tv Nightly Business Report PBS October 25, 2017 5:00pm-5:31pm PDT
>> announcer: this is "nightly business repor with tyler mathisen and sue herera. volatility and volume. stocks tumble as bond yields rise. and a number of critical tech earnings are just around the corner. put up or shut up. that's what a number of lawmakers are saying to president trump when it comes to the high price of prescription drugs. winning over millenials. can the world's largest hotel chain compete with airbnb? those stories and more tonight on "nightly business report" for good evening, everyone, and welcome. i'm sue herera. tyler mathisen is on assignment tonight. big moves, big volume. the market hasn't seen that in a while. today the runup we've seen recently cooled off a bit,
despite okay earnings and positive reports on the economy. the dow jones industrial average dropped 112 points to 23,329. the nasdaq was off 34. and the s&p 500 fell 12. bob pisani has more on what drove today's decl >> reporter: a momentum selloff on wall street today. u.s. stocks suffered their worst trading day in two months. the market is very concerned about a sudden spike in interest rates and it has a couple of reasons to be concerned. first, durable goods was much more than expected, a good thing for the economy but it raised questions about inflation. john taylor may be the frontrunner for the fed chair, spooking investors since taylor is known to want to raise rates faster than the fed is doing so far. that caused some investors to take money off the table, particularly in stocks that had strong gains this year like semiconductors. even stocks like boeing sold off
after monster profits, up 60%. then uncertainty on tax reform. the market has priced in good news but it's not clear if it will get done. today some republicans said a plan to cut contributions to 401(k) plans was still on the table, that's deeply unpopular with the investing public. the bottom line, the market has told us it cares most about keeping interest rates low and tax reform. and anything upsetting those two pillars will cause stocks to move down. for "nightly business report," i' bob pisani at the new york stock exchange. as bob just mentioned, shares of boeing fell today, down almost 3% in part because of profit taking after its big runup. the drop came despite a strong quarter that saw deliveries hit a record and upbeat profit and cash outlooks as well. phil lebeau tells us why boeing's business is expected to soar. >> reporter: to understand why shares of boeing have risen 100% in the last year, look at the
company's airplane busy, starting with the dreamliner. not only is boeing making more money on each 787 it sells but it's also ramping up production. that's because demand for commercial airplanes isn't slowing down. in short, more people around the world are getting on planes. >> airlines continue to report solid profits and passenger traffic growth continues to outpace gdp. with traffic growth of 8% through august. also, cargo traffic is experiencing a healthy recovery with 10% traffic growth over the first eight months of the year. >> reporter: as airlines clamor for newer, more fuel efficient planes, boeing may raise production plans for its most popular model, the 737. boeing is scheduled to crank out two new 737s every single day overt ne next three days. boeing is wrestling with costs over air force refueling tankers.
but the first planes are still on schedule to be delivered next year. overall, boeing's defense business remains strong, given the dow component a solid balance sheet as it heads into the end of the year. phil lebeau, "nightly bu. >> boeing is the best performing dow stock this year. while tech is the best performing sector this year. earnings for the group begins in earnest tomorrow with results from microsoft, alphabet, and amazon. as josh lipton reports, the biggest risk to this sector . >> reporter: tech has been on a tear so far this year. the sector is up 30%, about double the returns from the s&p 500. tech portfolio managers expect the rally to continue, pointing to attractive valuation and strong growth prospects. but tech investors also point to one big caveat, the increasing drumbeat of political and regulatory threats targeting mega cap tech companies.
>> regulation is just bad. it's going to force innovation to happen where it's not. so if you regulate tech, you're just telling them to go do their innovation elsewhere. >> reporter: president trump targets amazon, often inincredibli incorrectl saying it doesn't pay its fair share of taxes. mark zuckerberg is in the crosshairs too after allegations that russia used it to interfere in the election. european regulators now say that google is breaching antitrust rules by requiring manufacturers to preinstall google search on their devices as a condition to license certain google apps. that's important, because it encourages people to see google search ads when they look for information on their phones. google disputes the eu's claims, saying it's expanding competition, not hurting it. some of the biggest tech
companies in the world enter earnings season in a political reality of pressure here and abroad. josh lipton, san francisco, "nightly business repo joining us is daniel flax, senior research analyst at newberger. happy birthday, i understand it's your birthday, thanks for spending part of your day with us. >> great to see you, sue, thanks very much. >> let's pick up with where josh lipton left off, with regulation. perhaps not regulation here in the u.s. but maybe regulation on more of an international basis. does that concern you at all? >> i think, sue, it is a risk to these companies as we think about how they're going to evolve. so for example, with facebook and some of the scrutiny around the elections, i think it's a factor. however, the company in the case of facebook is responding. they're putting more people in place to try and do a better job managing some of the ads.
