the most active lists tomorrow. It's trading after hours down here about 22 cents. The company is selling one billion dollars in convertible notes tonight. Remember all that demand that we had when we heard a similar deal from Lucent a couple of weeks back. Well, it put Lucent in very active trade for several days. We'll watch to see if the same happens to Nortel Networks -- Lou.
DOBBS: OK. Lucent and Nortel, two highly challenged stocks right now.
ROMANS: To say the least.
DOBBS: Christine, thanks. The Nasdaq composite below 2,000 today. Traders already looking towards tomorrow's opening, looking for a better performance for tech stocks. Greg Clarkin at the Nasdaq market site. Are they going to get a better performance -- Greg.
CLARKIN: Well, I'll tell you right now, all these eyes are really going to watching those tech stocks, hoping for a better performance. At this point there doesn't seem to be a catalyst out there, at least at the moment, that could send things higher. I want to take you back here to the wall, show you the level. 1966 -- this is where the Nasdaq closed. 1965, a lot of technicians would tell you, is a key support level.
Today the Nasdaq was able to hold that level. It got as low as 1958, came back off that, and just hung around that 1965 level for about the last 40 minutes, maybe hour, of trading. Now, this is a period of -- a point of support for the Nasdaq, as technicians say. There's a lot of buying congestion right around there. If it goes below that, well, technicians will tell you that 1935 is the next step down in terms of support levels. And that really represents the low end of the recent intraday trading range. If you look at any chart of the Nasdaq, you'll see over the last couple months it has been locked in a real tight trading range.
Right there on the right hand side of your screen you can see just how tight it has been. And down around 1935 or so it's bounced down around there in late July. It was able to bounce off that. But still, first and foremost, they would like to see it hold that 1965 level. And at this point, you know, today we saw just a flood of money coming out of equities, a lot of it going into the bond market. There was no roadblock, no obstacle to stop the money. And traders this afternoon were really skeptical as to whether something would occur overnight from corporate America or from a technology company that would provide that kind of upside catalyst tomorrow.
So there's a lot of nerves going into the opening tomorrow. They're going to want to see the Nasdaq can at least hold to 1965 and, you know, move higher if they can -- Lou. DOBBS: They're not the only ones, Greg. Greg Clarkin from the Nasdaq market site. Thank you, Greg.
Topping tonight's Moneyline movers: Cooper Industries gaining more than $6 a share. The company's board unanimously rejected Danaher's unsolicited $5.5 billion bid, Cooper calling the offer inadequate, highly conditional, and not in the shareholders' best interests. Danaher down nearly $1 a share. Loral Space and Communications down almost 25 percent. Loral narrowed its second- quarter loss, but revenue dropped by 15 percent. Loral also trimming its revenue outlook for the year, as it struggles with its Globalstar satellite-phone venture. And Enzon adding nearly $5 a share, FDA regulators approving a chronic hepatitis-C treatment, jointly marketed by Enzon and Schering-Plough. Schering-Plough finished flat on the session.
Despite continued selling on Wall Street, Todd Eberhard has seen a very busy August. Bullish on the markets, he expects the Dow to reach 11,000 in the coming months, and Todd predicts the Nasdaq will hit 2,400.
DOBBS: Todd, good to have you with us.
TODD EBERHARD, EBERHARD INVESTMENT ASSOCIATES: Good to be with you, Lou.
DOBBS: Well, we've got a little more ground for you to make up here, after today.
TODD EBERHARD: You're right. We didn't need this day to help towards my goal.
DOBBS: Let's talk about this market today. We saw some pretty strong selling on a beige book report. I mean, that's not only unusual, but hard to explain.
EBERHARD: There's nothing else out there to lead these markets anyway, up or down, and the beige book is something normally nobody would have even looked at, or even talked about, certainly. And now it's the front page of news. The question now remains if they do cut a quarter point, the Fed, on the 21st -- is it good or bad? And that now is going to be the argument on Wall Street for the next week and a half.
DOBBS: What is going to move this market ahead from here, if anything? And I know you're talking about some strong moves. But through the rest of the summer, are we really going to see much of a move, do you think?
