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American Morning

America's New War: Stock Markets Open

Aired September 26, 2001 - 09:30   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.
PAULA ZAHN, CNN ANCHOR: the exchange is open now, as you can see by a lot of representative of the New York Fire Department, the police department. The same scene over at the Nasdaq marketsite today.

As we continue to watch this scene, I'm going to bring Andy Serwer into the discussion, of course, who is an editor for "Fortune" magazine.

So, Wall Street's looking for three-pete today. Are you going to get it?

ANDY SERWER, FORTUNE MAGAZINE: I don't know. I really don't know. I think we're going to get some lackluster trading. Again though, this is what Wall Street's looking for, calming down. They'd rather have even a slightly down day than a hair raising day at this point.

ZAHN: But what they got yesterday was the kind of day, you said once again, that they really were hoping for. No major, swings like they had seen two days before.

SERWER: Exactly, we were never more than 100 points up or down. Ended up -- up nicely, and so I think we're going to see that ball continue to just sort of calm down a bit, which is exactly what people on the Street are looking for.

ZAHN: Any surprises to you yesterday?

SERWER: Well, I think what's surprising me, if you take a step back, Paula, and look at where we are today; people are starting now to really take a look at the market longer term.

Since trading resumed on 9/17 the market is down 8.5 percent. Year to date, the Dow is down about 19 percent. And for the Nasdaq, we're down about 39 percent on the year.

ZAHN: Wow.

SERWER: So a huge drop, but traders trying to get that back.

ZAHN: Can you help me with something, because we seem to be having all kinds of conflicting information coming in about levels of consumer confidence. On one hand, the CNN/"USA Today"/Gallup Poll showed that people thought that perhaps a year from now things would be OK, and then you had the consumer confidence numbers come out yesterday that show the exact opposite.

SERWER: Yes, well...

ZAHN: Where is the American consumer right now?

SERWER: I think the American consumer is concerned. I sort of believe -- I take some stock in those numbers yesterday that shows a precipitous decline in consumer confidence. Although, you are right. The signals are mixed.

If you look at Bed, Bath & Beyond the retailer, yesterday reaffirmed that its numbers would be good, and said that things look pretty good going forward. So, maybe people are still buying towels and sheets and those kind of things. I'm concerned though about bigger ticket items, like autos, TV sets going forward, though.

ZAHN: Now, we continue to see noted economists out there stating that we are in a recession. And you and I have talked about this many times before. This certainly doesn't meet the classic definition of a recession, where you have two periods of negative growth after another.

SERWER: Right.

ZAHN: Is there an acknowledgement, by and large, in your community today that we're in a recession?

SERWER: I think there is. We're in a recession everything but name, Paula. The "Wall Street Journal" said today that economists across the country are sort of acknowledging now that we are in a recession.

But one thing that I want to point out, you know we're talking about a lot of doom and gloom here, consumer confidence, the ripple effect of the attack. There are some things that could go right. I think we should take note of those right now.

I think the government stimulus packages that we're talking about will have an impact on the economy. Greenspan and Rubin yesterday going back and forth on that on the Hill and the Senate Finance Committee talking about that. We have bailout package for New York City and the airlines. That's a positive.

And also, the interest rate cuts, you know those take a while to ripple into the economy. I think we're going to see the impact of that. Stocks also could be oversold. We really are discounting the worst case scenario right now. There's a school of thought on Wall Street that the economy will bounce back in January, and the stock market will start to take that into account in November.

ZAHN: Boy, I hope you're right.

SERWER: Don't we all.

ZAHN: One last question, though, about these trends.

Why, now, are you finally seeing these economists who would loath to say this two months ago, that we're in recession?

SERWER: Well...

ZAHN: I mean is it just so obviously because of the attacks, or is everybody basically blowing up what used to be the definition of what a true recession is?

SERWER: I don't think they're blowing it up. But I think they won't officially declare a recession until we do get those two negative quarters, Paula.

But, it's so blindingly obvious for these dismal scientists, after all, that's what economists are, right? That you can't help but acknowledge that we probably are in recession. Things have fallen so quickly and so fast, it's hard to suggest otherwise at this point.

ZAHN: Dow up 38 points even as we speak.

SERWER: There's more good news.

ZAHN: Check out that bug. Nasdaq up 14. Keep your eyes on that, for those of you that have money in the stock market.

Thanks, Andy.

SERWER: Could be three days in a row, Paula.

ZAHN: All right. We're going to check in with you throughout the morning.

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