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American Morning

Mutual Fund Investors Pulling Out

Aired July 23, 2002 - 07:36   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: We're going to turn back to one of the more daunting things going on in a lot of our lives, and that is the performance of the stock market. Economists are debating whether stocks are being dragged down by corporate scandals or whether it's possible that investors are ahead of the curve and the economy could stall.

So what's this all mean, Andy Serwer?

ANDY SERWER, "FORTUNE" MAGAZINE: Well, it means we had another bone jarring drop yesterday, Paula. And you know things are bad when the market's only down 234 points.

ZAHN: Boy.

SERWER: Only down 2.9 percent. So investors are really going to be keeping their fingers crossed, as you would say.

ZAHN: But the performance of yesterday's market...

SERWER: Look at that.

ZAHN: ... isn't that big of a surprise. Historically what you've had a really bad day on Friday, isn't this what happens on Monday?

SERWER: Well, you know, actually there's a debate now about whether the Mondays after Fridays are so bad. You know, the statisticians are going nuts on this thing. We were anticipating a very bad day. We were all over the place. A lot of weakness late in the afternoons now. This has to do with futures trading, computer selling.

The bottom line is the markets are still very nervous. There's a phrase people are using on Wall Street, RIO, ride it out. But it's getting very, very hard for ordinary investors to do that. We're seeing a lot of selling by mutual fund investors. Brokers are getting flooded with calls now to sell stock. We were looking for some encouraging signs from President Bush yesterday, some encouraging language. We sort of got that. Let's listen in to what the president had to say yesterday.

(BEGIN VIDEO CLIP) GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm not a stock broker. I'm not a stock picker. My attitude to Wall Street is they'll buy you or sell you depending upon if it's in their interests. And, you know, that's just -- when I was, when I used to watch the stocks I was in Midland, Texas, somewhat skeptical about what was taking place on the floors of these exchanges.

(END VIDEO CLIP)

SERWER: Well, that played yesterday on Wall Street and some wags told me, Well, we were kind of skeptical about what you were doing at Harken Energy back in Midland, Texas, coming right back at him.

ZAHN: Ooh.

SERWER: Anyway, again, very difficult for the president to move the market one way or another.

The good sign today, Paula, is that futures are up. We know how unreliable that is. But the overseas markets actually were kind of strong in Asia and in Europe. So we're hoping it will carry over. At some point the selling has to run its course.

ZAHN: And the buying has to begin.

SERWER: The buying has to begin.

ZAHN: And we've been hearing some of those bulls say there are some buys out there.

SERWER: Yes, and we'll have to see about that. You know, one area that's particularly weak today or has been weak over the past couple of days, financial stocks, Citicorp, J.P. Morgan, stories tying those banks to Enron. You can see here some of the performance of those big banks really not doing well, the brokerage stocks. Not surprising because their fortunes are tied to the financial markets. But in particular some of these new stories about Enron are troubling for those companies.

So, we'll be checking...

ZAHN: Troubling for those companies and troubling for a lot of investors out there.

SERWER: Yes, for investors around those stocks. So we'll be following that.

ZAHN: Thanks, Andy.

SERWER: OK.

ZAHN: See you in a little bit.

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