EBERHARD: Well, you've got -- figure the next 30 to 60 days, probably not much. I think it's a tight trading range, just as Greg just talked about, being in that. And I think that's going to continue. But the break out point has to come at some point. You hope it's on the upside, and from our indications it will be. The area we're looking at is only one place, and that would be companies meeting or exceeding expectations by analysts. And the third quarter warnings are going to come into play, again, 60 days looking forward...
DOBBS: That's just about what we are out there.
EBERHARD: Just about. And that's going to be the impetus from our side. I think that we're going to see companies meet and start to exceed slightly, but start to exceed, and that could give the impetus for this market to head out.
DOBBS: Helped also by the fact that last year's third quarter was a very weak third quarter.
EBERHARD: Exactly, You start to lower the bar enough that you eventually start to exceed those numbers.
DOBBS: Are you seeing signs that we're seeing any kind of turn in terms of the real economy? Real industries, real companies?
EBERHARD: Lou, you know, you know this probably better than I do, interviewing the people you do. But the fact is we're seeing a patient that was very bad, dropping, dropping, dropping and has somewhat leveled off to a great degree. The beige book numbers for July and June, everybody knew this. This is nothing unusual.
(CROSSTALK)
EBERHARD: Now we drop at 2:00 on dramatically. But do we see it going up at this point, the economy? No. We talk to people in a lot of industries every day to find out what they're seeing and nobody's talking about a great return. But I think it's going to be slow and steady, three months out, four months out from now.
DOBBS: 2400 on the Nasdaq.
EBERHARD: That can be done in a few days.
DOBBS: 11,000 on the Dow. And amongst the picks that you've made and recommendations, because that's one of things we do here at MONEYLINE -- everyone who is here to talk about stocks brings with him or her their track record. So we have to do these little updates to kind of make sure everybody knows.
EBERHARD: This is a big lead in for this.
DOBBS: Well, there they are. Todd's picks. Now these were back on June 21st. We haven't given you long to perform, here.
EBERHARD: I expected that -- I think that I commented on that point, that it would be after my next appearance that they would go up.
DOBBS: Sure. That would be exactly right. But these are, if you will, spot checks. American International Group -- now, these are terrific companies, by any definition. American International Group. IBM. G.E. Johnson and Johnson.
EBERHARD: Right. DOBBS: Now, you notice I didn't mention Professional Detail...
EBERHARD: Yes, I noticed that.
DOBBS: ...which today lost, ladies and gentlemen -- just because Todd, who we invited here some weeks ago -- today it lost $10 a share.
EBERHARD: That's correct.
DOBBS: What happened?
EBERHARD: Well, Bayer, which is one of companies you discussed -- one of their three drugs that Professional Detailing goes out in markets is being pulled, so that affects them in a major way, contractually. Set the other argument outside, Professional Detailing did the exact same move that it did today approximately three weeks ago. And in a day and a half it was already back to the level it was prior to it.
DOBBS: Is this a forecast or a hope, here?
EBERHARD: Probably a little of both, at this point. But even the analyst who came out today and spoke about it when we saw the news come out -- and it halted trading for some time -- even said, "It's already in the stock. It's not a sell point.
DOBBS: Are you staying with each of those stocks?
EBERHARD: We like those stocks very much, yes.
DOBBS: Todd, it's always good to have you with us.
EBERHARD: A pleasure to be here.
DOBBS: Todd Eberhard.
In other corporate news, General Motors is seriously considering Echostar's $30 billion bid for its Hughes Electronics and DirecTV divisions. GM says it is still in talks with Rupert Murdoch's Newscorp; Newscorp trying to combine DirecTV with its Sky Global Networks to rival Echostar.
Jenny Craig's market cap is slimming, forcing the company to be delisted on the New York Exchange. The weight-loss company no longer meets the Exchange's requirements. Jenny Craig hoping to be listed on the American Stock Exchange. Otherwise, its shares will trade over the counter.
In tonight's "MONEYLINE Focus," affordable housing. A still- vibrant real estate market is now threatening a government-sponsored program for low- to middle- income housing.
Peter Viles has the report.
