Marketplace: News Archives

Was it the mauling of a bear or the goring of a pacing bull? Today the stock market took another beating, with the Dow Jones industrial average falling 161 points, nearly 3 percent. More striking was the sorry scene on the NASDAQ market--which fell another three point nine percent today. The NASDAQ is now just eight points shy of erasing all its dramatic gains of the year. At the offices of Charles Schwab in New York, investors watched the ticker and were generally philosophical.

Person #1: "We're luckily long term investors, so it looks like some opportunities to buy here in a couple of days; so I'm going to look for a buy in a couple of days from now."

Person #2: "I've been coping today, pretty well under the circumstances. I lost quite a bit of money, but I'm still on my feet, thank God. It's happened before, so I'm a little attuned to it."

Unlike several of the other anxious market days this year, Wall Street is currently not worried about an overly strong economy. The worries are of a more back-to-basics variety: concern about the direction of corporate profits. By the end of the day, the Dow had lost almost seven and half percent from its high. But there's another way of looking at it: the Dow remains up four and half percent from the start of this year. So is this "The Correction," I asked Texas stock broker David Johnson.

Johnson: "Oh yeah, I think we can call it a correction. Actually, in any kind of bull move, any bull leg, you know, you usually assume a five to seven percent correction, not necessarily all in one day, you understand. And it can go ten percent, that's not abnormal and so far it's not abnormal, but bloody--yes, it's bloody."

Brancaccio: "You're calling it a bull leg, not a bear claw?"

Johnson: "Well, I don't think so, although that's the really interesting debate. I was amazed, coming back from vacation, to see the switch about 180 degrees from ten days ago. Everybody was worried about full employment and the implications: everybody making a lot of money, spending a lot of money, thereby feeding corporate profits--and the sense that they're better than we thought. Well, now we're thinking just the opposite; showed you the impact in ten days."

Brancaccio: "Certainly, and what's happened in that ten days is a lot of bad news coming in from a couple of very large high tech companies; news that's just spread..."

Johnson: "Well, some bad news, some bad news; I wouldn't call it a lot of bad news. I think the market was looking for an excuse to sell off. Motorola had weak numbers, Hewlett Packard says they're going to, United Health Care did. Chrysler had record profits, I guess nobody saw that, huh? Or nobody cared to look at that. So now, tomorrow, what really shapes up is the interesting day, Dave, you know. Tomorrow, we've got the profits from Intel and Texas Instruments, so that would put the nail on the coffin if they have bad numbers and say, well, all the high-techs are going to be bad. But then, you also have Caterpillar, Citicorp, Johnson & Johnson, Phillip Morris. We've got inflation at the retail level. Tomorrow should have been the day that today turned out to be."

Broker David Johnson via KERA in Dallas. For a sense of the broader market, the S&P; 500 fell two and a half percent today, with five times as many stocks down as up on the New York Stock Exchange. Some of this is being felt abroad: the key IPC index on the Mexican stock exchange fell three point one percent. More in a few minutes.

In Russia, it's out with the old and in with the -- old. Less than two weeks after his re-election victory, President Boris Yeltsin has sacked yet another hardliner from his administration--this time his hawkish chief of staff--and replaced him with a liberal reformer, former privatization chief Anatoli Chubais. Is it the liberals' revenge -- coming after years in the political wilderness? Eric Engleman reports from Moscow.

Engleman: "Anatoli Chubais is the reformer with nine lives. First, he was Russia's privatization czar, the deputy prime minister in charge of the economy. Then he was fired. It looked like Chubais might end up in the private sector as a high-paid consultant; instead, he has rejoined Yeltsin's team, again, as chief of staff. Chubais is seen as a champion for market reform and Western investment in general.

So since his election, Yeltsin has appointed a tough law-and-order security chief, Alexander Lebed; reconfirmed a middle-of-the-road reform prime minister, Viktor Chernomyrdin; and brought back a liberal face from the past, Anatoli Chubais. What does all this mean? Maybe Al Gore will find out tomorrow: that's when his appointment with Yeltsin was rescheduled. The two were supposed to meet today at Yeltsin's office. Now the first Westerner to see Yeltsin face to face in more than a month will do so at a health spa outside the capital.

In Moscow, I am Eric Engleman for Marketplace."

About 2,000 delegates of America's biggest labor union are meeting this week in Philadelphia. The Teamsters are debating financial and constitutional issues that could change how the union's organized at the national and local levels. And the union's preparing for its second-ever democratic election. Karen Brown reports.

