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tv   Nightly Business Report  PBS  August 15, 2013 7:00pm-7:31pm PDT

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this is "nightly business report" with tyler mathisen and susie gharib brought to you by. >> sailing through the heart of historic cities and landscapes on a river, you get close to iconic landmarks, to local life, to cultural treasures, viking river cruises, exploring the world in comfort. dow down down down, stocks fell sharply today, concerns about the consumer and corporate america. has something changed in the economy? and what does it mean for your money? >> walmart says shoppers aren't shopping, spenders aren't spending and profits won't be what was predicted the what the walmart's woes say about the broader economy. and housing disconnect. home builders are more
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optimistic than they have been in eight years. "nightly business report" for thursday, august 15th. good evening everyone and welcome. the drip, drip, drip of sliding stock prices turned into something more today, something like a tarrant. investors digested troubled news with walmart and cisco and claims mean the federal reserve will reduce stimulus sooner rather than later. the dow is 546 points or 3.5% below the all-time high hit on august 2. the s&p 500 is 48 points or 2.8% below the peak set that day. new today's sell off accounts for half of those declines from the all-time highs, the dow down 225 points, the nasdaq lost 63 and the s&p 500 lower by 24. but it wasn't just stocks that
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fell today. bond prices tumbled, too, largely on the fed fears. the yield on the ten-year bond is 2.77%, it's highest in two years. also moving up today were gold prices. they spiked more than 2% settling above $1360 an ounce as the dollar fell against the eros and the yen. as tyler just mentioned, the news from walmart gave investors the jitters. the earnings lowered the outlook for the rest of the year. but what was most troubling, the world's largest retailer said consumer spending isn't as strong as we thought. american consumers are turning cautious. the grim assessment about the consumer mood added to worries about similar earnings reports from macy's yesterday. courtney regan has more. >> reporter: it doesn't get much bigger than walmart. when the world's largest retailer says consumers in the u.s. and around the globe are
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spending more cautiously, the market pays attention, and the bigger concern is that the discount retailer doesn't see it abading any time soon. walmart's second quarter profit comes in line with wall street's expectations, but a short fall in sales. the discount retailer also slashing full-year forecasts for both earnings and sales. stores open at least a year fell come parred to last year, though, the company said both improved throughout the quarter. walmart executives blaming the 2% payroll tax hike that hit most americans this year for the reluctant to spend. >> the lower income consumer is under a lot of pressure. the mid to higher end, certainly the higher end is doing okay. >> reporter: on a media call walmart's cfo said indications for back to school and apparel and home goods is good,
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exciting. it depends on the product category and brand noting consumers are spending on bigger ticket goods like cars and home furnishings, though trading down on smaller purchases. >> the consumer has more capacity to spend today than the consumer had a year ago. they are spending it more selectively. >> something as simple as diapers, not necessarily buying the brand and more basic staples one and using savings to buy something else. >> reporter: while this round of retail earnings reflects a consumer feeling the pinch from higher payroll taxes, number of economists believe consumers have begun to get over it and think spending has begun to pick up. retailers certainly hope that's true, after all, christmas is just 131 days away. for "nightly business report," i'm courtney regan. well, shares of the nation's biggest home builders bucked the market slide today. some of the best known builders,
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dr horton, lennar and kb homes spiked 5% higher on a jump in builder sentiment and drop in foreclosures in july. that's today. those same stocks are currently in bare market territory, off 20% or more from their peaks. now with mortgage rates keeping higher, consumers turning cautious there is concern the home builder stocks which had been on fire even before the housing recovery really took root may have been over bought. diana olick has the story. >> reporter: the nation's home builders are feeling good about their business, but you would never know it from the stocks. officially in a bare market, home builder stocks are down over 20% from the highs in may. big names like dr horton now at a one-year low and downgraded by rbc. blame it on rising interest rates. >> we're absolutely concerned about the rise in interest rates. the feds' actions to taper in october will make things worse,
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not better. >> reporter: rising rates are not taking much out of builder sentiment, which is up three points in the monthly index in august, the fourth straight month of gain. builder confidence at an eight-year high. of the components, current sales and future sales expectations are up, only buyer traffic is lagging unchanged and still in negative territory. so why the disconnect between the builders and their stocks? >> these were companies that were literally on the ropes three years ago, four years ago. they are back in the clover and made remarkable strides in the short period of time but relative to investor expectations and what people believe the earnings power of the company, they are paying less the same dollars based on what they believe will transpired in the back part of the year. >> reporter: builders ease confidence is getting a boost. >> there is a shortage of product. people want to move in but they don't have anything to buy.
