Marketplace: News Archives

Thursday, November 30, 2000
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It's Thursday, November 30, 2000. I'm David Brancaccio.

It doesn't take years of Jungian analysis to figure out what disturbed investors in computer companies today. It was one of the biggest retail computer companies in the country coming out and saying its sales didn't go well over the Thanksgiving weekend. "Considerably weaker than expected" is the actual phrase Gateway used. Some analysts are criticizing Gateway for reading too much into one weekend's worth of data, but the company's CEO is sticking by the warning, saying a slow economy to blame. Gateway shares closed down more than 35 percent. The Nasdaq Composite at one point today was trading down 6.8 percent, but at the end the loss was 4 percent, 109 points. The Dow at one point today was down 336 points, but it ended with a loss of 214 or two percent. Bob Moon has the story.

Moon: "Frustration with tech stocks turned to outright fear today, on the heels of Gateway's profit warning. Not only did it hit other computer and related high-tech stocks, it unleashed a market wave of selling. Mark Sheldon is chief market strategist at Spencer Clarke:"

Sheldon: "There's certainly a lot of carnage out there. It's a scary market to be perfectly honest. The average NASDAQ stock today is down 52 percent from its high earlier this year."

Moon: "But amid distant rumblings from some analysts of possible hard landings, or even a recession, it's important to note that there were rays of hope glinting through the storm clouds:"

Sheldon: "We are relatively optimistic. I'd say generally optimistic about the next 12 to 18 months. We think things'll get better and stabilize over the near term. We think we're near a bottom. Some of the catalists to help the market are the fact that there's about four trillion dollars in savings and money market mutual funds on the sidelines, cash on the sidelines, waiting to come in. We think the Fed is going to go to a neutral by December and possibly cut rates in the first part of next year, and we think the election will get solved by early December. So these are some of the things which should help alleviate market concerns."

Moon: "But if the clouds do clear, the fair weather may come too late for those hit by margin calls. These are the investors who can't wait out the market because they're forced to pay back the loans they made to buy stock in the first place. Dallas stockbroker and business analyst David Johnson says that the sell-off fed on itself today:"

Johnson: "People have been losing money and losing it rapidly, and they have to pay the piper at some point. At some point, you have to sell the stock, and pay back the money you borrowed."

Moon: "Johnson worries that once a sell-off like this starts, it's difficult to stop. However, the Fed and a resolution of the presidential stalemate could help the dust to settle. Johnson says investors need some good news, and they need it soon:"

Johnson: "There's nothing wrong with a slowdown in the economy. The economy coming to an abrupt halt - now that's a problem."

Moon: "I'm Bob Moon for Marketplace."

At an investment meeting in Scottsdale, Arizona today, analysts grilled Gateway CEO Jeffrey Weitzen, some asking him if he deliberately lowered expectations so that the stock would pop when things don't turn out so bad in the long run. Weitzen denies that any games are being played here, but acknowledges that Gateway's profit warning -issued after the market closed yesterday - is, quote, "worst case."

Presidential Election Day Twenty-Four was punctuated by OJ's White Bronco-type TV live shots of a Ryder rental truck carrying ballots from Miami-Dade County on the slow drive to Florida's capital today. Hopefully, more substance will emerge tomorrow when the U.S. Supreme Court hears arguments in the case of the Florida recount. The court seats 400 spectators, and you can believe that getting one of those spaces is the hottest ticket in D.C. since Michael Jackson played RFK stadium in 1985. Marketplace's Stephen Henn reports.

Henn: "Veit Dihn is a law professor at Georgetown University – a former Supreme Court Clerk - and has filed and friend of the court brief in tomorrow's case in supporting Bush."

Dihn: "I will not be able to watch the oral argument tomorrow and just like any other member of the bar I would need to stand in line to even get access to the room."

Henn: "And after the big-wigs – friends and family of the justices and other important people are taken care of there are only about 75 seats for members of the Supreme Court's bar and just fifty for the general public.

So fans started arriving early. Mark Hearst got in line with his mom around 7:30 this morning and a little after one o'clock he was still bundled against the cold."

Hearst: "My brother and Dad are going to bring sleeping bags....I'm out of here man if it snows, but you know if you get those tickets you could probably sell them for a pretty penny."

Henn: "But John Fisatolla, who was first in line at 3:57 this morning, isn't sure he'd take the cash."

Fisatolla: "You know what I considered that at around maybe nine or ten in the morning I was thinking five or six digits – but you know what I wouldn't give this up for anything. Any amount of money I wouldn't give this up. This is history this is something I am going to be able to tell my grandchildren that I was here."

Henn: "And according to Fisatolla, you can't purchase a piece of history.

In Washington, I'm Stephen Henn for Marketplace."

Hyams: "The European Commission admits that cattle herds in all of its fifteen member-states could be affected by the deadly animal illness. Humans who consume the tainted meat could years later suffer from a fatal human form of the disease known as Creutzfeld Jacob.

In France, since mid-October when the crisis began spreading across the EU, the price of live cattle has plummeted by 24 per cent.

Cattle farmers are pressuring the French government for compensation, saying that they cannot cope with the huge financial loss.

They want the French government to cover the cost of unsold beef and of replacing their herds. but so far the agriculture ministry has only offered soft loans.

French farmers also worry that the other beef producing countries, like Argentina, will quickly move in to take over the market.

How to deal with the Mad Cow disease is a huge economic and social issue.

The cause of the problem seems to be meat-based animal feed that is fed to livestock. Farmers are scrambling for alternatives. One option could be soy feed imported from the United States. But French farmers are worried about genetically-altered material. The European Commission has recommended that all animal-content feeds be banned for six months, and that all cattle more than 30 months old which do not undergo a test for Mad Cow disease should be destroyed. A European agriculture council will meet Monday to grapple with the problem."

And that's the top of our news for Thursday, November 30, 2000. The Nasdaq closed at 2597 today, a drop of 4 percent. It was down 23 percent in November, making it the worst month for the Nasdaq since October of 1987, the month of the crash. More details when we do the numbers.

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