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Markets Stage Remarkable Recovery

Aired July 15, 2002 - 15:59   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.
LOU DOBBS, CNN ANCHOR: Good afternoon, everyone. I'm Lou Dobbs in New York City. "INSIDE POLITICS" is coming right up here on CNN, but let's take a look first at today's volatile session on Wall Street. What began today as a brutal sell-off is ending with what is a remarkable recovery. The Dow Jones Industrials tumbling more than 400 points at the low today before drastically narrowing that loss.

The Dow Jones Industrials have fallen for the past six sessions, and in this final hour of trading, a remarkable recovery, as you see there, is under way. Volume today extremely heavy. Declining issues swamping advancers by a ratio of just about five to one on the New York Stock Exchange.

The selling hardly limited, however, to the Big Board. Heavy selling as well on the Nasdaq. The S&P 500 below 900 for the first time in five years. But by the session end -- and the session has ended -- there is the balcony and the closing bell. Art Harris, a retiring officer of the New York Stock Exchange, by the way, is ringing the closing bell.

Let's go to Rhonda Schaffler on the floor of the exchange now. Quite a day, Rhonda.

RHONDA SCHAFFLER, CNN FINANCIAL NEWS CORRESPONDENT: Indeed, Lou. You rarely see comebacks like this, and you rarely see sell-offs like we saw around mid-session today. At this point, though, people are catching their breath and preparing to come back for more of this tomorrow.

We have a lot of stocks making news today. Let's take look at some of the movers, including the two most actively traded stocks here. We actually had a major merger announcement involving some pharmaceutical companies, that would be Pfizer and the Pharmacia. Basically, Pfizer moving to acquire Pharmacia. If this deal is approved, this would be the biggest drug company in the world; revenues of more than $48 billion.

Home Depot helped lead the comeback for the Dow Jones Industrial Average. Home Depot announcing a stock buy-back. It also says it's on track to meet its earnings numbers.

Duke Energy recovered from some steeper losses earlier in the session. Some brokerage downgrades, concerns about this particular company and investigations into so-called round trip trades, that's something we talked about quite a bit with these utility companies.

And Coca-Cola, another standout Dow gainer. This company saying it is going to start expensing the cost of all stock options the company grants to its employees. This is, of course, something that's being widely discussed on both Wall Street and Washington, and Coke stock responding favorably to that news.

Let's good to the Nasdaq. Quite a comeback there as well. Philippa Holland tracks it for us -- Philippa.

PHILIPPA HOLLAND, CNN FINANCIAL NEWS CORRESPONDENT: Surely was a come back, Rhonda. Take a look at this. We are going to close in positive territory; up 8.60 at 1,382; 1.9 billion shares traded here at the Nasdaq. And really a remarkable session. We were trading as low as 4 percent at one point, and now to finish in positive territory. Really saw some strength come back.

Our advancers, 13, to 21 decliners. Taking a look at our intraday chart. At one point, we were as low as 1,315 here at the Nasdaq. Our high for the day was 13 -- well, the finishing point, 1,382; 1.9 billion shares traded here at the Nasdaq.

Other movers, take a look at as we see what some of the stocks did today. Dell Computer was one of them. Merrill Lynch today issued a note saying investors should continue to sell into any strengthened tech shares, but they do think that they are a fan of Dell Computer, saying it was an exception to this strategy. Dell was even lower, even though it was such a good note for Dell, and the end we were actually seeing some buying come into Dell Computer.

Sun Microsystems also up on the day, up 42 cents. The most active list here at Nasdaq. Its fourth quarter report is expected on Thursday. Oracle managed to gain 47 cents a share. Software stocks as a group lost ground after Salomon Smith Barney issued a report saying some of the estimates for the second half are too high. Even that negativity didn't weigh on Oracle. By the closing bell, managed to finish to the up side.

Microsoft lost 12 cents, at 51.74. Intel managed a gain of $1.13, finishing the day at 19.12 after Salomon Smith Barney's John Joseph said the seasonal picture is looking much better for the company. Things are looking much better for Nasdaq investors, as well as we see a remarkable turnaround in these markets -- Lou.

DOBBS: Philippa, thank you very much. A quick check on the markets. Please join us tonight for "MONEYLINE," 6:00 p.m. Eastern. Among my guests tonight, the chairman of the Securities and Exchange Commission, Harvey Pitt. We'll be discussing what more needs to be done to stop corporate corruption, as some are calling for Harvey Pitt's resignation. I'll also be joined by Steve Galbraith (ph), chief investment officer at Morgan Stanley. We'll be talking about today's remarkably volatile session. Now let's go to Judy Woodruff in Washington for "INSIDE POLITICS" -- Judy.

JUDY WOODRUFF, CNN ANCHOR: And Lou, before I let you go, I am going to ask you to put some of this in a policy context. What is it that you would say government policy makers have or haven't done to contribute to this kind of volatility in the markets?

DOBBS: Well, this volatility is first and foremost a sign of great uncertainty on the part of investors about the integrity of corporate financial reporting, about the integrity of the markets themselves and the reliability of financial accounting and reporting.

The policy makers have got to address the basic, in my judgment, the basic foundation of all that we are watching now in terms of excessive CEO compensation, outright greed and the misstatements of financial results. And that is to reign in those stock openings, to expense them, to put them out in front of the investors, straight- forwardly on the income statement.

And as you know, Senator Carl Levin, whom I understand you will be talking with later, advancing that effort, as Senator John McCain as well.

WOODRUFF: And Lou, we are learning late in the day that Senator Levin's plan to deal with those stock options isn't even going to make it onto the floor of the Senate because of internal opposition there. Is this the kind of thing that is going to have a direct effect on the markets, do you think?

DOBBS: I believe that it will certainly have a direct effect on the environment, the atmosphere, if you will. This, as you know, is the second effort. The first by Senator McCain and Levin to outright expense options. That amendment put forward to Senator Paul Sarbanes' legislation last week. Now with this news today that Senator Tom Daschle and the leadership of the Senate, the Democrats, will not be advancing that cause; certainly doing nothing to enhance investor confidence in either political party right now, because there is certainly a broad understanding amongst investors that this is an issue -- excessive CEO compensation, and the inability and the willingness of corporate America to step forward.

Now, we are putting this on the Congress and the White House right now, Judy, but let's be clear. The business roundtable, the U.S. Chamber Commerce, the Business Council, all of the big business associations in corporate America themselves bear a great responsibility here. There is very precious little, very little, precious little leadership coming from corporate America itself and the exchanges. And that's unfortunate.

WOODRUFF: All right. Lou Dobbs, and I know that you will be bringing us the very latest at 6:00 Eastern on "MONEYLINE." Thank you, Lou.

DOBBS: Yes, ma'am. Thanks, Judy.

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