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CNN Live Sunday

Investors Hope for Better Week on Wall Street

Aired September 23, 2001 - 18:51   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.
DONNA KELLEY, CNN ANCHOR: Investors are hoping that Monday will be the beginning of a much better week on Wall Street. Heavy losses last week left the markets absolutely reeling. Blue chip stocks plunged to their worst weekly loss since the depression, and Allan Chernoff is joining us now, for a preview of what we can expect.

Allan, hi. The president even said that the economy has had a shock. Certainly the market had a shock last week. Any idea at all what we might expect for tomorrow?

ALLAN CHERNOFF, CNN CORRESPONDENT: Donna, of course we can never be certain about this, but the buzz over the weekend is that the market is due for at least a little bit of a bounceback. A lot of the market newsletters being sent out over the weekend talking about the dramatic overselling that we had last week, and even one major national publication, "Barron's" magazine, arguing that it is time to buy stocks, because they are very much undervalued. Now whether that actually happens, we'll have to see at the opening bell, 9:30 Eastern time. We'll also have to see, if we do get a bounce, whether in fact, it can be sustained.

KELLEY: What might determine that, Allan? What might show us that it could be a sustained rebound, and other people who have tossed around earlier, this might be a good buying opportunity.

CHERNOFF: Well, Donna, for the market to really have a sustained rebound, you'd have to have some good news coming out of corporate America. We have not had very much of that. General Electric did deliver a little bit of good news last week on Friday, saying it still expected double-digit profit growth, and that certainly could help out the market if we get a few more announcements like that, but much more likely, we are going to see corporations saying they expect profits to be hurt very much by this tragedy.

Also, keep in mind, some of these forecasts talking about the market being undervalued, they rely on estimates of what the Standard and Poor's 500 companies are going to be earning. The truth is, nobody really knows right now what those companies will be earning. Always difficult to make that forecast, but now more difficult than ever. So a lot of uncertainty over Wall Street now.

KELLEY: You know, there was some talk earlier in the week, too, about being patriotic and getting in there and buying stocks, and I also heard about War Bonds, but I haven't heard much more about the War Bonds. Anything more about that, that you've heard?

CHERNOFF: Not yet, about the war bonds. That really hasn't been talked about all that much on Wall Street at all. Doesn't appear to be needed just yet. In terns of the patriotism to go in and buy stocks, there was a lot of talk about that last weekend. Some people did it on Monday, and you saw what happened.

The simple fact is, that the institutional money managers -- the people who run those big mutual funds, the big penchant funds that so many people have their money in, those are really the people who determine what's going to be happening in the stock market. It's a wonderful thing if you and I buy a piece of stock here and there, but that simply is not enough to drive the market dramatically higher.

KELLEY: And certainly, dramatically, for the airlines, now the $15 billion bail-out to try and help them. What happened to their stocks this last week, and how does it look for them? And will that bail-out help investors to feel confident to get back into stock with them?

CHERNOFF: Well, Donna, those companies simply have been devastated. The stocks, as an entire group lost half of their value last week. Even before this tragedy, the airlines were expecting to lose $2.5 billion this year. Now, of course, as you know, the planes are flying virtually empty. My uncle flew from Los Angeles to Boston a couple of days ago. He said there were 14 people on a Boeing 767 plane. Just one example of what's happened in the skies right now. That is devastating the airlines and the talk on Wall Street is that even with this bail-out, the airlines still could face some dramatic troubles. Bankruptcy is yes, still a possibility.

KELLEY: All right. From CNN Financial News, Allan Chernoff. Thanks very much.

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