Dow Climbs 43.46 to 10,910.44; Nasdaq Falls 27.77 to 2,128.86; Boeing to Move Headquarters to Chicago
WILLOW BAY, CNN ANCHOR: Boeing takes off, bound for its brand new home base. This is MONEYLINE for May 10, 2001. Which city won over America's biggest exporter? Sorry Denver, sorry Dallas. Boeing lands in Chicago. A breakthrough for investors, but more importantly, for some victims of leukemia: the FDA OKs a powerful new drug from Novartis. We'll hear from the CEO. And, has Kraft built a better Oreo? The first new version of America's favorite cookie in a decade.</s>ANNOUNCER: This is MONEYLINE. Reporting tonight from New York, Willow Bay.</s>BAY: Welcome to MONEYLINE. We begin tonight with the much-anticipated decision by Boeing. The company whose name is synonymous with Seattle today christened a new era, choosing to move its headquarters to Chicago. The news is a big win for the city, and a stinging blow to the runners up: Denver and Dallas. Lisa Leiter reports from Chicago on today's cliffhanger.</s>LISA LEITER, CNN CORRESPONDENT (voice-over): Boeing's flight plan: Chicago, that decision came in a phone call to Illinois Governor George Ryan this morning from Boeing's chairman while in route from Seattle.</s>PHIL CONDIT, CEO, BOEING: He said, I've made my decision, we're going to Chicago. But in the end, it's my decision.</s>LEITER: The governor and Chicago Major Richard Daley rolled out the red carpet for its new corporate resident.</s>MAYOR RICHARD DALEY, CHICAGO: We're very excited and happy that you have selected the city of Chicago.</s>LEITER: Boeing said choosing between Chicago, Dallas and Denver was difficult and no single factor made the difference.</s>JOHN WARNER, BOEING: All of those things that affect the quality of life, education, transportation, culture, recreation, climate. Many different factors. They all added up. It was a judgment call, looking at everything.</s>LEITER: Money may have also been a factor. Boeing could be eligible for up to $40 million in tax incentives.</s>GOV. GEORGE RYAN (R), ILLINOIS: These incentives are coming because Boeing is bringing new revenues to Illinois that would not otherwise have been available.</s>LEITER: The governor sighted an Arthur Anderson survey, saying Boeing will contribute $4 1/2 billion to the local economy over the next two decades. Boeing said it will be settled into this downtown skyscraper along the Chicago River by September 4. And while the company plans to bring only 500 jobs to the Windy City, it also brings a lot prestige. (on camera): Chicago has been waiting for news like this for 30 years. The last Fortune 500 company to move its headquarters to downtown Chicago was energy equipment company FMC in 1972. Lisa Leiter, CNN Financial News, Chicago.</s>BAY: Taking a look at Boeing stock today, it gained nearly a dollar, ending at 65.95, just a few dollars away from a 52-week high. A bigger winner on Wall Street today, Novartis after the government gave its OK to a promising new cancer drug, Gleevec. The FDA approved the once-a-day pill that's been highly successful in treating a rare form of leukemia. The drug targets leukemia cells and leaves normal cells intact, what officials describe as a huge advance over damaging chemotherapy.</s>TOMMY THOMPSON, HHS SECRETARY: If this does not sound like the same arduous chemotherapy regiment that one of your friends or loved ones have received in years past, that's because it is not. This oral drug is based on the concept of molecular targeting, and we believe such targeting is the wave of the future.</s>BAY: Officials seemed impressed with the drug, and so did investors. Novartis stock gained $2.65. Later on MONEYLINE, we'll talk about Gleevec's potential with the company CEO, Daniel Vasella. Novartis was a big mover today in what was, otherwise, another lackluster session on Wall Street. While the Dow did snap a three- session losing streak, the Nasdaq slipped into the red. The Dow up more than 100 at one point today, ended up less than half that at 10,910. The Nasdaq also rallied early on, but lost its footing, ending down 27 at 2,128. The S&P; edged lower, ending at 1,255. So why couldn't the markets maintain those early rallies? Susan Lisovicz joins us now from the New York Stock Exchange -- Susan.</s>SUSAN LISOVICZ, CNN CORRESPONDENT: The market stumbled because just as April was a month characterized by big moves, May has been defined by its narrow trading range. Despite positive news from different parts of the economy, one analyst said there's still no Brave New World awaiting investors.</s>LISOVICZ (voice-over): Consumers ramped up their retail spending in April, and that cued investors to do the same at Thursday's opening bell. With the Federal Reserve's meeting on interest rates just three trading days away, Wall Street also found encouragement overseas from a surprise interest rate cut by the European Central Bank. Both the Dow and Nasdaq logged early gains in the day on optimism also fueled by bullish comments about chip equipment makers, and the latest job market data, showing fewer Americans filed for unemployment benefits after a sharp gain the week before, but hopes for a return to April's big moves faded quickly.