tv Nightly Business Report PBS October 23, 2014 1:00am-1:31am PDT
this is "nightly business report" with tyler mathisen and susie gharib. brought to you in part by the street.com. featuring stephanie link who shares her investment strategy, stock picks and market insights, the multi-million dollar portfolio she manages with jim cramer. you can learn more at the street.com/nbr. jittery markets, just when you thought it might be okay to step into the market. a fresh worry appears, a shooting in the heart of the canadian capital, a soldier dead, a gunman killed in the parliament there. that, plus oil prices send stocks falling. and at&t reports weaker than expected earnings after the closing bell and warns that revenue won't be as strong as first thought. recall widens, and now the
manhattan district attorney is reportedly investigating the company that made those faulty air bags. as the auto industry deals with another serious and massive safety recall. all that and more tonight on "nightly business report" for wednesday, october 22nd. good evening, everyone, two powerful forces combined today to make already jittery investors even more nervous, sparking a big selloff in the markets. one trigger, another sharp drop in price in the oil. the other, an act of brutality that caused chaos in two countries, a confirmanadian sol was gunned down at a war memorial, followed by heavy gunfire inside canada, parliament, the identity, unknown, the motive unclear.
>> the investors were rattled, volatility spiked and early market gains were wiped out. at the close, dow down is 53 points, the nasdaq ended 36 points lower. and just a day after the biggest gain of the year, the s&p 500 fell 14. after remaining stable for a few days, oil prices fell sharply again today down nearly two dollars a barrel to close at the lowest level since june of 2012. bob pasani has more on the selloff of stocks. >> stocks started the day mixed but began to move lower eastern time. today, the canadian shooting incident was a source of considerable confusion mid-day as it was not clear how many gunmen were involved. the lone wolf type attacks are a source of concern and can affect market psychology. >> trying to disrupt average
life by taking shots at people, and you know running down with cars. that re-introduces the risk with the market. a second development mid-day, oil renewing its decline which was a significant part of the reason the markets dropped last week. the catalyst occurred at 10:30 a.m. eastern time when the market reported a big build in oil. west took crude oil dropped a dollar, it recovered but dropped again around noon eastern time. that drop occurred independently of the canadian headlines coming out at the same time and it put additional pressure on the market with energy stocks leading the market down. the problem is simple, there is just too much oil in the world. although oil dropping is good news for the u.s. economy, the decline in oil has become a proxy for deflation and slowing global demand in general. so it is viewed with some concern. and it was not just today,
investors have been nervous for weeks with new figures showing that they pulled out nearly $6 billion from stock funds in the weekending october 15 as the market skidded on worries about slowing global growth and fears about the spread of ebola. the investment company institute funds saw a d pullout of $4.5 billion during the same week. >> here to provide perspective, the chief market strategist. nick, the market was higher earlier in the day but was it just ready to pull back or was these two instances that we talked about, oil and the shooting in canada a real trigger for something? >> it absolutely was, a day that should have been very quiet. we have had three very strong days after the strong pull back last week, as we began, it looked like it should be very stable. it should have been a quiet day. you know, nick, we hear from a
lot of people, market strategists talking about the markets in terms of the fundamentals. and then we have others who talk a lot about the psychology and the fear factor. it seems as though investors are much more sensitive these days to headlines rather than the fundamentals. is that how you see it? >> yeah, absolutely, there are two reasons for that equally important. the first is the qe program later this month, giving investors something to worry about what the pace of the recovery and the pace of the u.s. economy is going to be without the stimulus. the second point is that fear tends to weigh with investors. it isn't a problem until it is, then it is a big one. fear is a motiving factor in the markets and we're seeing it right now. >> it was a week ago today that we were all talking about a correction when the market was down 400 and some odd points. the dow was at least. do you think in retrospect that
