tv Nightly Business Report PBS February 8, 2018 5:00pm-5:30pm PST
>> announcer: this is "nightly business report," with tyler mathisen and sue herera. >> not over yet. stocks fell off again. this time the dow plunges 1,000 points, its second biggest point drop ever. staying focused. what to do and not do when the markets throw a hissy fit. a house divided. lawmakers are split as the deadline to keep the gent up and running fast approaches. those stories and more tonight on "nightly business report" for thursday, february 8th. good evening. and welcome. i think. okay. so you pick the description folks, swoon, slide, selloff, plummet.plunge, any way you slice it, the stock market today was nasty foagain. the second time this week, the dow fell quadruple digts. this time, 1,000 points, a little more than that.
second biggest one-day point drop ever, after monday's fall. the dow is current loo o tra for its worst week since october 2008. that oas in the heartthe financial crisis. now, the culprits today appear to have been the same that have dogged the market since last friday, a rise in bond yields, and sharp moves in volatility nds. here are the numbers. sit doesn't for these. the dow wilted 032oints to finish at 23,860 that is 4%. nasdaq fell about 275 points or 3.9%. and the s&p 500 drop an even ar0. here's how the indexes have fallen since their peak just ck ten days or so ago on january 26th. the dow and s&p are now both in correction territory. that means they are down more than 10% from their peak. and the nasdaq virtually there,
of a 9.7%. babb pisani has more on the day's act. >> reporter: it wa another wild day, the kind of day where the market appears to be changing by the minute. the dow plumtded me than 000 points and ended at session lows. once again in correction territory, down 10%. what is going ri? thenal trigger behind the selloff was friday's jobs report. higher wage growth led to a spike in bond yields. he stock market. that makes some sense. but since then there has been an x factor, this slew of trading strategies, short volatility,ra long stocks that's been unwinding. this selling that we are seeing this week, this massive selling, that's deleveraging, unwinding of those trades. for nowp in of the selling appears to be professional traders. if volatility continues, there will beor outf from retail investigators, those who pouredl $70on into exchange traded funds in january.
their likely to get a little for "nightly business report" i'm bob pisani at the new york stock exchange. as we mentioned with latest pullback the dow is now in correction territory. the stocks in the index are some of the most widely held among investors. is there any value to found there? here is john trainer, the chief investfficer at people's wealth management. we are also joined by kimberly forest who will give us her thoughts on today's market activity and what could be next. welcome to both of you. >> thank you. >> thank you. >> john, let me start with you. weentioned that the dow and the s&p are in correction the nasdaq is virtually there as well. does this feel to you like a correction? or does it fell like a change in the market from bull to bear? >> well, i'd go with your firs we think this is a correction. and one of the points that we are trying to emphasize wit clients is differentiating between what's going on on wall
street, which is shocking, and what's taking place on main street, really, the real economy. d wall street is going through a correction, as you just said, aon correc there is some portfolio repositions going on right now. we do not bieve that that is going to leak over onto main street into the real economy. so long term investors keep your eye on economy. and we think you know things -- from will be brighter skies to come, but there will a be a transition and the transition is not over. we can see this volatility continuing. >> kimberly, how about you? how lo could this spasm last? >> that's a great question.el and i have to you, no one knows. that being said, what we're going to do is look at how people -- how investors value stocks. and generally, what they do is they look at the p/e times a multipl multiple. we'll get to what that equation is here in a second. it's price divided by earnings
times some multiple. historically when earnings have investors very low have had to accept higher multiples. last year, the market end at abou 20 times the price to earnings ratio of the index. lid this year, that's falling. and that's f because of bond prices. so what we have to ask ourselves is, how low does this have to go for investors to be hapith the multiple? and i think we are close to it. we are down, again, about 10%. and you know, it feels like this could be a bottom, but, again, no one knows what is in there fuor anything, let alone stock prices. >> john, you gave us some buying opportunities. you know, for longer term investors, a lot of -- you know, we had a parabolic move up in the market. and it feels good when market goes up like that. it doesn't feel so good when the market>> goes down. no, i doesn't. >> but if you do have lon
term time horizon, what would now?be buying right and -- would you be buying right now? if so, what. s >> three of thcks in the dow. we like home depot, we like disney and we likete u health care. we think each one of them is going to be a beneficiary of robust economy. they are beneficiaries of the tax reform that we've en. and each of them has a unique business model where we are eing strong earnings growth. so we are sticking with the highest conviction names. that's the kind of advice we are giving clients right now. now is n the time to be bottom fishing in bitcoin. we think the three names i mentioned would be better names. >> ki john just gave us good ideas there a you selectively buying these days? or what is your posture. >> we like to buy low and sell high because we are value investors. and we -- i can't tell you exactly what we've done, but we would likely be more of a buyer than aelr at this point.