(BEGIN VIDEOTAPE) PETER VILES, CNN CORRESPONDENT (voice-over): This is the Shakespeare in Northwest Chicago, an apartment building that once relied on the real estate equivalent of welfare. Twenty years ago, it took federal tax breaks and rent subsidies to convince private investors to renovate it.
FRED LEVY, OWNER OF SHAKESPEARE APARTMENTS: The Section 8 program at that time was the only way that you could truly renovate a building in an area that at that time was considered marginal.
VILES: But like so much of urban America, this neighborhood has changed, and for the better. Levy recently sold the building for $1.6 million.
LEVY: It's a wonderful area and people are finding it. And people are -- there's a demand for housing in this area.
VILES: Another uncelebrated consequence of the great boom of the '90s. The vibrant real estate market is a threat to Section 8 housing, the massive rent subsidy program that dates from the early '70s.
ALAN HERMES, RELATED CAPITAL: Each one of the owners of those projects is at a crossroads and is making a decision today whether he will continue the affordability of the project or go to market. And we've had tremendous real estate increases in America, and therefore the developer has a real economic decision to make.
VILES: Existing tenants are generally protected. They get portable rent vouchers they can take to other apartments, and the comfort of subsidies still has its appeal to landlords. In Worcester, Massachusetts, Spear Management is sticking with Section 8, and planning a $10 million renovation of this complex.
DIANA ANDES, SPEAR MANAGEMENT: We decided the tax credit program was where our best business decision was doing to be. Continuing this property as affordable, financing under the tax credit program and continuing our Section 8 contract.
VILES: Nationally, landlords are dropping out of the Section 8 program at a rate of about 300 projects per year -- a small portion of the overall program, but a reminder of how deeply this 11-year expansion has reached into the American economy.
Peter Viles, CNN Financial News, New York.
(END VIDEOTAPE)
DOBBS: Just ahead here on MONEYLINE, despite tough business conditions, we'll be telling you about two retailers not only weathering the storm, but issuing positive outlooks. And later here, President Bush will not be talking any time soon, at least to one media company. We'll tell you why next.
(COMMERCIAL BREAK) DOBBS: As we reported, the Fed's beige book putting a damper on investors' spirits today. One of the reasons: weaker-than-expected retail sales. But there is some positive news in that sector. High- end clothing retailer Polo Ralph Lauren reaffirming its earnings guidance for the year. Lauren profits, in point of fact, up 20 percent over the latest quarter. Analysts also impressed by Polo's six percent sales growth, despite what is a difficult retail environment.
Elsewhere in the sector, Lands End today beat earnings estimates. The catalog retailer posted a four percent increase in its sales. Lands End also keeping a tight reign on expenses, cutting back on costs, particularly advertising. Lands End stock closing almost five percent higher today.
Polo Ralph Lauren up nearly 10 percent. Other stocks in the group also moving higher. Over the past year, the retail sector has outperformed the broader market by about 20 percent. And keep an eye on this sector tomorrow as well. Most of the country's retailers will be reporting their July sales performance, the chain store results. And next here on MONEYLINE, the turning point between the White House and the media.
(COMMERCIAL BREAK)
DOBBS: It may be impossible to believe now, but the media actually once had a very friendly relationship with the federal government. Up next we'll take a look at all that's changed over the years, and why.
(COMMERCIAL BREAK)
DOBBS: There's a lot of talk about "Talk" magazine, now. The September issue, out on the newsstands today, contains a pictorial poking fun at the underage drinking troubles of the president's twin daughters. Now the White House says it won't be talking to "Talk" magazine anytime in the near future. These squabbles are part of a long and often tense relationship between the government and the media.
Susan Lisovicz has the report.
(BEGIN VIDEOTAPE)
SUSAN LISOVICZ, CNN CORRESPONDENT (voice-over): President Roosevelt didn't want to be photographed in a wheelchair, and he wasn't. President Kennedy's extramarital relationships went unreported. Those were the days when the American media actually had a friendly relationship with the government. But that all changed with the Vietnam War and Watergate.
RICHARD NIXON, PRESIDENT OF THE UNITED STATES: I had no prior knowledge of the Watergate break in.