Brown: "Philadelphia has been plastered this week with banners that read, "Teamsters: Fighting for our Future." What they don't say is that Teamsters are fighting each other for the future of the country's largest union. President Ron Carey was voted into office in 1991 on a throw-the-rascals-out platform, promising clean unions from top to bottom, and better contracts for the rank and file. Now Carey's running against Jimmy Hoffa, Jr--who's most famous for his legendary Teamster father, and who many say represents that "old guard" of the union. Hoffa supporters jeered throughout Carey's opening speech today."

Supporters: "We've got to fight these union busters with 21st century strategies, and that's what this union been doing for the past 4 and a half years."

Brown: "The campaign goes beyond simple personalities as delegates debate the union's role in a new era of labor. Hoffa supporters say Carey bankrupted the union through mismanagement and they want to beef up the union strike fund. Carey says he inherited a financial mess from his corrupt predecessors and he says the International's aggressive organizing efforts could take a big hit, if some of Hoffa's financial proposals are adopted. The candidates are also fighting over control of the local unions. Since Carey took office, the International has taken over 60 locals after charging their officials with corruption. The 1.4 million rank-and-file members will vote for their new president in November. In Philadelphia, this is Karen Brown for Marketplace."

Keep your eyes open CNN -- there's another rival in the 24-hour news game. Today NBC and software giant Microsoft launched their all-news cable channel. MSNBC started broadcasting today from a New York studio that one anchorwoman described as "a cross between a Seattle coffeehouse and the bridge of the Starship Enterprise." Question is: is this new channel the dawning of a new era in news--or a huge white elephant? Marketplace's Phillip Boroff reports:

Boroff: "Although ABC dropped its plans for a new 24 hour news network, MSNBC enters a crowded field. CNN, CNN Headline News, CNNfn, and Rupert Murdoch's forthcoming news network will be competing for a relatively small audience -- compared with the huge numbers that watch entertainment programming. NBC's trying to differentiate itself in two ways: with its anchors, such as Jane Pauley and Katie Couric, who are hosting shows on the cable network; and NBC's trumpeting its partnership with Microsoft -- and the companion website, offering news and discussion related to what's on the cable channel.

At a kickoff news conference at Rockefeller Canter, there were questions on various technical glitches this morning involving the web site -- and whether the world's largest software company can be an objective source of news, particularly about technology and news media. John Hockenberry, who will anchor his own talk show on the new network, says there's a potential conflict of interest. But if the programming is not truthful, no one will watch.

Hockenberry: "Everybody knows MSNBC comes with the Microsoft imprint. So if Bill Gates is the story, everyone's watching very closely. The pressure's on.

Boroff: " Another question, can the network make money? Initially, it will be in roughly a third of the homes competitor CNN is in. Scott Hildebrand, a consultant with Arthur D. Little, says it will be an uphill battle."

Hildebrand: " It took CNN three to five years to turn the corner and make money. I don't think MSNBC is going to do any faster."

Boroff: " Analysts say NBC and Microsoft are trying to position themselves in the future, if and when the Internet takes off as a news source. At the New York desk, I am Philip Boroff."

You should know that NBC is owned by General Electric, which is also a national underwriter of "Marketplace"

And that's the top of our news for Monday, July 15. As we said, the Dow Jones Industrial Average fell 161 points...more than 2 point nine percent. .

Cuban Cigar Smuggling
Despite a long-standing ban in this country on any trade with Cuba, some 5 or 6 million Cuban cigars find their way into this country each year. And as Reese Ehrlich reports, the premium stogies fetch as much as 25 dollars each.

Welfare and Lottery
New York State is collecting half the lottery winnings of people who are on welfare, under recent welfare reform regulations. Host David Brancaccio reports.

Buying Stocks on the Internet
Lots of people use the Internet to research investment opportunities; now, more and more people are also using the ëNet to find investors for their companies, or to buy stocks. Could this prove fatal for stockbrokers? Philip Boroff reports.

Bottom Line Blues
What happens when a down-sized executive decides to down-size her life and head west for new adventures? As the Bottom Line Blues series continues, commentator Sue Newman explains how she turned adversity into serenity.

Look Ahead
How do you know whether or not your health plan is good quality, and giving you what you pay for? A new "report card" is meant to grade hundreds of the nation's managed care providers on the quality of their services.