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the existing product is not there so we're trying to build new. it getting good. all of a sudden the houses are moving up in price and getting enough interest to buy. >> reporter: much of the builder confidence revolves around permits and starts because that's the future pay, but as one analyst notes just because they build it doesn't mean the buyers will come. i'm diana olick in washington. >> what these these bulletins from housing, the consumer and job market mean for stocks? we turn to jim paulson, the chief investment officer at wells capital investment. good to have you. >> good to see you, suzy. >> a lot of negativity today in the markets. what is your take? >> i think a lot of it, suzy, we're digesting a number of big things after a huge market move. that's one of the things we're digesting. we made such a big move off last
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fall fall lows. in audition, we've had just a dramatic change in long-term interest rates. you're talking about mortgage rates going up, the ten-year treasury hitting 280 today. it was 160 not that long ago. of course, we'll face feds tapering or slowing down quantitative easing soon. these are big events and i think it led to a little market indigestion if you will. the market is in a trading range for the rest of the year, but i think we'll get through it and as we come out the other end, maybe at the end of this year, i think we'll be stronger for it. we'll find out that both the economy and the stock market can stand on it's own two feet without as much support from the fed and even in the face of higher yields. that might put up greater confidence to drive us higher next year. >> so trading range for the rest of the year that implies the year's highs have been hit or go
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back and go above them. let me ask you this, the news we're digesting today, cisco's report and forecast and on the other, walmart today suggests there may be under lying issues having to do with capital spending, the appetite of businesses to buy equipment and on the other hand appetite on consumers to spend. are you worried about consumers and business spending? >> tyler, i'm not too worried about it. i get some of those company's reports. i think cisco reflects weakness out of the emerging world, particularly asia, which is obviousy world slowing down. i see that with global trends. but i think -- i'm looking at a consumer that's looking at the best job market we've had in this entire recovery. we created over 20200,000 jobs month on average. occurred in 2007, net worths are
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back to record highs and debt service burdens to record lows and confidence highest levels among consumers of the recovery. i think they will be okay. do they flow somewhat? absolutely. are they probably spending a little more on houses and autos and there by a little less on other things? i think that's true. the trends are in place to have a sustainable consumer going forward. i'm not that concerned about it. >> let me ask you something, pick up the comment made in courtney's package a comment about walmart and a gentleman said we're in a split economy. one area is doing well, housing, auto sales, tech spending not doing as well. are we in a two tiered economy because everybody talks about the u.s. economy is doing well and not doing well. are there two economies going on here? >> i think there is some of that, i really do, suzy. it's not necessarily totally uncommon, either as we come out
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of a recession, this is a bad one and in someways coming out of it. we come out typically with the lower income groups coming out last and i think we've seen that in this recovery, as well, where the groups now maybe more of the middle income is starting to do better but you got a big section of the lower income group that's doing bad. we have a 7.5% unemployment rate, a lot of that centered in lower incomed groups of the economy. i think you see that. the discounted areas, i think, might be suffering more than the higher-quality or higher-end retailers at this point. >> thanks a lot. jim paulson chief investment officer at wells capital investment. the crack down in egypt left hundreds dead and more than 4,000 injured, most supporters of the ousted president mohamed morsi. president obama interrupted his family vacation in massachusetts to condemn the slaughter and
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cancel plans for upcoming military exercises with the egyptian army, which washington helps fund to the tune of more than a billion dollars in annual aid. >> our traditional corporation cannot continue as usual when civilians are being killed in the streets and rights being rolled back. as a result, this morning we notified the egyptian government that we're cancelling our by-annual military exercise. >> reporter: taking place with supporters of ousted president mohamed morsi and security forces. the latest attack on a military check point killed at least seven soldiers, and also the muslim brotherhood making it clear this is just the beginning. they will not back down and rise again. they are planning a million-man march for friday. security forces on their side aren't taking chances.