i think in many respects, what's happening is that these giant technology companies are really maturing, if you like, relative to some other industries. food, beverage, health care, all of these are regulated industries. >> so perhaps they're growing up a little bit and becoming more main line companies versus -- not that they don't innovate, but they were always known as chiefly innovators. but the industry has matured. >> i think that's right. whether one looks at how they're managing their businesses, obviously tax is becoming a bigger focus area in the u.s. as well as in some other countries. i think the key for these companies over the medium to long term is to continue to innovate and to continue to invest in their businesses so that they can deliver attractive services to their customers. that's key to growth in their view. >> a number of these companies are coming out with their earnings beginning tomorrow.
your newberger berman owns a google, amazon, and microsoft, and apple. you're watching microsoft most closely. why? >> if the company under the management team has really transformed the business mix and really embraced the cloud, so the move to the cloud is really capitalizing on some of microsoft's core advantages in technology, and importantly, their customer relationships. so when we speak to their customers, they are telling us they're investing more with microsoft because microsoft is bringing them along into the new cloud era. >> where do you think the market is in terms of its expectations for these earnings reports? i mean, the expectations have always been pretty high. but is the market anticipating something that perhaps some of these companies might not be able to deliver on? >> i think in the short term,
the market is obviously very focused on the results, in the case of microsoft tomorrow night. we think the company is likely to achieve or perhaps beat the consensus expectations. what we're really trying to better understand from the results and certainly in the quarters ahead is how the company is continuing to transform its business. and that in our view is really going to be critical to microsoft, and these other giants, to creating additional value for their customers and ultimately their shareholders as well. >> all right. we'll leave it there. daniel, thanks so much. >> thanks, sue. >> daniel flax with newburger berman. the cloud is fast becoming one of the most critical businesses for tech companies. that's the reason behind google and cisco's agreement to join forces to take on amazon. that partnership combines google's expertise in building massive data centers and open source software, with cisco's global sales force and customer support. together, both companies believe that they can develop products
to use in the cloud in a race to catch up with amazon which of course dominates the cloud infrastructure. sales of coke popped in the u.s. that company reported earnings and revenue helped by its new diet soda, coca-cola zero sugar. the new ceo says he's pleased with the results and backed coke's full year outlook. visa reported a double digit increase in profit, beating wall street expectations, driven by more people making payments using its network. shares of visa and coke moved in opposite directions today. earlier bob pisani mentioned positive economic news. well, there was more. sales of new homes rose to their highest level in a decade. economists say that people unable to find existing homes due to a lack of supply are turning to new construction. damage from last month's hurricanes may have also inflated that data. no position is more important to the economy than the chair of the federal
reserve. last night, we outlined the five people on the short list to become the next fed chief. but today there are reports that the white house's top economic adviser is out of the running. according to bloomberg, the president does not intend to appoint gary cohn to the position. the president instead reportedly wants to keep him in his current role as his director of the national economic council. some mixed messages for retirement savers. the top republican tax writer says changes could be part of his party's tax reform overhaul. today when asked if the 401(k) tax break was on the table, the president backtracked a bit from his recent tweet where he promised no changes. >> well, maybe it is and maybe we'll use it as negotiating. i think kevin brady is fantastic. but he knows how important 401(k)s are. >> there are reports that republican lawmakers are considering capping the amount americans can contribute to these plans at $2400 a year.
