Marketplace: News Archives

Friday, September 29th, 2000
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It's Friday, the 29th of September. I'm David Brancaccio.

For a vivid illustration of just how volatile the stock market has become, go no further than the market in the last two days. On Thursday, the Nasdaq Composite index rose 3.33 percent as money went flowing into technology companies. Then today, the Nasdaq goes the other way, a drop of 105 points or 2.8 percent. Much of the volatility has to do with the inability of investors to get a handle on the direction of corporate profits and it doesn't help when a closely watched computer company pipes up one day and warns that it profits won't come anywhere near expectations. Marketplace's Michelle Brier reports.

Brier: "It's been a bad 24-hours for apple. Late Thursday, the maker of iMac and Macintosh computers warned its fourth quarter profits would be off by about 30 percent. A massive sell off of the company's stock followed and by mid-day apple shares had fallen 50 percent, wiping out 13 months of solid gains. But one rotten day shouldn't spoil apple for investors, says Matthew Rothenberg at Zdnet."

Rothenberg: "I don't think it's a mortal wound to apple. i thinks it's a wider reflection of the PC market. The company will still turn a profit and I don't see how this is a terminal case for apple."

Brier: "Apple supporters found some solace, saying the fact that other computer stocks tanked along with apple means apple is no longer a second-tier computer maker."

Rothenberg: "I would say in kind of a perverse way that is true. people are keeping their eyes on apple."

Brier: "There was a bit of good news for apple today - after years of rumors, the company says it will finally open its own stores to sell Macintosh products. In New York I'm Michelle Brier for Marketplace."

For those travelers put out by all the United Airlines flight cancellations this summer due in part to overcrowded airports and a pilots contract dispute, revenge is a dish best eaten cold. That cold dish is coming in the form of a profit warning from United that knocked the value of the airline's parent corporation down 4.5 percent today. From WBEZ in Chicago, Jody Becker reports.

Becker: "Didn't make it to Disney World the day you expected to over the summer? It won't come as much of a surprise then that United Airlines' parent UAL is warning stockholders that they'll posting a third quarter loss today, which they expect to follow up with further losses in the fourth. Hundreds of delayed flights, all time high salaries written into pilots' contracts and the rising cost of jet fuel sent UAL shares down about six percent in early trading. And now word from UAL chairman and CEO James Goodwin that last month's tentative settlement with pilots will result in higher-than-expected costs in other labor contracts. This time last year United's quarterly earnings were $3.75 cents a share, but Wall Street analysts predict all the turbulence that hit United this year means the airline may not even peak at the $0.97 a share forecasted for this years third and fourth quarters. For Marketplace, I'm Jody Becker in Chicago."

There haven't been this many "gremlins" on the road since American Motors Corporation stopped making those goofy cars. It turns out that new cars are turning up a startling number of their own gremlins--defects that have lead to a record number of recalls during the last model year. Bob Moon reports.

Moon: "A loose nut that anchors the steering wheel, center console latches that can pop open in a crash and, of course, tires that can lose their tread. Those are among a recent surge in automotive recalls causing some experts to question whether car quality is slipping. Government figures show a record 19.9 million vehicles were recalled last year - more than the total number sold. Two million vehicles were recalled this July alone. This may be one reason: There are simply more cars and trucks on the road than ever before - close to 210 million last year. Another explanation: the Internet. Yes, the Internet. With so many consumers comparing notes, it's become harder for carmakers to quietly fix things case-by-case. Some dealers say quality is better overall these days, but too many little things are slipping by. The Detroit News has a North Carolina Ford dealer recounting how he recently had to explain to a potential buyer why a pickup was labeled F-350 on one side and F-550 on the other; the dealer saying a customer looks at that kind of thing and wonders what's wrong with the rest of the truck. I'm Bob Moon for Marketplace."

And that's the top of our news. The Dow today closed down 172 points or 1.6 percent. The index lost five percent this month, but it was a worse September for the Nasdaq. More on that shortly with the Texas stock broker. Details when we do the numbers.