Transcripts

Wall Street's Roller Coaster Ride Ends The Week Down

SUSIE GHARIB: More losses on Wall Street today, as the Dow tumbled 171 points and the NASDAQ lost 36. Today's sell-off capped off a tumultuous week: an emergency rate cut by the Federal Reserve; massive price swings in U.S. financial markets; and a White House rescue plan to stimulate the economy. Looking ahead, next week could also be volatile. Here's Suzanne Pratt with a preview of what to expect.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: As weeks go on Wall Street, this four-day one seemed exceedingly long. Next week, however, may be no better for investors. Not only does the Federal Reserve meet to discuss monetary policy on Tuesday and Wednesday, but Friday the government will release the highly anticipated monthly employment report. Experts believe those events, in addition to other economic data, will help determine the course of trading for next week and beyond. U.S. financial markets widely expect the Fed to cut rates further at next week's gathering. UBS strategist David Bianco says if policymakers instead hold rates steady, watch out.

DAVID BIANCO, CHIEF US STRATEGIST, UBS INVESTMENT RESEARCH: Yes, we do believe the equity market expects the Fed to cut and equity investors will be disappointed if the Fed doesn't. The economy is slowing and we believe that inflation risks should not be the predominant concern.

PRATT: But, Euro capital markets' Peter Schiff says it makes no difference what the Fed does next week, as U.S. stocks are already in a bear market.

PETER SCHIFF, PRESIDENT, EURO PACIFIC CAPITAL: I think the market is going down regardless, whether it goes down right away or not especially again if you measure it in other currencies or against gold, the market is going to decline.

PRATT: Schiff says that's because the U.S. economy is already in a recession. He expects Friday's data on the state of the labor market to support his pessimistic view. Wall Street economists are forecasting that a paltry 63,000 jobs were added to payrolls this month. The unemployment rate is expected to hold steady at 5 percent. But, other market pros are far more positive on stocks when looking deeper into the future. They point to attractive valuations and earnings forecasts from corporate America that are still fairly resilient.

BIANCO: I expect the S&P 500 to appreciate about 20 percent from these levels by 2008 year end. I would not rule out further turbulence, but I do think we've seen some of the worse in these markets at the start of this year.

PRATT: Going into next week, experts say investors' nerves are rattled. Even if fundamentals perk up a bit in the coming days, it will be tough to change investor sentiment. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.