meantime, over at the fcc, that agency plans to vote on rolling back landmark media ownership regulations. those rules limit the ability of companies to own multiple tv stations and newspapers in the same market. such a move would be a win for newspaper companies and broadcasters. others say it could usher in a new era of media consolidation. still ahead, the big push by lawmakers to lower the price of prescrip
dow component nike setting aggressive new growth goals today. the sporting goods company sees earnings per share growing in the mid-teens over the next five years, driven by online sales and new products. nike also sees revenue up in the high single digits over the same time frame. ceo mark parker says naturally the u.s. is critical, but overseas markets will also play a big role in thh. >> we also see that in asia-pacific, latin america, and of course europe. all parts of international business are going to be growing. china is the biggest. if you look at the population, the target population in china for nike, it's really moving toward ten times of what it is in the united states. and the appetite for nike in
china as the number one brand is incredibly strong. >> wall street liked what it heard, sending shares up nearly 3%, making nike the best performer in the dow today. shares of the health insurer anthem touched their highest level in a year after higher premiums and stronger medicaid and medicare enrollment helped that company easily beat quarterly earnings expectations. the insurer also raised the lower end of its full earnings estimates. anthem says it sees its participation in the affordable care act plans to drop sharply next year amid what it says is too much uncertainty around the future of those marketplaces. shares jumped 5% to break through the $200 per share the by pa by the bipartisane budget proposal would cut deficits by $4 billion. the budget office says the plan
wouldn't necessarily change the number of americans with health insurance. it's unclear if that legislation introduced last week by republican senator lamar alexander and democratic senator patty murray will ever be voted on by congress. this month, california passed a law hoping to rein in drug prices. and today, four democratic congre congressme made their push. meg terrell explains. >> reporter: it was one of the few, maybe t only thing that donald trump and hillary clinton sa agreed on on the campaign trail. >> drugs on medicare, they pay this wholesale incredible number. e $300 billion could be saved if we don't bid them out. we can't do it. because of the drug companies, folks. >> reporter: when trump was elected, he continued to insist that drug prices should come
down. but so far there's been no major action from the government. >> we have not heard a peep. radio silence. >> reporter: four congressmen today introduced a bill to give medicare the price to negotiate for drugs. >> it is time for medicare to be able to sit down with the drug companies and negotiate prices. >> reporter: senator bernie sa along with representatives elijah cummings, lloyd doggett, and peter welch cited kaiser foundation research saying americans want government to have negotiating power. lobbying group pharma said it would bring about government-controlled price controls and jeopardize access to medicine for seniors and people with disabilities. allowing the government to decide which medicine patients
can and cannot get. republicans have typically sided with the drug industry. the party's major exception has been donald trump. but with no major action since he took office, drug stocks have rallied. this week, analysts reported that drug maker celgene raised the price on two medicine, each by 9%. for the $7 billion blood cancer drug revlament, it was the third price increase this year to more than $18,000. celgene said that its, quote, pricing decisions reflect the benefits that our innovative therapies provide to patients and said it continues to invest in more than 43 potential treatments currently in clinical trials. for "nightly business report," i'm meg terrell. glaxo sinks on concerns about its dividend. that's where we begin tonight's market focus. glaxo posted higher quarterly results helped by consumer health care products. the company said it would consider a bid for pfizer's over
the counter business should pfizer put it up for sale. but the prospect of that kind of deal could top $10 billion. that stoked fears of a dividend cut. that sent glaxo shares down 6% to $38.19. profit at the world's largest biotech company amgen beat wall street expectations, helped by lower costs and higher operating margins, helping offset a drop in sales of the company's more established products. amgen raised its full year adjusted profit forecast despite taking a hit to its puerto rico operations from hurricane maria. shares initially fell following the after the bell earnings and also ended the regular session down about 1.5% to $177.50. shares of advanced microdevices continued to get hammered today following the company's earnings which came out late yesterday. the chip maker's profit and revenue beat expectations, but the company says it sees revenue falling 15% quarter over quarter. and that sent shares down more
than 13% to $12.33. international paper beat earnings expectations, thanks to price hikes in some key businesses, and lower outage costs despite being hit by two hundreds. the company says it is confident it will hit its full year earnings target. ip's shares slipped 1% to $57.99. late last night the senate by the narrowest of margins took a final step to keep new rules from going into effect that would make it easier for consumers to sue banks. kayla tausche ex >> reporter: a late night vote in the senate rolled back a rule that would let consumers band together in suing banks and credit card companies, rather than fighting issues alone through a process called arbitration. vice president pence cast the deciding vote. >> the joint >> reporter: the consumer financial protection bureau introduced the rule this summer to give consumers the chance to hold banks accountable over
