Marketplace: News Archives

Friday, September 22, 2000
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It's Friday, the 22nd of September. David Brancaccio, here.

America has some oil waiting in tanks for an emergency. Today, the Clinton Administration decided that the prospect of cripplingly high heating-oil bills this winter is emergency enough to let some of that oil flow into the markets to help bring prices down. Energy Secretary Bill Richardson says 30 million barrels will be drawn from the stockpiles. The last time oil was released from government storage was during the 1991 Gulf war. Reporter Bob Moon continues our coverage.

Moon: "Just a day after the Clinton-Gore administration floated its oil reserve trial balloon on the Gore campaign trail, the nation's energy chief insisted President Clinton's decision isn't political, that he's only aiming to help Americans who otherwise face a home heating-oil crisis."

Richardson: "We believe that the home heating-oil stocks, the potential shortages, the potential disruptions justify this action. This is not a price issue. We're not trying to manipulate the price."

Moon: "But moments before Bill Richardson made his announcement, administration sources were telling The Associated Press that the move was an attempt to drive down oil prices. While some analysts warn the action might not increase heating-oil supplies if refineries can't meet demand, Richardson estimates it'll mean an extra three to five million barrels of heating-oil. And he rejects criticism that the reserves are supposed to be saved for a rainy day."

Richardson: "Well, we think this is a rainy day. We think that between now and winter, because of the low stocks of home heating-oil, we're in danger of a potential disruption."

Moon: "Richardson stresses the release is a swap, not a sale, and that oil companies will eventually replenish the stocks. He also says the government is prepared to take further action if necessary. I'm Bob Moon for Marketplace."

Today, Europe, Japan and the United States stepped in to prop up the Euro, the battered European single currency that once cost $1.17 each but had slumped to an ignominious 85 cents and change yesterday. It's the first big intervention on behalf of the Euro, in which central bankers will buy billions of Euros, an action that had been expected for months, but never came, until today. John Glenn, who heads Columbia University's Council for European Studies, says the catalyst for action now is likely the high price of oil, plus Denmark's impending vote on whether to link its currency to the Euro.

Glenn: "This is the week before the Danish referendum on the Euro and the latest polls that I've seen suggest that Euro skeptics are likely to win out. The European leaders are trying to do what they can to prevent this from happening because a Danish 'No' would certainly throw a wrench in the wheels of the integration project."

Americans may be happily buying cheap European cheeses and fine leather goods right now, and those industries are happily exporting them in large quantities. But the lower the Euro goes, the more imbalances become disruptive, imbalances that include U.S. goods that become too expensive to sell in Europe. The Euro bounced to 90 cents for a while, but ended trading in New York near 87 cents.

The Euro and high oil prices got a lot of the blame when Intel Corporation, the folks who put chips that form the brains of most of the world's computers, warned that its sales in the third quarter could disappoint. Three hundred eight million shares of Intel changed hands today, by far the most ever for a single company in a single day. Unfortunately for the Intel, most of that was selling as Marketplace's Michelle Brier reports.

Brier: "It all started with that warning from Intel. The chipmaker said its future revenues would be hurt by slowing demand for computers in Europe. 'Blame it on that troubled Euro', managers said. But the excuse sounded a lot like 'The dog ate my homework" to many investors, who dumped the company's shares as fast as they could."

Weissberg: "It was ugly in the morning."

Brier: "Ted Weissberg is president of Seaport Securities."

Weissberg: "Intel lost as much as 21 percent. Other tech stocks like Cisco and Dell and Microsoft were dragged down with it."

Brier: "It was a tough day in a tough month for technologies, says market analyst Larry Wachtel at Prudential Securities."

Wachtel: "We've been coming down through most of September. In fact, after rising 12 percent in August, the Nasdaq has fallen 12 percent in September. It's been a viscous ride for technologies."

Brier: "But what a difference six hours can make. By mid-day, stock prices were clawing their way back. Wachtel says investors had one of those rare periods of reason."

Wachtel: "Now, Intel is a bellwether and it was a shocker and Intel suffered and everybody dumped technology. Then they looked around and said, 'Wait a minute, why there should be a universal sell off based on one company? The problems of Intel are not necessarily the problems of a thousand other technology companies.' And what Wall Street has begun doing today is to sort out the winners and the losers."

Brier: "By the time the dust settled, the Dow was up, the Nasdaq was down but only a little and the big loser remained Intel. Wachtel says what the markets need most of all now, is to get out of September. But, that's still five trading days away. In New York, I'm Michelle Brier for Marketplace."

And a couple of follow ups to our coverage this week.

On Monday, we reported that a group opposed to bio-engineered food had issued a warning about some taco shells, saying tests showed the presence of genetically altered corn approved only in animal livestock and not for human consumption. Today, Phillip Morris' Kraft Foods unit recalled all taco shell products sold in grocery stores under the "Taco Bell" brand. Kraft said its own tests confirmed the problem. Matt Rand of the group Genetically Altered Food Alert is calling on the FDA to test all products containing what's called yellow corn #2.

Rand: "That's a massive undertaking for the FDA to do, but if this can get into one product, this could be in a number of products that contain yellow #2 corn."

While some experts are concerned some people may be allergic to the corn in question, it should be noted that there are no reports of any adverse effects from eating the Taco Bell shells nor has the scientific community reached a consensus that genetically-altered corn in general is dangerous.

And we broadcast a story on Wednesday about a Los Angeles bus driver who was in a personal and professional quandary about whether or not to speak out publicly at a union rally held outside transit headquarters yesterday. We promised to update you. Turns out the bus driver who wanted us to call her "Lupita" opted not to take the stage at the event in which over 2,000 bus drivers attended.

And that's the top of our news for Friday. Today the Dow Jones Industrial Average went up 81 points, or 0.7 percent. The Nasdaq declined 0.8 percent.