Transcripts

The Markets' Mixed Messages & Movements Continue to Baffle

PAUL KANGAS: The expectation of good news out of Apple today helped drive stocks higher on Wall Street. After Friday's 367-point slide, the Dow closed with a gain of nearly 45 points. But as Scott Gurvey reports, the market's direction in the near term is far from clear.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Stocks bounced back from five straight losing days as buyers turned bullish on technology shares ahead of several tech sector earnings reports. Jim Awad of WP Stewart Asset Management says with expectations low, earnings reports are showing strength.

JAMES AWAD, CHAIRMAN, W.P. STEWART ASSET MANAGEMENT: I think stocks ought to be OK here because on balance the economy continues to grow. Overseas economies continue to grow at a faster rate than ours and U.S. corporations are in terrific shape. A little bit of revenue growth leads to respectful profit growth. So I think the profit picture is going to be fine. The valuation picture is fine. The risks are credit events or a sustained and dramatic decline in the dollar from current levels.

GURVEY: Investors also did some bargain hunting among the badly beaten financials today. Reacting to comments by Fed Governor Randal Kroszner, which were taken to mean more help may be on the way, Kroszner saying the central bank will quote act as needed to encourage growth. Wall Street has been calling for the Fed to do more to help the banking sector recover from the sub-prime mortgage collapse. Many analysts think there will be a testing of lows before the market makes a significant move up again. Michael Metz of Oppenheimer says investors need to be selective.

MICHAEL METZ, CHIEF INVESTMENT STRATEGIST, OPPENHEIMER & CO.: I think it's still a very fragmented market. I don't see much chance for a strong recovery by either the financial area or discretionary consumption spending area. But I do think that the big blue chips that are really dependent on foreign growth will do relatively well and frankly I'd buy the energy stocks on this dip.

GURVEY: The Federal Reserve meets next Tuesday and Wednesday to review interest rate policy. The bond market currently indicates a probability of 86 percent that the central bank will cut rates by a quarter of a point. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.