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American Morning

What to Look for in the Markets

Aired October 01, 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 big question is, after Friday with the Dow ending up 166 points, and the Nasdaq closing up 38 points; what do you have in store for yourselves today?

Andy Serwer of "Fortune" magazine is the man we go to for some insights on that.

Basically the market recapped, what? About half of what it had lost the previous week?

ANDY SERWER, FORTUNE MAGAZINE: But first of all, I want to compliment your timing of that bell.

ZAHN: Did you like -- that is the closest I have gotten to it in two weeks. Thank you Andy. I needed that.

SERWER: Yes. Anyway, that's right, Paula. The -- it's sort of a glass is half full, glass is half empty sentiment on the sentiment on Wall Street right now. For the week, the Dow was up about 7 percent, Nasdaq up about 5 percent. That's the good news.

The bad news is, for the quarter just ended, the Dow was down 15 percent; and get this, the Nasdaq was down 30 percent.

ZAHN: Ouch!

SERWER: And anyone who owns tech stocks knows how that feels. So, that's a huge drop. That is what Wall Street is walking into Monday morning right now. Markets in Japan were mixed. Europe was down. Futures were down. So, we're probably looking at some weakness here at the open.

But, the big news is the Federal Reserve.

ZAHN: All right. Let's talk about what is expected to happen tomorrow?

You're going to get a rate cut?

SERWER: We're going to get a rate cut, Paula, I think that is in the card.

ZAHN: How much? SERWER: That's right. The only question now is: A quarter point, a half a point? A lot of people are anticipating a half point cut. I think if we get a quarter point cut, the market will tank. I think the market may go down even with a half point cut because it is so anticipated.

This would be the ninth rate cut this year, and it would take us, the Fed Fund's Rate, down below 3 percent for the first time since 1963...

ZAHN: You're kidding?

SERWER: ... just to give you an idea of how historical this is.

ZAHN: Now there's some other important numbers coming out as well. On Friday you have the unemployment numbers coming out, and John King and I were just discussing that. I guess the administration is expecting numbers that would bring us to a four year high.

SERWER: Yes.

ZAHN: What percentage of unemployment are we talking about?

SERWER: I think that's around 5 percent. The 5 percent threshold, which people would be survived. If you had told them about 18 months ago we would be hitting that, they would be surprised.

Also today, we have the National Association of Purchasers Management Index number that comes out. And this arcane sounding index actually measures industrial activity. It's been down 13 months in a row, not a surprise there. But actually in August, it was surprisingly strong, sort of signaling perhaps we were coming out of the worst of it. But now in September it's got to be down again.

ZAHN: All right. Any advice for people out there who are really having trouble putting their seat belts on, and trying to be calm here?

SERWER: The only thing I can tell you is, if you were all doom and gloom and wanted to sell last week, look what you would have done. It you had woke up last Monday and sold, it would have been bad timing because you would have missed this rebound market timing. And in this type of environment, is especially tough. But, fasten your seat belt.

ZAHN: All right. That's the advice you pretty much have given us straight the last two weeks, because it is so darn volatile.

All right, thanks so much, Andy.

SERWER: Thanks, Paula.

ZAHN: We'll see you a little bit later on this morning.

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