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they are aught riceed to use deadly force if necessary. a cure few is in effect and traffic is dying down in the background and state of emergency is still on, as well. keep in mind, that we have comments from u.s. president barack obama. he strongly condemned what is happening in egypt and said it was for egyptian to decide what would happen in the future. in the meantime the deepening unrest in egypt combined with the civil war in syria is sending the price of crude oil higher, fearing worries about a squeeze of supplies coming from the middle east. today oil prices rose to close at $107.33. twiter the new feed to the world. financial power players use it and move stocks, but what about the risks of hacking and the slip of the thumb? is twitter raising the amount of risk in the marketplace? but first, let's get a look at the biggest drags on the dow today.
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we begin the market focus with a late-day earnings report from nordstrom. it trimmed the earnings and sales forecast as the sales at the department stores slipped. this makes it the latest retailer to cut shares. it finished to $59.33 and fell shorter after hours trading. dell out with better than
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expected earnings. the company embroiled in a take over battle between michael dell and carl icahn beat analysts estimates and that's despite shrinking sales of pcs. it closed to $13.70. kohl's was one of the few bright spots in the market. the retailer benefitting from private labeled brands like jennifer lopez and rocking republic and while some are struggling with back to school, they say they are off to a good start. they met expectations and investors brushed off the cautious outlook for the year. the stock gained more than 5% to close at 53$53.51. kohl's wasn't the only one in the green today. estee lauder saw revenue growth across gee graphic regions.
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investors slugged off mooted outlook sending the stock to $67.36. and there was a deal in the conductor business. maxim is buying volterra who makes chip sets. maxim says the purchase will give it a greater role in the enterprise and communications markets. at the close shares were down 3% to $27.76 and volterra up to $22.91. and a deal that may be about to fall apart is sending shares of onyx pharmaceuticals over. it is being held up over access to onyx' cancer drug data. it doesn't want to access the data before the study is over because it may slow the approval process. the stock fell 7% to $115.34. it happens every quarter.
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investment firms and hedge fu s funds. they give a glimpse into money managers. sowered on food stocks saling the company's holdings in craft and stocking up on general mo r moto motors. they sold off millions of shares of u.s. airways a good move considering the lawsuit to stop the carrier from merging with american airlines. delphi in favor of high-end jeller tiffany and the omega advisors unloaded most of the facebook shares. those regulatory filings are one way investors learned what wall street's big dogs are doing but another way is via facebook and especially twitter.