that was the bottom for whatever correction we went through. >> you know, my perspective was falling. even if it is the bottom it is important to note the volatility will pick up. we're optimistic on stocks, we believe it is a good economy, everything considered. but the volatility is low. >> the utility index was at an all-time high showing that a lot of investors are putting their money in a safe place. i mean, given that are you changing your outlook or your investment strategy? >> we are not. but you raise a good point. the utilities up 16% or so on the year. just highlights how important it is to stay diversified in a stock portfolio and overall. a lot of people were bad mouthing bonds earlier in the year. bonds have done very well, the utilities have done very well, staying diversified through this
period. >> all right, thank you very much. more corporate earnings today after the market closed. investors got a wake-up call from dow component at&t, they reported quarterly earnings below, earning 63 cents a share, revenues forecasted $3 billion on the new wireless customer rates. the number was higher than last year. at&t shares were initially lower in after-hours trading and were down a fraction during the regular session. morgan brennan joins us with more. you looked over the numbers, what is the key take-away? >> and that is what the key take-away is, different competition among the u.s. wireless carriers, really starting to play out in at&t's earnings. so we have the profit miss, less subscribers added than expected. most tellingly is we saw the
company revise downward their sales for the entire year. there were a couple of factors tied into it. one big factor is they're not seeing people sign up for their next plan. and that is the company's installment plan for new smartphone devices. they have been doing it aggressively, trying to attract more subscribers who pay for their smartphones outright but in turn don't have to sign contracts but can upgrade more frequently. that is part of how they're working, less people sign up for that plan very worrying, moving forward. >> all rightrwmorgan, thank you so much for coming. all right, i had had earlier today strong earnings for boeing, held up by big demand for commercial jets, boeing says it now has a backlog of more than 5,000 orders, worth more than $430 billion, the profits shot up 18%, investors were looking for more and that sent
shares more than 4.5% lower today. more troubles for the auto industry, federal prosecutors are reportedly looking into japanese auto parts maker takata and whether it misled the automakers about the number of defective air bags. the report follows a major warning by the federal government revising the air bags for nearly 8 million vehicles. and for the owners of some of the vehicles they're told not to allow people to be riding in the front passenger seat. after numerous recalls about faulty air bags, over the last few months the federal government is now telling millions of car owners to get their cars fixed immediately. the warning by the national highway traffic safety administration covers 7.8 million vehicles, built between 2,000 and 2008. models from ten automakers from defective air bags that need to be fixed. the air bags are built by
takata, one of the largest auto suppliers in the world, the warning has created a bit of a problem. dealerships say it may be weeks or months before they have the parts to fix the air bags, because the priority is to fix the models in the high priority states along the gulf coast. investors believe that human conditions are causing the air bags to malfunction and send the metal fragments flying. because of the air bags in several locations, gm is sending letters to a select number of customers telling them not to allow anyo re in the front passenger seat until the air bag is fixed. toyota is going a step further. they have disabled the air bags of some recalled vehicles until they can be repaired. and that may take a while. we've reached out to takata to get a sense of when it believes repairs will be finished but
we've yet to hear back from the companies. so for now, there are millions of americans driving vehicles with faulty air bags. and as they drive around, they may be taking a risk. they are looking at what may or may not protect them during a crash. phil lebeau, chicago. switching back to the economy, inflation in check, and how consumer prices rose just a tenth of a percent in september. key factor, falling energy costs, over the past year consumer inflation has rose just 1.7%. and that low inflictiation why uncle sam is giving such a low raise. they are looking at 27% in 2015 averaging out to $22 more for pensioners and the disabled. this marks the third year in a row that the annual cost of living increase will be below 2%. >> still ahead, johnson and
