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CNN Live Today

Wall Street Worries

Aired July 22, 2002 - 11:00   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.
DARYN KAGAN, CNN ANCHOR: It could be another manic Monday for the financial markets, investors still reeling from Friday's drop of almost 400 points in the Dow. They are bracing for another rough ride this week. Trading opened today against the backdrop of WorldCom declaring bankruptcy on late Sunday night.

Let's look at the Dow, back in negative territory. Leon was saying this looks like a roller coaster ride. Yes, we were just in positive territory a couple of minutes ago. Right now, the Dow is down 17 points. Stocks slipped at the opening, before rebounding a bit and falling again. Right now, as we said, the Dow is down 15 pounds.

Let's bring in Allan Chernoff. He's in New York with a look at more on the markets, if you can bear to watch.

Alan, good morning.

ALAN CHERNOFF, CNN CORRESPONDENT: Good morning, Daryn. Well, we have got heavy trading activity, quite a few nervous investors on Wall Street. Some market pros saying the potential remains for another big sell-off. But so far, as you pointed out, the damage not nearly as bad as Friday. Over the past two weeks, though, the Dow industrials plunged 1,360 points. That is 14 percent, and it is the worst two-week performance since the crash of 1989, if you can remember that far back.

It has been a choppy session thus far. The Dow was up more than 80 points at one point, but the positive momentum has dried up, and right now, you can see the Dow industrials off more than 17 points. SBC Communications, which is the parent of Ameritech and Southwestern Bell, as well as Pac Bell, down 3 1/2. Now there's a lot of concerns it won't get paid a lot what WorldCom has been shelling out to the company. On the flip side, 3M and Procter & Gamble are adding more than $2 each.

And as for the Nasdaq, right now, let's have a look. The Nasdaq is off 10 1/3 points.

Of course we're tracking the WorldCom situation. This morning, CEO John Sidgmore said that he regretted WorldCom's fate has come to this.

(BEGIN VIDEO CLIP) JOHN SIDGMORE, PRESIDENT & CEO, WORLDCOM: While this is not the path we wanted to take, we think it's clearly the right thing to do for our future with this company. With integrity, communication and focus, I firmly believe we will ultimately benefit from this period.

(END VIDEO CLIP)

CHERNOFF: WorldCom bankruptcy the biggest in U.S. history, far larger than number two, Enron. By the way, WorldCom shares are up 6 cents today at 15 cents, although we should point out that the shareholders in a bankruptcy certainly do not get anything. Everything goes to creditors, the bond holders and the bankers -- Leon, Daryn.

KAGAN: Alan, this is what I want to know about WorldCom. How do you declare bankruptcy at 9:00 on a Sunday night? Something tells me that you and I wouldn't have that same kind of access.

CHERNOFF: That's exactly how it very often works, Daryn. The lawyers are working all weekend long, you know, and they're billing by the hour. They are more than happy to be working over the weekend. And very often we do get the bankruptcy filing late Sunday night.

KAGAN: Got it.

Allan Chernoff in New York, thanks so much.

LEON HARRIS, CNN ANCHOR: From Wall Street's nine-week losing streak to concerns about corporate accounting scandals, these are stomach-churning times for investors. You might call it investor indigestion.

CNN's Louise Schiavone is standing by at the diner in Washington. She is out there trying to find out how people are coping.

Louise, good morning. What are they telling you out there?

LOUISE SCHIAVONE, CNN CORRESPONDENT: Good morning, Leon.

Well, it doesn't seem like anybody is too sickened here. People are enjoying their breakfast here at the diner here in Adams Morgan, which is a neighborhood in Washington D.C. We are talking to a few people who are invested in the stock market. A lot of people say they are going to ride it out. Other people have really been whacked by what's been happening on Wall Street.

Let's talk to Greg, who is a student, and he's invested.

Greg, thanks for joining us.

UNIDENTIFIED MALE: Thank you.

SCHIAVONE: What sort of investment have you had and what experience have you had?

UNIDENTIFIED MALE: Primarily 401(k) and mutual funds, mainly stocks, and that sort of thing.

SCHIAVONE: How is your mutual fund doing?

UNIDENTIFIED MALE: They're doing pretty poorly. I think the worst, to a large extent, is behind us.

SCHIAVONE: What will you do? Have you sold? Are you going to hang in there? Do you think your mutual funds will recover?

UNIDENTIFIED MALE: I think now is a bad time to sell, because the market is down. And for me, the money is in the long-term investment, so I'm just going to hang on to it for the future.

SCHIAVONE: So you're not worried; you're a young guy.

UNIDENTIFIED MALE: Yes, basically. I mean, I'm disappointed in the failures of the accounting system, but I figure that it will improve with time.

SCHIAVONE: Thank you, Greg.

We are going to talk to someone who has been a lawyer for quite some time, a professional woman. She's currently in the antiques business. And this is Sue.

Thanks for joining us, Sue.

Sue, what is your strategy for investing?

UNIDENTIFIED FEMALE: I invested fairly conservatively, and I have at least 40 percent in bonds and T-notes, which means I'm not nearly as worried about that. I just got dividend checks the other day, and so my stocks, while they've gone down, haven't gone down as much. My father, on the other hand, who is 86, decided he wanted to be aggressive, and now his stocks have really gone down, and I think that's a problem.

I am going to hold on. I think I have got basically sound companies, and I think they will go up again.

SCHIAVONE: So I guess you're strategy, your personal strategy, was to diversify.

UNIDENTIFIED FEMALE: Correct. And right now, it is to hold on. I think it's silly to dump stocks, unless you've total losers like WorldCom, say.

SCHIAVONE: What about your dad? How has that affected his lifestyle?

UNIDENTIFIED FEMALE: Well, he just worries a lot, that's all. I mean, I spoke with him last night, and he was, again worried -- he was calling his broker, and saying, how much have these things gone down? I'm just not going to look at my stocks for a while. And I think they are going back up. SCHIAVONE: Thanks very much, Sue. Here in the Washington area, according to Scarborough Research, about 71 percent of the population is invested, and half of that is mutual funds. Another 40 percent in individual stocks. Another 20 percent in bonds, 11 percent in real estate. So people do have investments and are watching what's happening on wall Street. Of course everybody will be watching today -- Leon.

HARRIS: No doubt about that. Louise Schiavone, thanks much. We'll talk with you later.

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