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American Morning

January Effect Fizzles Early

Aired January 09, 2002 - 09:28   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.
JACK CAFFERTY, CNN ANCHOR: We're about a minute and a half away from the start of trade on Wall Street, New York Stock Exchange for Wednesday. The early January rally seems to have kind of staggered and stumbled a little. The market scratching its head looking for direction here.

Andy Serwer, the Editor-At-Large of "Fortune" Magazine joins me each morning at this time. What up with the stock market?

ANDY SERWER, "FORTUNE" MAGAZINE: Yeah, I think we're really in this sort of mixed bag trading range thing, of running out of steam. Look, the January effect lasted all of what, three days? I mean, come on.

But I don't really think there's a whole lot of enthusiasm out there. And today, this morning, before the bell, you kind of got a microcosm of what's going on, which is to say, a mixed bag. Luxury goods maker, Coach, saying things are going great, Cisco saying things are okay. Alcoa yesterday had a terrible quarter.

CAFFERTY: First disappointment in earnings for them in quite some time. That's one of the big Dow Components.

SERWER: Eight years. Of course, Treasury Secretary O'Neil's old company there. And -- but you know, On the other hand, you've got Linner, the giant homemaker, saying things are going great. So, you know, different sectors of the economy responding differently, not a terrible picture but not a really great, robust picture. And when people are looking for a strong recovery here, I think are going to be looking for a while.

CAFFERTY: All right. In 15 seconds, we'll hear the opening bell. Several of the federal reserve board members were out speaking around the country, yesterday; giving perhaps a little more pessimistic assessment of the outlook for that recovery you're referring to, than some of the gurus down there on the street, who say we might have a stronger recovery.

(BELL RINGING)

CAFFERTY: There's the opening bell. Stocks begin trading, following a mixed session yesterday. The Dow was down. The NASDAQ actually gained on the day. The S&P was off just a little bit. There's the opening bell over there at the NASDAQ Marketsite in Times Square, where they trade, primarily, technology stocks. Cisco and some of the others you were talking about. But it will be interesting to see, you know, they say as January goes, so goes the year on the Street.

SERWER: Yeah. But the past couple years, we've had a nice little rally in January, and then we sort of tailed off in the spring as reality sets in. I hope we don't see that. But it's hard to really see anything coming up in the spring that's going to boost stocks, except maybe an absence of good -- of bad news. And we hope we get that.

CAFFERTY: The other thing that might help, is the fact that we're into a period where the comparative earnings from a year ago will begin to look a little better.

SERWER: Right.

CAFFERTY: Earnings were so terrible during 2001, that now, when companies say, "we expect earnings to be up," the comparison to what were awful numbers a year ago, might tend to reinforce that idea on Wall Street, that things are beginning to turn around, yes?

SERWER: And that is especially true in the third quarter, Jack, when the economy fell off the cliff. In fact, it sort of puts the pressure on us though. Because if the economy is not looking good by the third quarter, we're in really bad shape. Because, that, of course, is when things really went off the cliff big time.

CAFFERTY: And, of course, no stimulus package from our lovely elected representatives.

SERWER: Nope! They're just twiddling thumbs over there, ain't they?

(CROSSTALK)

SERWER: All right.

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