johnson making a big push that many other drug makers are not, the vaccine for ebola, that story next. the u.s. tightened rules today on travellers coming from west africa. there are now special ebola symptom screenings and fever checks. meanwhile, the race to develop treatments to combat the spread of ebola has kicked into high
gear. johnson & johnson has emerged as a leader, the shares rose a percentage point, one of the few gainers in the dow. so how close are the other drug makers to finding an effective vaccine or other remedy? m meg terrell as more. >> the major giant has a big pharmaceutical polish against ebola, j & j is developing a vaccine for the virus, investing $200 million to accelerate and expand production. it hopes to make a million next year, they are one of several drug makers working on an ebola vaccine, joining others, can the development happen fast enough in the current outbreak? >> it is actually the production side of the vaccine that caused the difficulty, especially when you're doing -- working on large
scale. they claim they will be ready to go into testing by may. to me, that sounds ambitious. but i hope. >> more than 9900 people have been infected by ebola. primarily in the west africa countries of guinea, liberia and sierra leone, more than 4500 people have died. j & j is working with the world health organization. the lack of financial return for diseases not frequently seen and affecting primarily poor countries means they don't focus on viruses like ebola. >> we really ought to use this as a trigger to have a discussion about a policy regarding emerging infectious diseases. because the world is shrinking. and what happens in emerging markets ultimately as we discovered comes to mature markets. >> many companies are also working on drugs to fight ebola. there are no current approved vaccines or drugs for the virus.
while the financial return would be small, the health benefits would be great. smith-klein out with a cost cutting program, the drug maker pledged it will cut expenses by a billion and a half dollars over three years, exploring a spin-off of the hiv business, this as earnings topped estimates but revenues fell a little bit short. as meg mentioned, the company is working on a vaccine and expects to have the first dose ready for testing maybe even late this year. with that, shares were up nearly 2% to $44.41. shares of b oi gen fell hard today after the company reported sales of the new ms drug falling short of expectations. the company confirmed the first case of a serious brain infection in a patient who took the drug and recently died. not even earnings that whipped
analysts' forecasts stopped. dow chemical saw its profit jump last quarter, helped by higher sales in the plastics and performance materials unit, earnings and revenue topped the streets forecast, the company also out with a plan to cut costs by a billion over the next three years. despite the costs, the ceo says the company has been able to delivery for shareholders. we had had strong results. a good quarter, very pleased with it. good cash generation. the share buybacks are on track, $3.4 billion, dividends 1.3, so we're generating a lot of cash giving it to our shareholders as we bring other big projects on line next year. >> nevertheless shares were off more than a percentage point to 47.61. stanley, black and decker shares up 42%, the tool maker increased margins and sales, tightened the earnings outlook
for the year though. that didn't seem to bother investors. the stock up 1.5% to 87.41. it was the opposite kind of story for norfolk southern. the profits rose, not enough to meet analyst estimates. the revenue came up short. the ceo commenting on the recent merger talks between cfs and canadian pacifics saying he doesn't see the potential in rail mergers. >> there are significant issues of any kind of rail mma of any major scale. most importantly it is a regulatory environment that wouldn't be conducive to doing that. and in which even if you could gain regulatory approval you would have to give up we believe, most if not all of any potential benefits. >> shares of norfolk southern fell 3% today to 106.50. a disappointing sales, the quarterly revenue below analyst
estimates and cutting the full revenue guidance, and the constraints to meet demand, the stock dropped 15.5%, to 37.67. caterpillar had a difficult day today. they said the dealer sales fell 10% for the three months ending in september. sales in the mining equipment division hit the hardest, the stock off a percentage point to 94.57. after the bell, visa hiked the quarterly dividend, the company upping the payout by 24% to 28 cents a share paid to shareholders in december. shares spiked initially after that news during the regular trading day the stock was down a percentage point. and fedex anticipates a record-breaking holiday shipping season. the delivery giant says it will ship nearly 300 million packages between black friday and christmas eve.