there are a lot of good stocks out there that we believe are mispriced. and again, we are going towards those high quality names that are benefitting from an improving economy. and that would includeames in the industrial area as well as e technology bec productivity never really goes outs of style. >> john you mentioned that you are talking tor clients. >> uh-huh. >> what are you hearing from your clients? are they worried about this market? what are they asking whu? are they telling you? >> that's a great question. and for most of last year, sounded like a broken record. i was talking to them about, you know, as rates rise we higherate seeing volatility in the market. we have actually been bringing to client meetings a chart that shows the last thr fed terest rate increase cycles from start to finish. the s&p 500 wasgh , but it was a very rough ride volatility increased. so last year we didn't see the volatility. e ople were saying okay we hear
you butn't see it. now they are finally seeing it. they are seeing that and we are saying, this will continue. we anticipate t thised of volatility continuing in the market. >> 2017 kim, sure is not 2017 in terms of anything right now, in terms of volatility. we have given up a lot, almost half of 2017's gains in point terms if you loo at it that way. i wonder, even though the market is so heavily driven by al rithmic or machinetrading, are there any tell tales that could tell you that the bottom has been hit? is there a number? is that a data point? is there a profit report that couldk k in and turn the psychology? well, i think in the 18 years that i have been doing this, this is a cli chch but it's reay true. people are driven between the two poles of fear and agreed. i have to think that the
beginning of this year was -- people were hovering around the agreed pole. right? cause they saw that market going up so steeply. >> uhveuh. >> andbody was piling in. now, in very shorttime, we have got that other pole. >> okay. >> the fear pole coming . so i think when things -- when you feel like the worst, that could be the time where it just stops becauses there no more excess to get out of the system. >> all right. >> and i don't know when that is. rry. >> no. that's okay. listen, you don't have a crystal ball. nobody does. >> nobody really does. >> john trainer with people united wealth management. kim forest with forest pit capital. the dead tne to keep government up and running is midnight tonight. and as of this t evenre are growing divisions, particularly among house lawmakers. kayla touchy is on capitol hill for us. where do things stand as of know. >> repter: tyler, there have been no votes so far and the
deadline looms in a matter of house. the house was eyeing a late night vote on the. but the senate hopedo wrap up its vote by this afternoon. but there have been some obstacles, perhaps predictable ones that leadership is nowrk g to solve expeditiously. >> what might those be? what are the holdups? >> in order to move forward an the senat 100 senators need to unanimously sign off on the measur to move forward today. there is one who is not on board. rand paul vehemently opposes more spending and higher debtle ls and has been trying to get people to outlaw the newis of budget budget caps to try to put republicans on the record on this issue. basically, he want to fund the got rnment but note higher levels that the white house, the house and the senatey have alregreed to. that's something that's not going to fly. >> he hold all those cards and they have to have 100% behind
the vote what is the risk now that the government shuts down again for the sond time in month's time? >> there is still an opportunity for this to get sorted out before the clock strikes midnight tonight. but without senator paul's support the senator can't move forward until the wee hours of tomorrow morning, risking a technical shut down where the government is unfunded overnight but congress scrambles to get ib togethore federal workers go on duty at 9:00 a.m. unclear whether they can get it done in that window of time but that is certainly a possibility. >> kayla touchy on capitol hill. as kayla mentioned the budget agreement brings more spending more doesn't and potentially more problems. ylan mui has that par of the story. >> reporter: the testry department is projected to hit e mileston next year. it's to the one to celebrat the nation's deficit is forecast to top 1 trillion dollar in 2019 after law makers in washington struck a deal to keep the
