tv Nightly Business Report PBS January 3, 2019 5:00pm-5:31pm PST
business report," with sue bill griffeth and sue herera. stocks tank as ale feeds into some of investor's biggest fierce of a global economic slowdown. $74 billion-dollar bet. bristol myers squibb is buying celgene to create a cancer drug powerhouse but that's not the only reason for the get owgether. shift, a new congress is sworn in, ending the partial government shutdown, though, tops the agtd but still no end in sight. those stories and much mor tonight on "nightly business report" for this thursday, january the 3rd. > and we do bid you a good evening, everybody. sue is off tonight. what a night to beoming to you once again here from the new york stock exchange, twars
another rough session for stocks. starting last night withhe re revenue warning from apple we told you about. the companylamed china, sparking new concerns of a global economic slowdownho and concerns then reverb rated in the markets around the in the world in the last 24 hours. the selling intensified on wall street when a new report this morning poibted to a decline in factory activity in december. and as one strategist put it,ep thatt shows that the slowing growth overseas may have ma o it to shores. here are the day's closing numbers with the dow closing on its low of the day down 60 poin to the it 2686. the nasdaq down more than 200. the tech stor had the worst day in seven years. and the s&p 500 slid by 62. by the way, apple dropped nearly 10% suffering the biggest one-day decline in six years. the company that was once the most valuable in the world has lost nearly 38% of that value
since early october. mike santoli has more on day's stock slide. >> reporter: one of the world's most important companies has confirmed one of investor's greatestfierce, that the global economy is slowing sharply with china and the trade war near the center ofwe ness. apple warns of a steve fall in revenue for the frth quarter mostly due to iphone sales in china punished the stock and drove selling in a r widege of shares in the the sputtering chinese economy. aerospace dragged thearket lower on the second trading day. fear gnat u.s. china trade standoff is hurting the economy is a key factor driving the three-nth selloff in the s&p 500. and these concerns were amably fied in a weaker thanxpted report on u.s. manufacturing trends on thursday. the ism report is aly clo watched gauge on industrial conditions and the pullback added to worry that corporate
profit forecas for 2019 will need to be cut significantly. many strategist came into t ye saying stocks appear attractive after the recent decline. valued near three-year low despite the earnings expectations. yet this is based on current projections of% 7ofit growth. that number needs to be cut ubstantially stocks wouldn't necessarily proveinexpensive. then there is the larger debate on whether the chances of a u.s. recession in coming quarters is rising appreciably due to the issues. the bond market has been dropping treasury yields in a way that hints r ating recession concerns. yet consumer spending and d upoyment numbers have h quite well. for all these reasons, investors are awaiting friday's jobs number. and the coming flood of earnings report later this month with a mix of eerness and caution. for r "nightly busineort" i'm mike santoli. certainly apple's rar earnings warning has left many wondering how bad it gets this earnings reporting season.
and who could be next if any? the ceo of asset management company joins us at the stock exchange tonight happy new year. >> happy new year. >> do you sense if this is a specific problem tos apple or this a broader issue that other companies suffer from as well. >> remember, this is a bad movie second time around. in october when they did this it was the first sign that really the market was anchanging. it did. we sold off since then. then we got to the moment of capitulation at the end of the year and thought maybe okay. and apple does it again. for me this is still an apple issue. because there are two things going on. first they're transforming as a company going from a manecacture ofology to a company that's service oriented that's a slow painful transition. secondly the tariff issue attacking the cost of goods and impacting revenue specifically in china. >> and other companies which o we heard about le caterpillar or boeing has been poster children as well for the trade active with china. >> for sure. >> do you think other companiesl
like that will have problems as well. >> i do well adeleie -- you mentioned boeing. you think about the weakening of the biggest plane market in the globe one of the biggest suddenly buy less planes, uss traffic, buying less manufacturing fro that's where the tariff hits home. >> the issue whether or not the slow growth in china our shores.d what about our earnings season not long fro now for the fourth quarter what do you expect to to hear. >> got to play the averages like baseball a bit. sure l 2t year was awesome now become to average. maybe 10 instead of 12. >> is that priced into the stock >> i tt is. nkrket. i think we have gotten to the market where the market is far oversold. you are looking a a scenario. where if the fed is competitive nsumer.e a powerful wages increasing low inflation, low interest rate the signs of a strong consumer should suppo
us. a lot of people wondering what to do about it. what do you say to the average investors. >> take your time.o you want rotate the cash for bonds. let the vol oility soften a bit. see where the fed sits between now and march. however there is going to be seportunity to buy in the stock market here bec i think earnings are grinding hire high sfwleer are you buying owth or defensive issues by became very popular last year. >> great yes i'm not in the defensive camp. i don't think we are in the cusp ofession. we hear that. but we grew up with run away inflation or interest rates. none of that exists. we are in the exub rant economy. with a strong conmer it's not time to be defensive yet. >> are you ready to buy technology, an apple or any company like florida. >> i start with the consumer discretiary andork to the health care sector a staple of where we are going and theno tegy sector eventually. at some point keep an eye on the bangs. they've been hit hard. let's see if with he get loan