</s>LARRY WACHTEL, PRUDENTIAL SECURITIES: The market is simply not ready to make a major move, because it has made a major move. So the good news helped you move higher and then people looked around and said, I'm not going to chase this thing, because we've already moved a substantial way from the bottom.</s>LISOVICZ: That move took the blue chips within 21 points of the 11,000 level before the Dow advance faltered. And the Nasdaq rally fizzled completely, with the tech-heavy index closing down more than 1.25 percent. Retail stocks, however, maintained their strength on positive forward guidance from the Gap, and sales that more than doubled expectations at Kohl's. Semiconductor equipment shares, including Applied Materials and Novellus, failed to hold onto their gains after an upgrade from Morgan Stanley Dean Witter. Market watchers say cautious optimism has replaced euphoria.</s>ARTHUR CASHIN, UBS PAINEWEBBER: We think some of these things might have been overextended. As we've said time and time again, what used to sell at 210 and now sells at 15, doesn't necessarily have to go to 200 again. It may just get back to 20.</s>LISOVICZ: Despite incentives to buy, investors returned to a pattern we've seen a lot this week, a total lack of conviction. One trader said it felt like the summer doldrums, and to get used to it -- Willow.</s>BAY: Oh, dear, Susan Lisovicz at the Big Board, thanks. Investors didn't see the incentive to buy, but consumers clearly did last month. And a first guest said today's solid report on retail sales is crucial, as long as consumer spending holds up. The U.S. economy could still have its soft landing. Joining me now, Joshua Fienman, chief economist at Deutsche Bank. Josh, welcome.</s>JOSHUA FIENMAN, DEUTSCHE BANK: Thanks, Willow.</s>BAY: Why do you think retail sales held up the way they did?</s>FIENMAN: I think the consumer has pulled back from the really strong growth rates we were seeing last year. They haven't thrown the towel completely. I think they're still underpinned by a tight labor market, although it is getting looser, and income gains that are still fairly solid.</s>BAY: How realistic is it to expect consumer spending to stay, you know, solid, given -- given what is a weakening job market, given that we report practically every day, companies laying off more workers.</s>FIENMAN: That's the biggest risk to the U.S. economy, that the labor market is losing steam very rapidly and that could feed back onto consumer spending and psychology. So, I think that's the biggest risk that the Fed certainly wants to guard against.</s>BAY: Where would you place the odds that consumer spending will stay OK at this point?</s>FIENMAN: I think it will be the most likely outcome, because we have interest rate cuts that are in the pipeline, we have tax cut that's coming. The inventory correction is largely behind us.</s>BAY: You think the Fed cuts and the tax cuts will at least keep consumers somewhat confident.</s>FIENMAN: Exactly.</s>BAY: What do you make of today's labor numbers?</s>FIENMAN: Well, that was mildly encouraging. Jobless claims, which have been on a steady uptrend, reversed that course a bit. There's only one week too early to say whether it's a new trend, but it's encouraging anyway that we didn't get another increase in jobless claims.</s>BAY: One of the things that the market liked today early was a rate cut by the European Central Bank. First of all, how much will this help slowing growth in Europe?</s>FIENMAN: Well, I think it's part of a set of cuts that we will likely see from the ECB over the coming months. And it will help. Europe has been slowing.</s>BAY: But they were growing...</s>FIENMAN: They were growing less to begin with. Exactly.</s>BAY: Where are they headed?</s>FIENMAN: I think they're headed probably for a couple more quarters of sluggish growth, before the ECB's rate cuts get into the system, and...</s>BAY: And you expect the ECB to be aggressive.</s>FIENMAN: Not as aggressive as the Fed, but somewhat more aggressive than they've been.</s>BAY: Does the ECB's action take some pressure off the Fed, it's not carrying its weight entirely on its shoulders or not?</s>FIENMAN: Not really. I think the Fed's major concern is what is happening right here in the U.S. The ECB's move won't really have an impact there. So, I do expect the Fed to do more.</s>BAY: What do you expect specifically of the Fed. First of all, starting with Tuesday?</s>FIENMAN: I think the Fed will move again on Tuesday, maybe another 50 basis points.</s>BAY: And then after that?</s>FIENMAN: Maybe another 25 or 50 before they are done, before they start to see signs...</s>BAY: 25 or 50...</s>FIENMAN: In June, say.</s>BAY: In June. And then, after that?</s>FIENMAN: Then I think they may move to the sidelines. Because I'm hopeful that by then, the economy will show some signs of improving, the tax cut may be enacted, and they'll feel that they've done enough.</s>BAY: OK, fairly optimistic thinking. Thanks, Josh.</s>FIENMAN: Thank you, Willow.</s>BAY: Next on MONEYLINE, a nightmare for drivers and for politicians. Surging gas prices, just one of the challenges the White House faces as it hashes out an energy policy. It may look like a garden party, but it's actually a gathering of top executives. A live report from Business Council Meeting in Greenbriar. And later: make way for the next generation Oreo.