fedex taking month december the 15th, to be the busiest day of the year with more than 22 million packages going out. and as we head into the holiday shopping season some big banks and credit card issuers are sending customers new cards, containing cutting edge technology designed to tighten security and cut down on fraud. kayla tausche has more. for many of americans, a thick envelope came in the mail, a new card imbedded with a chip. as customers raced to get ahead of the shopping during the holiday season. each new security breach has been a reality check. >> as the additional breaches are happening, our issuers are accelerating their plans, that were already in play. >> since then, this technology
has come into focus, it is popular abroad because it requires a unique code to carry out a transaction. when britain switched to a chip and pin system they cut fraud in stores by 70%. >> not surprising then, the banks and credit card issuers focused first on replacing cards most used by international travellers and frequent fliers to cut down on overseas theft. but this month it went main stream with bank of america replacing old debit cards with chips. more banks and government-issued cards will do the same thing next year anticipating a widespread change at the checkout that requires retailers to get new terminals, too. president obama highlighted the issue at the consumer financial protection bureau last week. >> i'm happy to say the private sector is already deeply engaged. today, a group of retailers that include some of our largest, home depot, target, walgreens, walmart and representing more than 15,000 stores across the
country. all of them are pledging to adopt chip and pin technology by the beginning of next year. >> while the banks will pay a bit more to put chips in cards, the retail terminals can cost up to a thousand dollars apiece and require training for consumers and employees to use. although there is one more motivation, apple pay. >> there is not just one justification for new terminal purchases, there is three. so the point is, nfc and encryption are enabling all the general terminals. >> by this time next year some half a billion new chip cards will be in our wallets, by some estimates only 60% of retailers will be ready. for "nightly business report," i'm kayla tausche, in new york. coming up, swedish massages for rabbits, watching grass grow, that is how some of your taxpayer dollars are being spent, and that is not sitting well with one senator, we'll explain right after this.
are you saving enough for retirement? well, too many of us are not. a new wells fargo survey found that middle class americans have saved just around $20,000 on average for their golden years, down from 25,000 a year ago. the report also found that four in ten middle class folks between the ages of 50 and 59 are currently not saving at all
for retirement. and about a third admit they won't have enough money to survive in retirement. >> well, you know the old man's saying one man's trash is another man's treasure, tom coburn has a twist on that, that one man's prime government expenditure is another man's wasteful pork barrel spending, all listed in the 2014 edition of the waste book, all part of the situation with monkeys being trained. what did they find,monkeys? >> you know, tyler i wish i could be trained to gamble. and they found huge waste in the federal budget. let me read you a couple of highlights. this gets under his skin, he releases it every name, sort of the name and shame. $331,000 for a study involving couples sticking pins into
voodoo dolls to see if they stick the pins in more aggressively when they have low blood sugar and they are angry. nasa was forced to spend $150 million for a launch tower that was immediately done away with because the type of rockets it was built for have been done away with years ago. nevertheless they were forced to spend the money by the politicians. and this gambling thing, a study to see if the monkeys had the same misplaced belief when we're gambling that when we get on a hot streak it may actually continue. >> so what did the scientists discover in all the research? >> they found a monkeys are just as bad as gambling as we are, when they are on a hot streak they believed it would continue. there is no basis in fact for that. the monkeys thought it, the human gamblers think it as well.
and sports stadium interesting, $146 million for sports stadium, coburn singling that out, an interesting one for sports fans. >> and tonight, one of the original apple one computers sold at auction today for a stunning $905,000, far more than forecast. the computer is believed to be one of the first batches of machines built by steve wozniak, built by steve jobs back in 1976. the buyer not disclosed, tyler you can get a brand-new mac for a thousand, but it doesn't have the same magic. >> and one may cost a few $100. >> that is "nightly business
report," i'm susie gharib. and i'm tyler mathisen, thank you for joining us, we'll see you back here tomorrow night. "nightly business report" has been brought to you in part by. the street.com, featuring stephanie link who shares her stock picks, and the multi-million dollar portfolio she manages with jim cramer, you can learn more at the street.com sla /nbr.
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