growth later in the year. turn around that could be the second half of the year or >> always wise counsel. thank you happen new year. >> take care. elsewhere white house economic adviser kevinid hasset lot of companies doing business in china not just apple could feel the pain of a slowwn inhe second largest economy of the world. >> i speak regularly with peoplw atl street. this is something people have been seeing coming for a good long while. it's one reason why -- you could go back and look at my tv clips in december i was saying yes the chinese economy is slowing one of the reasons why markets y responding the way te is that people are downgrading folks witorecast for a lot of business in china. >> as you know, trade tension between t u.s. and china are high right now. and adding to the economic strain today was a travel advisory from the state department saying that americans need to exercise increased caution when traveling to that well, even if you don't own
apple shares outright there is a good chance that you own some in anxchange traded fund or index fund o in a mutual fund. van guard is the largest institutnal shareholder in apple. mostly through the index funds and etfs. ack rock and state street also among the top holders in apple. in fact those three firms combined sufferedosapers of about $10 billion just today. and remember, warren buffett beshire hathway took a big stake in apple and today paper losses came out to $3.5 billion meantime the head of theederal reserve bank of dallas says it's time for the central bank to hold off on interest rate increases. >> during an interview rabbit cap lan said thedn fed sho take further action until the economic uncertainties resolve themselves. he added it couldake several months he feels policy makers should keep an open mind about the tim table f further increases.
there was some positive news on themy ecooday involving jobs. report on the job market showed the private sector added more jobs than expected in december. the adp private payroll report biggest271,000, the gain since february of 2017. and tomorrow of course the government issues its own monthly jobs report which is widely followed by many market rticipants. well despite the concerns that the economy may be slowing, to sales continued to be strong last month. in facthe numbers in december helped the industry post surprisingly solid sales for the whole year. but can that continue in 2019 in that's the big question. phil lebeau takes a look. >> reporter: whatever worries analysts may have about my america's eco cooling off, auto dealers are not seeing it in showrooms. rop comparedes did to the same month in 2017. but overall, business was robust
with sales climbing slightly higher in 18, topping 17 million vehicles for a fourth straight year. thatevas happened before. will it continue? there are mixed signals. the jobs market and consumer confidence remain strong. and relatively cheap gas means ericans have more money in their pockets. they are also taking out larger and longer term auto loans. that's because they're paying more than er for a new model. so there is concern consumers may be at their limit. especially with the wave of three and 4-year-old models coming off lease. that givesuys the options of paying far less for a car or truc withow miles and most of the latest technology. the wor is this industry for 2019 for the first time in decade doesn't grow. >> reporter: one thing is not xpected to change for auto makers this year. trucks, suv suvs and crossovers will remain in demand. as americans continue to move
away from driving small cars and sedans. phil lebeau, "nightly business report," chicago. a blockbuster deal in the drug industry to tell but. bristol myers squibb is buying celgene for about $74 billion making it the first major deal of 2019. shares of celgene soared by 20% while bristol myers squibb went in the other direction dropping 13%. the focus of the combined company will be cancer. treatmen but as frank holland reports that's not the only reason for the tie-up. >> s bristol myersibb is bulging up, the acquisition will create a dominant pharmaceutical company with a focus on cancer treatments. but both compaes face challenges. and that may have been the real driver of this deal. >> i don't see this as really a -- a deal that is driven by enthusiasm, excitement on either end. i think it's reallympwo mature ies with, you know,
consolidation benefits. they have a lot of r & d salesforce getting eliminhaed. that'ss driving the deal. >> the companies say the deal will create $2.5 billion worth of savings by 2022 and increase rusts profitsly roughly who% next fiscal year. these savings come as bristol suffers set bax in development d of newgs. it's facing competition from merck. celgene will lose patent protection for its best selling drug by 2022. celgene shareholder will receive bristol myers squibb stock and cash giving enemy a premiumn the closing price on wednesday. bmo capital marke analysts alex arfay called it expensive butca lo in a letter to investors. >> the rationale is complementary portfolios in cardiovascular decease, a promising pipeline and cos
synergiy. >> the merged companies will have products worth $1.0 billion each in annual sales. management says the combined company will create a pipeline of potentially profitable drugs in development with six near-term product launching that could deliver more than $15 billion in revenue potential.xp butts say it all depends on how these drugs come forward d if they get to market. shareholders from both companies and regulators still have t give final approval of the deal. if that happens bristyers squibs acquisition of celgene is expected to be completed by the third quarter of 2019. for "nightly business report," frank holland. time to look now at some of some of the upgrades and downgrades. beginning with alphabet upgraded to buy from hold at cannacord ut. the analyst cites the potential for 15 to 20% revenue growth and declining margin pressure. the price target 1250 that stock fell with the broad are market down 2.5% to 1025.46.
