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CNN Live Event/Special

America's New War: Stock Market Speculation

Aired September 17, 2001 - 06:37   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.
CAROL LIN, CNN ANCHOR: In terms of what happens next, let's go to an expert -- market analyst, Bernadette Murphy. She is with Killeman & Beard.

Good morning, Bernadette.

BERNADETTE MURPHY, KILLEMAN & BEARD: Good morning, Carol.

LIN: All right. You heard Bill Hemmer. He is saying that the stock market is bracing -- the markets in the United States are bracing for incredible volatility today.

Do you have any predictions as to what investors are going to do?

MURPHY: Well, I think initially, there is probably going to be some buying at the opening just as a vote of confidence. But we have to remember that an uncertainty has now been introduced into the equation. And there are investors who hold our securities from all around the world. And so, there may be some selling. Yes, we will have volatility.

What's the downside risk? Maybe we could go down 5 to 7 percent, not necessarily today, but over the next couple of days. But should investors be concerned -- should they really become worried about this? Not at all. This is the end of a decline. We began a decline 18 months ago. This could be the final, oh, climax selling, we call it. And anybody in my business knows this is not the time to sell the market; this is to be considering what you're going to invest in.

LIN: And interesting how the American government is appealing to investors. Vice President Dick Cheney said yesterday, "I would hope the American people would in effect stick their thumb in the eye of the terrorist." Clearly a call to invest and be patriotic.

How likely is it for a call from the U.S. government to small investors to say, hang on, believe in us.

MURPHY: Well, I think small investors should hang on, and I do think they should believe in us. I think maybe today, they may want to sit aside and just to see what is happening here. Before long term -- on a long-term basis, this is not the time for them to be selling stocks. It's really not.

We have a market that is oversold on what we call a technical basis. There are many that believe it is oversold on a value basis. So, yes, we go -- we may go down, but we're going to be coming back, and we're going to be coming back strongly.

LIN: What actions, Bernadette, do you think by the United States government and the Securities Exchange Commission -- what specific actions on their part -- and there have been several -- can investors take comfort in?

MURPHY: Oh, I think that the lowering of interest rates, which has been going on, and we anticipate they will be even lowered further. And I think that the Federal Reserve has been pumping money into the system to make sure that there is more than ample money supply for companies and for even for the professional investors if they so need funds, you know, in the mutual funds and for the specialists of the floor of the Stock Exchange. I think that those steps are in place.

And I think that the government, I think, will be reevaluating some of the tax programs, how they affect corporations. We may -- there may be some encouragement for corporations for capital expenditures, and because that's been a weak part of the economy. And investors should realize we have to rebuild a whole section of this magnificent city. And there are businesses that are reestablishing offices very rapidly, and they require supplies and technology to become effective again. So...

LIN: So if you're a buyer in this market, what stocks are you looking for? What stocks should small investors be looking at, then?

MURPHY: Well, I think that consumer staples, because that's always a dependable area -- that's foods, beverages, household products. Healthcare is not necessarily dependent upon the economy, and that would be medical products, and it would be drugs. Eventually, I think we'll come to the realization that we will have to continue our energy exploration. I think that will be important too.

LIN: All right, Bernadette Murphy, definitely a vote of confidence from you today. Thank you very much for joining us this morning.

MURPHY: You're very welcome.

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