small sums of money. it would have taken effect next year. congress moved almost immediately to toss it out, using power to overturn regulations drafted only recently. the house voted to do so in july as industry groups argued that scrapping it will mean banks won't be weighed down by lawsuits. >> had they gotten rid of this rule and accepted the cpb rule, it would have been much more costly for the consumer to do business at a bank. >> reporter: treasury says the move will spare banks from 3,000 lawsuits and nearly $2.5 billion in legal and settlement fees. democrats point out the move protects companies recently embroiled in consumer scandal like wells fargo and equifax. cfpb found 75% of consumers don't know whether their financial accounts carry this fine print barring lawsuits. >> this bill is a giant wet kiss to wall street. bank lobbyists are crawling all over this place, begging congress to vote and make it
easier for them to cheat their customers. >> reporter: president tru is expected to sign the bill which the white house in a statement called a win for everyday consumers and community banks and correredit unions. republicans continue to take aim at what they call an overreach of power at the cfpb. a senior white house official says overturning these rules is one way to keep pressure on richard cordray, the sole figurehead running the cfpb tapped by president obama. i'm kayla tausche for "nightly business repor" washington. coming up, marriott gets hit. >> reporter: one legacy hotel operator is flipping the script in their strategy to appeal to millenials. this includes an urban amusement park on the roof and this rotating carousel. the full story coming up
president trump is launching a program to expand the testing of drones in order to speed up the integration of those vehicles into the national aerospace system. a white house adviser says the expanded testing will open up the skies for packages, infrastructure, and support for emergency management operations. but the white house stopped short of proposing new regulations allowing broader use of drones. starting tomorrow, new security measures will take
effect on all u.s.-bound flights including stricter passenger screening. the measures are in order to comply with u.s. requirements put in place to avoid an in-cabin ban on laptops. some of the new steps could include short security interviews with passengers. more than 300,000 passengers arrive daily on about 2,000 commercial flights to the u.s. and the naacp has issued a travel warning for american airlines. the group is cautioning african-americans that if they travel on american, they could be subject to discrimination or possibly unsafe conditions. the group says it has seen a pattern of, quote, disturbing incidents over the past several months reported by passengers, including some being removed from planes and others required to give up their seats. the naacp says the incidents point to a corporate culture of racial insensitivity and possibly racial bias at the airline.
american says it is disappointed by the announcement and it will invite the civil rights group to meet. and finally tonight, millenials make up the largest part of the workforce. marriott is looking to attract the g number of young and work, particularly since corporate travel makes up half of marriott's total revenue. will the strategy work? seema mody has mor >> reporter: marriott is opening its newest hotel at times square. definitely not your father's marriott. from rooms that have wall pegs to hang clothe to go the largest rooftop bar in new york city, the hotel is catering to the mindset of 24 to 34-year-olds, starting with the layout of the room, geared towards the modern traveler, like this 220 square foot quad bunk room outfitted
with four twin size beds, foldable table, and chair starting at $139. marriott's chief development officer says the room intentionally small, since young travelers spend most of their time outside the room. >> the guest rooms while well-appointed are quite small. but a big focus on public spaces. when you look at economic and demographic trends for the next generation of traveler, they want to be out in public. >> reporter: there's still some places inside to socialize, like that rooftop bar that has mini golf and a rotating carousel, and for those who come here purely to grab a drink but decide at the last minute to spend a night, it has a room called the crash pad, which guests can only book from the rooftop cocktail menu for $99. but the competition is fierce. marriott's main rival hilton has launched two brands aimed at the millenial minded, true and canopy.
radisson's red and starwood's aloft, now owned by marriott, all geared toward the young. travel experts say in order to stand out, marriott will have to be strategic in its marketing approach, relying heavily on social media to target millenials, especially as more enter the workforce and spend a larger percentage of their discretionary income on travel. seema mody, new york. that is "nightly business report for tonight. i'm sue herera. thanks for joining us. have a great evening. and we will see yo
>> this is "bbc world news america." funding of this presentation is made possible by the freeman foundation, and kovler foundation, pursuing solutions for america's neglected needs. >> planning a vacation escape that is relaxing, inviting, and exciting is a lot easier than you think. you can find it here in aruba. families, couples, and friends can all find their escape on the island with warm, sunny days, cooling trade winds, and the crystal blue caribbean sea.