government open. experts say that compromise paves the way for a big increase inal fed spending nearly $2 trillion in deficitsver the xt decade. more borrowing meansin bigger rest payments at exactly the time when the federal reserve is raising interest rate overspending is a partisan problem. republicans or democrats, it doesn't matter once they are charge they start spending as fast as they can. this deal is absolutely the besf example that. >> reporter: even before this budget deal interest expense was on track to become one of the biggest costs in the feral budget within the next ten years behind social security and by 2048 it is expected to be the single biggest category of federate spending according to the peterson foundation. this is not the way the republicans intended to run the gove when they took control of washington a year ago. >> this is the esident's fy 2018 budget. >> reporter: the white house is very proud of the fact that its
first balanced actuallyovalanced the decade and reduced the national debt in year one. but that appears to be falling by the waysideow and some fiscal hawks happy about it. >> a someoint we are going to have to change the name from the department of the treasury to the at the present time of debt. >> reporter: the reality is that more money is often the solution tohe thorniest political problems. for "nightly business report," i'm ylan mui in washington. >> let's look at some of today's upgrades and down grades. humana to outperform from neutral at credit swiss following the insurer's earnings report. the firm k378g9s he will ronment to continue. the price raid from $2.50 to 2.69. >> boston beer was lifted to neutral fromt underperform mcwary. twisted tea is one of their product. the price target rated to 189
from 155. boston beer shares up 1% on a really bad day. at tells people were out grabbing a beer. >> clorox was dngraded to hold from buy at argus research. that firm says margin pressure l and privateel competition owth. impede the firm also sees few near term catalyst for t second. shares finished down a fraction. twitter was downgraded to sell from hold at pivotal research after the company reported earnings this morning. the firm says twitter won't able to beat its stronger competitors in the ad market. the analy reiterated his $21 price target. despite the downgrade the stock soared. one reason why twitter stock was up so much was because it reported its first quarterly profit ever.oo juliatin has more on
what's working for twitter and the challenges that it brings. >> reporter: the company announced a surprise return to growth, growing its revenue 2% in the quarte and beat analysts expectations on earnings as well. twitter's monthly active users of 330 million fell short of expectations. that number flat with the prior ghquarter. thp 4% from a year earlier. but twitter reported i fifth consecutive quarter of double digit dailye act user growth. >> we are proud of the progress we made in 2017 and confident in our path ahead. would he have a significant opportunity ahead of us to twitter in as many hands as people and make itev more rt every day. >> jack dorsey saying 2018 wilen be an inves here as any no longer focus on margin growth and focus on hiring people on their product and sales team. they will also keep working on artificial intelligence to show users what they are most
interested in live content and happening now at the top of users timelines. and analysts are encouraging that twitter haas has plenty of room togroh. >> the advantage twitter has from an ad dollars perspective the same as snap. these companies are tisn. the 100th the size of goinge. they can grow easily withoump g into the goliaths like facebook and google. >> as for the botshat have drawn criticism during the 2016 presidenal election, dorsey says they are trying to direct users to credible accous and content. julia boorstin in los angeles. up next, what cbs is doing with its tax reform windfall.
