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CNN Live At Daybreak

America Recovers: New Information May Cause Drop in Stock Markets

Aired October 12, 2001 - 08:36   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: And welcome back. We're less than an hour away from the opening of the markets this morning.

Let's go to Amanda Lang right now, for a preview of what do you, all might expect if you're investors in the market. Good morning, Amanda.

AMANDA LANG, CNN FINANCIAL CORRESPONDENT: Good morning, Paula. I've had a nice couple of days here. The question, of course, is whether we're going to get a third run to the upside. Now, markets basically back where they stood before September 11th -- very nice symbolism as we head into this trading day.

Unfortunately, we are getting some economic data today that might work counter to our hopes for the markets, specifically retail sales. This is a much bigger loss than expected on September retail sales, excluding autos, which is destroying the number to the downside.

They fell 1.6 percent in September. That's double what analysts were looking for, and it gives a sign, which we knew from yesterday, from hearing from retailers, that certainly September sales were hurt, have been hurt, by the ongoing uncertainty in the economy, and by consumers.

And that really leaves us with the most important number. We're not going to get it till after the market opens at 10 a.m. It's the University of Michigan Sentiment number. It's for the recent weeks. In other words, it captures consumer sentiment since the terrorist attacks on U.S. soil.

And if it is negative, in other words, even more negative than is expected, that could hurt markets a great deal. The real overarching theme here, of course, continued uncertainty.

The trouble for the markets today, there appear to be willing buyers out there, Paula, but it's a Friday. And many people do not want to go home on this Friday of all Fridays, long in their positions. That means, even some of the bulls out there might be in a selling mood today. Paula.

ZAHN: All right, Amanda, just put this in a context for us, though. When those Michigan numbers come out a little bit later on this morning, they, at least I know the last round completely conflicted with the consumer confidence numbers the government was giving us.

LANG: Absolutely. And in fact, it's much more of an art than a science -- consumer confidence, consumer sentiment. How that translates into spending is a whole other story.

We know that the consumer is resilient. We heard George Bush saying last night, we want you to shop. People appear to be shopping. But the sentiment captures, of course, people's views. It is a poll. So it can be a distorted figure.

Normally, this University of Michigan number, incidentally, is a kind of an esoteric thing that we watch closely, and some market watchers watch closely. But people at home wouldn't really say, oh, it's 76 or it's 75. They don't even know what that means.

However, this is one of those days when we're trying to get a real gauge on the severity of the impact on consumers. And this is one of the first reads we're going to get. So it might actually upset markets a little bit.

On the other hand -- I'll toss out a bit of optimism -- we did hear from retailers yesterday, and some of their September sales figures were terrible -- 13 percent same-store sales declines at many major retailers in the U.S.

But the stocks weren't that badly hurt, and the stock market, of course, staged a very nice rally. So, it's entirely possible, Paula, that the bad news will be ignored again today. We can hope.

ZAHN: Well, we will be watching this all alongside you today. Thank you, Amanda. See you a little bit later on this morning.

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