Return to Transcripts main page
CNN Saturday Morning News
Wall Street Ends Unpleasant Week
Aired April 07, 2001 - 09:17 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.
KYRA PHILLIPS, CNN ANCHOR: Wall Street ends another unhappy week. There was more bad news even before U.S. markets opened yesterday. The new government figures showed a rise in the unemployment rate, and that disturbed investors. At yesterday's closing bell, the Dow was down 126 points, Nasdaq was down 64, and the Standard and Poor's in -- 500 index, the S&P 500 index, slipped 23 points.
Now, in closing out the first quarter, the Dow posted its biggest percentage loss of any first quarter since 1978, down 8.4 percent. The S&P 500 showed its worst decline since 1987, down 12.1 percent for the quarter. Nasdaq sank 25 point -- or 25.5 percent in the first quarter.
So where do we go from here? Our guest is stock market analyst Hans Kashyap. He's president and founder of Analytics Research Corporation.
Hans, good to see you this morning.
HANS KASHYAP, STOCK MARKET ANALYST: Good to see you, Kyra.
PHILLIPS: All right, well, we had one good day last week, all right? We had one good rally. What do you think that's the result of?
KASHYAP: Well, I think it was more of a sigh of relief. The market had been beaten up, the Nasdaq was oversold, and the Dow was technically oversold. And there wasn't any good news on the horizon, until Dell came out with good earnings, and people were just itching to buy in. And that's why we saw that brief rally on Thursday.
PHILLIPS: You think we'll see some more positive earnings like that and some more rallies? Or is this sort of just a unique case, you think, with Dell?
KASHYAP: Well, one of the problems in the bear market -- and we're sort of in a bear market, certainly on the Nasdaq and the S&P, and we sort of briefly dipped into that on the Dow -- is that bear market rallies just don't last. There's no follow-through the next day. And that's what we saw on Thursday.
Having said that, Monday is going to be an up day. We believe that the Dow is going to test the 10000 level, which is psychological, and if we can push and close above 10000 on the Dow, then we've got another 300 to 600 points to the upside. But short term, I think we're in a trading range with a positive bias. Monday should be an up day.
But a lot has to happen before a firm bottom is reached. I think we've seen a bottom, but perhaps not the bottom for this bear.
PHILLIPS: All right, well, I've been reading, there's so much money sitting on the sidelines. People are taking, you know, their money out of investments and putting them into cash accounts. I even read numbers as big as $2 trillion. Is that true? And when do you think this money is going to go back into the markets?
KASHYAP: Well, that's one of the things that's nice, that there is so much money in the mutual funds, and they're keeping the powder dry. And that is going to be committed, but I -- until we see more of the stalwart companies coming out with better earnings or preannouncements, like Dell and Alcoa, I think the market's still extremely nervous.
For now, we -- because of the bloodbath that the Nasdaq has seen, and even the S&P was down 33 percent, you're -- people are hesitant. And certainly the blue chips are the place to be, because that -- the Dow has been the strongest of the three indexes.
You need to see more consistency in terms of more companies coming out with good earnings. And so far, we just haven't seen that. There's just been red ink and layoffs.
PHILLIPS: Yes, it's true. Hans, before we let you go, I've got to ask you about Japan. What the heck is happening? And do you see that affecting us much more?
KASHYAP: Well, you know, it's interesting, a lot of people think that just the Fed cutting rates is the panacea to all the stock market woes, and historically, certainly, whenever the Fed has cut rates several times, three or four times, the market is indeed 20 percent higher six months or a year down the road. But it's not necessarily always the case like that.
And Japan is a case in example. Their market was down to 16-year lows, and yet the Bank of Japan has cut rates there down to bare bones. It's zero percent right now. And yet the Nikkei is down to new lows.
So having seen that, what we really do need is the fiscal stimulus here with the tax cut alongside monetary policy. And hopefully we can ward off the worst for the market and recover right from a 20 to 25 percent correction, and then head back up.
But I wouldn't expect to see new highs at this point. It's more -- it's going to be a grinding type of market.
PHILLIPS: Hans Kashyap, Analytics Research Corporation, thank you, sir.
KASHYAP: My pleasure.
PHILLIPS: All right.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