better thas looks at cvs's strategy. > they saw a $1.5 billion benefit from tax reform, exutax clueding t breaks profits were driven by the phaacy benefits business which offset continued weakness at its stores. they intend the plow it back into the business ult putting a chunk into worker benefits. starting pay will rise matching competitors like ndwalmart, a all full time employees will get four weeks parenta leave. they will spend on improving stores and boosting data systems as ll, which the company believes will help improve patient care as i looks to turn store clinics i health clinics. the rest will be used to pay down debt as they seek regulatory aroval to buy aetna. last week, theru anti review
period was extended. the ceo said that was expected. >> things are moving along as planned. we continu to expecthe transaction will close in the second half of 2018. in addition,eghe ition planning has begun, and we have asemisemibled team with representatives from both companies and are very pleased with how the planning process is progressing. executives say those investments will pay off longer term, and an increasingly competitive health care environment. one cvs hopes to dominate even more. for "nightly business report" i'm better that coops in new york. viacom rais its full year revenue forecast. that's where we begin tonight's market focus. the media company missed quarterly sales expectations but said it's optimistichat its results will improve this year. the company said it's working to improve growth in advertising sales and cut back on losses in liate revenue. last week viacom and cbs said they were exploring a merger.
viacom share rose 7% to $32.71. >> "new york times" reported another decline in print sales but the newspaper topped expectations thanks to a growini tal subscriber base. sub skriks description renues reached over $1 billion. they expect to see subscriber growth remain strong during this quarter. shopped pops to 44.40. as it faces regulatory issues with one of its new may grain treatments. the company said the fda raised concerns with its drug ever inner cal into question when that medication might enter the market. teva acknowledged 2018 will be difficulty. the shares well to $18.64 haynes gave earnings guidance for the year that disappointed analysts.
profits during the period were inine with estimates but shares fell 11% to $19.57. profit and topped sales expectations. grub hub also said young brands a going to take 3% stake in the company and partner with it to offer del options across the country. grub hub shares up 27% today at $89.04. the beauty products maker cody said strong deman for its newly acquired brands helped top wall street's the company said it is optimistic about the year ahead raising expectations saying it expects to post positive renue growth in the second half of 18. shares climbed t14% $19.96 after the bell the insurance giant aig missed expectations as tax changes and capacityurt results. shares rose slightly in the extended session but did end the
regular day down 3% at $58.28 also aer the bell the chip maker nfd reported earnings and re that easily topped forecasts. they also gave salesorasts for fiscal 2019 that were more than expected. shares took off in after hours butinished the d regul down nearly 56 brz at $217.52. >> coming up, how to stay focused on your long term goals in a stomach-turni market.
there is a little bit of a n rundf some classic safe haven investment for a volatile market liks one. if you own stocks and your stress level is rising there are thinre to remember if you a long term investor. sharon eperron is here to help you navigate the ups and downs. >> reporter: it has been a ller coaster ride that maybe never expected. the recens swi in the stock market have been specially tough for long term investors who often buy and hold and now may have gotten a little ooked. re are tips on how to ride out the wild market. don't panic. member your goals. there is a reason you started investing. you set a goal. it could have been been to save for college or fund your retirement. whatever your plan, take deep breaths and stick to your plan.
the money is there in the long haul and it's probably better to be in the market where over it's going to grow. the next thing is don't hit the sell b until you have reassessed your risk. i yoestment mix may be too aggressive. after last year's gns your portfolio may be retweaking. rebalance, diversify your holding. if you need cash for a large purchase inhrwo or years, rethink the stock exposure thirdly, don't go it alone. talk to an adviser,peaking wi a proe who weathered the moves like these before may give you a gut check, and if the you need it, calm you down and rework your investment strategy. before we no, here'ser look at how the major indexes closed. the dow plunged 1,032 points to close at .23,8 that's 4% to the downside. 275.nasdaq fell about the s&p 500 dropped 100.
and here's how the indexes have fallen since their peak on january 26th. the dow and s&p a in correction territory, which means they are down more than 10% from their peak. the nasdaq ise off m than 9%. actually, closer to 10%. almost in correion territory. that will do it for us tonight. thank you for joining us. i'm sue herera. >>n going to be interesting friday. thanks for being with us. i'm tyler mathisen. have a greatvening, everyone. we'll see you tomorrow.
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