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on tuesday, apple shares shot up 5% after billionaire carl icahn tweeted he has a large stake in the iphone maker. the freedom to tweet is a game changer in the business world. as julia borston tells us with that freedom comes risks for investors. >> twitter which has quickly become the world's breaking news feed is shaking up the business of wall stroort aeet and invest. they take to twitter to talk stocks, sometimes moving markets. carl icahn said he may use twitter to release information before taking to the communications tool to tweet the position in apple sending the stock soaring. >> twitter is a new player in the financial market. it's being fed into the high-frequency traders who dominate trading volume now. >> in april, they said it's okay for companies to release information on twitter and facebook, as long as they warn
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investors where to look. weighing in after netflix' ceo said the viewing topped 1 billion hours. the question is what does that mean for the security of investor security accounts. from burger king and jaep to the associated press has been hacked. the passwords weren't strong enough. prompting twitter to have an additional step to access ai an account. >> it's hard for someone to hack into or hack into an iclan account and the player with his track record there are a hand full of people like that or institutions that can move markets. >> what about twitter typos? they used to worry about a flat
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finger trade. now a concern is the slip of the thumb will send the markets into a t izzy. well it's not just new media you have to worry about. "the washington post" reveals the website was hacked today and a group that supports sierran president is claiming responsibility. this morning's cyber attack lasted a half an hour but surprised some readers logging into the web page. they were redirected to the army site. coming up, a number that might frighten all parents. what it cost to raise a child and the figure doesn't, doesn't include college tuition. but first, a look at some of the most active stocks today on the new york stock exchange.
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a judge in california superior court ruled that the golden state can move forward against the ratings agency s&p. california's attorney is suing them on behalf of the two largest public employee pension funds. the case hinges on the sweet credit ratings, a certain mortgage backed securities paper that later turned terribly sour. s&p said they will defend the actions. another possible set back for the planned merger of american airlines and u.s. airways days after the justice department filed a lawsuit to stop it.
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today a bankruptcy judge asked amr to explain why he should approve the company's merger and bankruptcy protection while the federal government is challenging those very plans. the judge expressed quote lingering doubts about okaying the merger, which that lawsuit says will raise air fires and eliminate choices for travelers. although no decision was handed down it will challenge the lawsuit, continue planning for the merger and be back in bankruptcy support on august 29th. apple's online restoring gadgets to some of the most popular in the world and most counter fitted devices. in china where most of those counter fit devises are manufactured consumers may have had enough. they are fighting back to stop the sale of those bogus goods. >> reporter: the chinese consumer, shoulds his identity,
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one way he can track counterfeiters. >> fake crocs. >> reporter: after sniffing out fakes for two decades, he feels consumers are backing him up in the fight. people have a stronger sense to protect their rights against counter fits he says, china has long been the land of the fakes. famous for everything from bogus luxury handbags and watches to gadgets but recent healthcares involving food and iphone knock offs are making consumers here think twice. >> counter fit shouldn't be normal in our lives. we should boycott them. >> translator: i don't trust the quality and they are harmful to genuine products. >> reporter: counter fit harmed international businesses for decades with hundreds of billions of dollars in estimated losses each year. beijing is clamping down on violators but to many companies, progress is slow. this wine importer opened shop
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more than two years ago. she's dealt with one copy cat and pursuing another. >> so they copied our store, tried already from the price concept, from the wine descriptions and wine sometimes even the uniform of our stuff, everything is copied. >> reporter: investigators wong says the situation will only improve if consumers are allowed to move from complaining to advocating the government enforce the law. otherwise, china will only be known for cheap low-quality and unreliable products he says, a reputation china wants to change. for "nightly business report" in beijing. and finally tonight, if you thought raising a child was getting more and more expensive, well, you're actually right. it will cost parents almost a quarter of a million dollars to raise a baby born in 2012 and until they turn 18.
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if you send them to college, you will save twice as much. if a parent stays home to raise them, that will up the cost. it is lowest in southern cities and rural areas and not surprisingly it says the rises are because of housing and healthcare but worth it all. >> it's worth it all. i'm sending my son macky a bill. here is your bill. send us the one stock you want to discuss tomorrow. log on to our website we're still taking nominees. click on the link to submit your question and don't forget to include where you're from. that's "nightly business report" for tonight. i'm susie gharib, thanks for watching. >> i'm tyler mathisen. thanks for me, as well. have a good night everyone. see you back here tonight. "nightly business report" has been brought to you by. >> sailing through the heart of historic cities and landscapes on a river, you get close to iconic landmarks, to local life, to cultural treasures, viking
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river cruises, exploring the world in comfort.
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