LISOVICZ: And now, it seems nothing is sacred. "Talk" magazine's latest issue contains a pictorial essay poking fun at the underage drinking arrests of President Bush's college-age twin daughters. The White House says it won't deal with "Talk" magazine anymore.
MAER ROSHAN, "TALK" MAGAZINE: I think it's not a wise move by this administration, and I think we saw happened when the Nixon administration kept enemy lists. It wasn't -- it didn't work out very well.
LISOVICZ: That is far from the only battle these days between the government and the industry that reports on it. A series of acrimonious letters between California Democratic Congressman Henry Waxman and NBC News President Andy Lack focus on what Waxman calls rumors that Jack Welch, the CEO of NBC's parent company, General Electric, interfered with the network's election results.
ANDREW KOHUT, PEW MEDIA RESEARCH CENTER: News organizations have to do everything they can to assure both Republicans and Democrats that they are fair. And the question is what their coverage is like, whether it's fair, balanced and objective and gives both sides in an argument equal hearing.
LISOVICZ: But scholars say the media's role as a watchdog requires a nearly constant tension with the government.
THOMAS PATTERSON, HARVARD UNIVERSITY: We want an independent press, and we want an independent government. And there are going to be inherent tensions in that relationship. What doesn't serve us very well, I think, is a poisonous attitude in that relationship.
(END VIDEOTAPE)
LISOVICZ: One Harvard study found that the last president to generate more favorable than negative news coverage was Gerald Ford, three decades ago. The issue, according to some scholars, is not any perceived political bias on the part of any one news organization. It's really an overwhelming preference for bad, and increasingly, scandalous news -- Lou.
DOBBS: I find it interesting as we were sitting there watching about -- your piece, the pictures with Nixon and Watergate. And what we're really talking about here is a magazine that is putting up at least a rendering of the president and his daughters, whom they have declared to be off limits. It's hardly parallel.
LISOVICZ: Off limits -- but there was an arrest, and that opened up.
DOBBS: How's business at "Talk" magazine?
LISOVICZ: Well, they're hoping it's very good as a result of all the talk about "Talk."
DOBBS: Absolutely. Tina Brown, go get 'em. All right. Coming up next, a look at your e-mail and "Ahead of the Curve."
(COMMERCIAL BREAK)
DOBBS: Companies out with quarterly results tomorrow, including Abercrombie & Fitch and WebMD. On the economic front, July's same- store retail sales and weekly jobless claims, also out. And as always, thanks for your e-mail. We enjoy hearing from you. Lokanath Patel in Dubuque, Iowa, writes. He has a question about Federal Reserve Board Chairman Alan Greenspan. He writes, "Lou, am I correct in assuming that he's not allowed to own stock or security?"
Indeed, you are right. By law, Greenspan may not own stock in banks, but he can buy shares in other companies. The government has just released figures, by the way, showing that he still likes to play it safe. He keeps the bulk of his money in treasury bills. How much is he worth? Although the Fed doesn't give exact figures, they do give a range. It's a wide range. Mr. Greenspan's investments are worth between four and 12 million dollars.
His wife, NBC correspondent Andrea Mitchell, does own stock in G.E., the owner of NBC, Estee Lauder, and her biggest holding is Abbott Labs. By the way, Alan Greenspan's salary last year: $136,000.
Our report last night on MBA graduates not finding jobs because of the tough economic environment provoked some protest. In that story, economist Diane Swonk suggested graduates could find other work while they look. For example, she said waited tables. Brian Peller, who says he's a student at Kellogg, fired back and wrote, "I find it insulting to suggest that students at one of the top MBA programs in the world should wait tables if recruiting is tough. To suggest we throw our education away and $60,000 out the window is demeaning to any student at a top MBA program."
Well, Brian, I hope you take this the right way. First, if you need money, then you need to work. Even if it's not the job you want. And secondly -- and this is a really important free thought from me to you --there is nothing demeaning about anyone who works for a living, no matter what their job. That's just my little thought to you and I hope you take it in the warm spirit in which it is intended. Everybody else, please send us your thoughts. MONEYLINE at CNN.com. Don't forget your name and your address.
And for tonight, that is MONEYLINE. We thank you for joining us. I'm Lou Dobbs. Good night from New York. "CROSSFIRE" is coming up next.
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