gill yand sciences was upgraded citing the drug maker new ceo and the company prospect for growth as a result. price esrget $85. shose more than 2.5% to $65.25 and dow component united technologists has been rate add neutral at citi in the new heverage. the analyst says stock lacks a near-term catalyst. making it tough for the stock to outperform. price target now $120. shares dropped to 4% today to 103.48. dollars. >> a once hot real estate marker has the year since the financial cr
the conces about a slowdown in china spread today in the luxury retail sector. the feing is if chinese shoppers are not willing to spend on an applephone then they may put off purchases of luxury goods overall. over y thers china has become a growing and lucrative market for many high-end ends are brands backup but many say that's why ralph lauren and tiffany traded lower today. aower smift in washington with the 116th session of congress beginning today. democrats taking control of the house and this dividedgr cs starts work a long to do list. ylan mui reports from the nation's capital. >> nancy pelosi, now officially speakef the house for the second time. the only woman to hold the
vel, she arrived on the house floor with her family, her five children and nine grand children as she called f common ground amid divided government. >> we have in nous ins the work will be easy and that all of news this chamber will always agree. but let us pledge that when we disagree we respect each other, and we respect the truths. >> that bipartisan spirit might not last long. on t democratic agenda new rules to automatically raise the debt limit whenever a budget gets passed. reform campaign finance ands voting rig laws process. the a vote to reopen the government happehong in the e tonight. and the bills don't have any money for president trump's border wall. senate majority leader mitch connell says the democrat effort is dead on arrival. >> i made it clear on several occasions -- and let me say it again -- the senate will not take up any proposal thatoes not have a real chance of
passing this chamber and getting a presidential snature. so let's not waste the time. >> negotiations over the shutwn will resume tomorrow. the white house will meet with congressional leadership from bothparties. on capitol hill today, vice president mike pence told reporters there is a crisis at the southern border. >> we're going to continue to engage democrats and republicans to come together and to achieve the kind of agreement that provide the border security that the american people need. and that means wall, a physical barrier but it also means a broad range of boert security mercies toake the country secure, prevent the flow of illegal drugs. illegal immigration. human trafficking. >> here in washing the ramt is sinking in that this shutdown is going to be measud in weeks, not days. for "nightly bu ness report" ylan muish in gton. delta loses altitude.
thethat's where we beg market focus with the airline saying it's not able to raise fares as much as had been expected. and it warned fourth quarter it revenue will be slightly below the prior forecast. creating concerns thathe major carrier also struggle to maintain profitability in year. delta shares were off nearly 9% today to 45.61. and the news sent shares of other airlines low as well. american, united, continental and southwest. starbucks is facing stiffer competitio china. chinese coffee start yum lucken now plans to openst,500 new es in an effort to overtake the number of starbucks locations in the world's second biggest economy.es shell more than 4% on starbucks today to $61.53. consumer products giant johnson & johnson said today that sales in india fell by 3% over the past 12 months. j&j has been grappling with the
stringent medical device policies and the controversy surrounding talcu powder has prompted safety inspections across the country. the shares fell 1.5% to 125.72. and generic drug maker teva said it's-on disclosed amount to settle patent infringement with am again over a treatment used forhronic kidney disease and parahigh radio carcinoma. they will stop sling the drug until 2021. teva recently won prl approval to market in the united states. the shares rose to 16.49. shares of amgen fell more than 1% to 188.98. the. the volatility in the equity markets is causing some totay on sidelines when it comes to making other large investmts. namely real estate. and there is no place that trend is more pronounce than in new york city right now with the market coming off the worst year
in a decade. robert frank reports. >> reporter: manhattan is going through two big corrections. the stock market r and thel estate market. the fourth quarter saw sales of manhattan real estate fall 14%. it was the fifth straight decline.f and made 2018 the worst year for manhattan apartments since the housing crash a decade ago. volatile markets are one cause. but buyers have been staying on the sidelines for over a year due mainl to oversupply of new kondos especially at the high end, a lack of foreign buyers and the new tax law estate in high tax states like new york less attractive. >> it was a w blanket that has essentially laid over the market. consumers when they are confused they pause. and that's what buyers are doing. >> inventory is growing. discounts are getting steeper. and there is now a 16-month supply of luxury real estate.
