Transcripts

The Dow Dives Another 200+ Points

SUSIE GHARIB: The selling continued on Wall Street today with the Dow tumbling 207 points. The blue chip average has now lost almost a thousand points since it hit an all-time high of 14,000 three and a half weeks ago. Behind today's sell-off -- problems at a company called Sentinel Management Group, which handles short-term cash for commodities traders and hedge funds. This morning, Sentinel sent a letter to clients, saying it couldn't meet redemptions without selling securities at a loss. The letter said Sentinel had, quote, contacted the Commodities Futures Trading Commission and asked for their permission to halt redemptions until we can honor them in an orderly fashion, end quote.

But the CFTC told NIGHTLY BUSINESS REPORT that Sentinel did not ask it to do that and the agency can't grant or deny permission because it doesn't get involved in day-to-day business matters. Then, late today, Reuters reported that U.S. futures exchanges are trying to get other companies to take over some of Sentinel's accounts. That could provide an infusion of cash and credit and let Sentinel's clients take their money out.

Well, another drag on the Dow today, the slumping stock price of Wal- Mart. The company reported lower than expected earnings in its fiscal second quarter. Excluding charges, the world's largest retailer earned $0.72 a share, That was $0.04 less than what analysts were expecting. It also lowered its fiscal year earnings forecast by $0.10 to a range of $3.05 to $3.13 a share. Wal-Mart says a sluggish economy, high energy prices and tight credit are all eating into its bottom line. Robert Buchanan, senior retail analyst at AG Edwards, says retailers as a group are facing tough economic head winds.

ROBERT BUCHANAN, SENIOR RETAIL ANALYST, AG EDWARDS: I think the weakness is clearly more widespread now than just Wal-Mart. A number of department stores are losing share. Many of the people on the interior of the mall are losing share. So Target will have a good number when it reports earnings, but a lot of other retailers won't. So, Wal-Mart is by no means alone struggling during what we think is going to continue to be an eroding environment for consumer spending.

GHARIB: Meanwhile, Wal-Mart also agreed today to pay almost $4 million to some 50,000 current and former employees in California. The state's labor commissioner says those employees were underpaid overtime and other wages.