butf manhattan is now a buyers market it's tell a wealthy market. the average price of the manhattan apartment is still$2 just under million. the big question is how much worse will it get in 2019? that may depend on the stock market which affects the buying confidence of the wealthy as well as the new york hiring plans of tech giants like google and amazon. >> 2019 if we had conversat fn a yem now and the stock market continues to be as volatile ast is, i would expect pricing to be softer than 2018 and sales to be less than 2018. >> the most expensive sale? 2018 was a penthouse on park avenue tt went for $74 million. se to 10,000 square feet with six bedrooms and a 300 foot balcony. the buyer was james dyson, the vacuum cleaner tie corn whose store is a few block away. for nightly business report, i'm
robert frank. speaking of which in other real estate news office vacancy rates in the u.s. inched high ner the fourth quarter. according to a n report new construction of office space declined in the last three months of the year. but rents which have been relatively stey over the last eight years were up about 3%. coming up, help wanted in the oil patch. > i'm jane wells in deal tark texas as a oil refineliry. the oil prices are low yet the help wanted sign is o here for women. we'll have that coming up.
here is what we're watching for and whathould be another busy day tomorrow as we mentioned the monthly employment report will be released. expectations are for creation of about 176,000 jobs in december. fed chief jerome powel will speak at the american economic association annual mee fng. and form chairs janet yellen and bern naeng will be there as well. and the president and congressional leaders are expected to mcut to d the partial government shutdown and border security again. and that's what we ar watching r on friday. well, the price of oil may be down. but hiring in that industry is up. eeand as we've reporting many times, energy companies are having a hard time finding skilled workers. that means moreomen are closing the gap in this traditionally male business. jane wells is in deer park, texas, for us tonight with the story. >> reporter: afternoon,
everybody. >> christina smith a mother of three. she used to manage a subway sandwich shop. worked at a commercial di store went to school got a technical degree and now a shift supervisor as a she par in deer park, texas making good money. >> my d says kid, you hit the jackpot. >> the petroleum industry estimates only 15% of the workforce is female. and only about half that number reach the executive level. like lori freeman a general manager in the gulf of mexico. >> i personally set the bar high for myself. a lotge of the chall i went through were challenges i set for myself. >> now big oil is going big on hiring more women. helping them as iustry veteran katie mainrd who vividly remarks made by a man sitting next to her on a olight houston. >> he said what's a pretty young lady like you doing in a dark dangerous business like oil and gas. >> she decided to create pink
pet troll. a oil company funded comny for women. >> it's happening as oil prices fall which is providing extra calk to an industry with a anor agingorce that needs a new generation of workers male for female. we need to think about the marathon. it's not a sprint. >> i'm 40 now butr don't remem growing up somebody saying,ening you could be an engineer , u know. >> some of the women mentor each other about opportunities and the challenges like not always being recognized as a senior engineer. hen i walked in the room a person asked if i could put their coat up. >> but that's happening less and less. >> i work hard, want to learn. i like to help people. and because of that i feel respected. >> in the end, why rruit women? in an industry needing a pipeline for a next generationrk worce, the answer may be,
why not? >> more "nightly business report," jane wells, deer park, texa w befor go a final look at the day on wall street. another big selloff. the dow fell 66 points. the low of the day. nasdaq down over 200. the s&p slid by 62. apple dropped nearly 10% today suffering the bigst one-day decline in six years. that is "nightly business report" for tonight. i'm bill griffeth. thanks for joining us. we'll be back tomorrow night at the new york stockxchange. moep you can join us then. see you tomorrow.