SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Bounce back. The rally
holds for a second day. The Dow logs its best two-day point gain ever. Is
this the turning point that investors had been looking for?
No clear path. The U.S. economy grows as global economies hit a rough
patch, complicating the picture even more for the Federal Reserve.
And, off the charts. The best car “Consumer Reports” has ever tested.
All that and more tonight on NIGHTLY BUSINESS REPORT for Thursday,
Good evening, everyone, and welcome. I`m Sue Herera. Tyler Mathisen
is off tonight.
Solid growth — the U.S. economy grew more than originally thought in
the second quarter, helped by a trifecta of spending by consumers,
businesses and by governments. Gross domestic product, the broadest
measure of economic activity, expanded at 3.7 percent, above expectations
of 3.2 percent.
And that wasn`t the only positive economic report. The job market
also remains healthy, claims for first-time unemployment benefits fell by
6,000 last week to near historic lows, and home buyer demand remains steady
in July — as pending home sales — a forward looking gauge of U.S. home
sales rose half a percent.
But these numbers stand in contrast to what`s happening in other parts
of the world, where stock markets are falling and global growth may be
slowing. And no where is the confluence of events more evident than at the
meeting of central bankers in Jackson Hole, Wyoming, where the Federal
Reserve`s next move is very much in focus.
Steve Liesman is there.
STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: This grizzly
bear stands at the entrance to the Fed`s deliberations in Jackson Hole, a
threatening reminder they may not be out of the woods when it comes to the
dangers of raising interest rates.
But one Fed official is ready to stare down the bear.
ESTHER GEORGE, FEDERAL RESERVE BANK OF KANSAS CITY PRESIDENT: This
week`s events complicate the picture, but I think it`s too soon to say it
fundamentally changes that picture. So, in my own view, the normalization
process needs to begin and the economy is performing in a way that I think
is prepared to take that.
LIESMAN: It`s major question for the Fed — to be deterred by the
markets or propelled by the better economic data. Rate hike advocates like
George got ammunition today in the form of a major upgrade to GDP in the
second quarter to 3.7 percent. Every major component — the consumer,
business and government — was revised higher.
It was a substantial bounce back from the weak growth that started the
RANDY KROSZNER, FORMER FEDERAL RESERVE GOVERNOR: In particular, it
was very good to see more investment, because I think that`s been one of
the challengers where we haven`t been seeing enough investment. I think
that`s one of the reasons why we haven`t been seeing wage growth. So, if
we can get more investment, that means firms are more comfortable with
where the economy is growing, less uncertainty, there`ll be more hiring,
more wage growth and then we`re on the good path.
LIESMAN: But there are those who say the Fed should fear the markets
KRISHNA GUHA, EVERCORE ISIS: The case for September was weakening
even before the sell-off. And I think the sell-off does matter even though
you absolutely shouldn`t set policy for the benefit of the markets.
LIESMAN: And here in Jackson Hole, there`s another element for the
Fed to consider — politics. Protesters led by Nobel Prize-winning
economist Joe Stiglitz delivered a petition with 110,000 signatures urging
the Fed to stand pat so workers` wages could rise.
JOSEPH STIGLITZ, NOBEL PRIZE-WINNING ECONOMIST: I don`t see this as a
hard call, and what is interesting is that though widespread support among
people who are not of the mindset of the Fed, not involved in the financial
markets, people who are really concerned about the real economy, there`s a
broad consensus. This is not the time to be raising interest rates.
LIESMAN: As Fed officials prepare to meet, the mountains are shrouded
in clouds, a bit like the outlook for Fed policy ahead. No doubt there`s a
bear lurking in those woods.
For NIGHTLY BUSINESS REPORT, I`m Steve Liesman in Jackson Hole,
HERERA: No bear today. Stocks soared for the second straight day,
helping the Dow index log its best two day point gain ever. It`s the
latest big move in a week chockfull of them. The Dow has travelled more
than 10,000 points since Monday. And there`s still one more day to go in
At the finish today, the Dow rose 369 points to 16,654, closing out of
correction territory. The NASDAQ also out of the correction, climbed 115,
and the S&P 500 gained 47.
Could this be the turning point that investors have been looking for?
Bob Pisani reports from the New York Stock Exchange.
BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT: The rally held for
a second day, but not without a lot of drama. For example, the Dow went up
2 percent in the last 45 minutes. That`s pretty amazing.
Once again, looking at a chart of the Dow really does don`t justice to
the volatility. This is the way to look at the day. The Dow opened up 200
points, and rallied another 180 points in the afternoon and then fell apart
in the afternoon, dropping 300 points and then rallied 330 points into the
Traders bought stocks hand over fist. There were seven stocks
advancing for every one declining.
Volume was heavy once again, though not as strong as early in the
week. The most widely held names, Apple (NASDAQ:AAPL), and Microsoft
(NASDAQ:MSFT), JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC), Pfizer
(NYSE:PFE), all were up 2 percent to 3 percent.
A 10 percent rise in crude made energy stocks the star performer.
Now, if you just look at the 300-point rise in the Dow, along with
yesterday`s 600-point rally, you might be tempted to say that we have
turned the corner. But the crazy intraday moves do not inspire confidence.
We need to see more boring August days before traders feel the worst is
For NIGHTLY BUSINESS REPORT, I`m Bob Pisani at the New York Stock
HERERA: As Bob just mentioned, energy stocks moved higher on that
spike in oil prices. West Texas Intermediate settled up more than 10
percent, its best one-day rise in six years.
Much of the gain is being attributed to a technical move. But as
Jackie DeAngelis tells us some experts may be starting to change their
thinking about where prices are headed.
JACKIE DEANGELIS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Crude oil is
seeing a near $4 pop day, having the best day since April 2nd, 2009.
Even the strong dollar couldn`t hold crude down, as strength in U.S.
equities lifted it higher.
The conversation in the pits today, have we bottomed? Certainly,
we`ve had that conversation before, and we`ve seen head fakes before as
well. But this time, traders think that crude could be working itself out.
In terms of data, yesterday, a draw in crude inventories added support
to prices. Remember, though, this is typically the time of the year that
we start to see strong build. That can still go coming but perhaps a
little bit delayed.
Tomorrow, we`re going to get rig counts from Baker Hughes (NYSE:BHI)
which may give us some insight into how production will trend here in the
For NIGHTLY BUSINESS REPORT, I`m Jackie DeAngelis.
HERERA: The big market swings have grabbed the attention of the
individual investor, who wants to know what they should do with their
investment and retirement accounts.
John Sweeney, executive vice president with Fidelity Investments,
Planning and Advisory Services, is here to offer some insight on that.
Good to see you, John. Welcome back.
JOHN SWEENEY, FIDELITY INVESTMENTS: Thanks for having me, Sue.
HERERA: Let`s start with who are you are hearing from.
SWEENEY: So, we heard from three different kinds of investors. I`d
call them the nervous investor, the confident investor, and the bold
And certainly on Monday, you had significantly elevated call volumes.
People were concerned about the information coming out of Asia. They`re
concerned about oil and obviously the impact on the Federal Reserve. And
so, people were looking for information.
The nervous investors — and there are very few of them — said maybe
it`s time to take some profits off the table.
The vast majority of investors though were confident and the people
who had plans, retirement plans, plans for college, and understood the
roles of asset allocation in their portfolios, they were confident.
And the very bold, they stepped in and they bought on the dips and
they took advantage of the low prices.
HERERA: What about those who might not have a plan because markets
like this and volatility like this certainly rings home the fact that you
don`t have a plan and the market basically is controlling what you do.
SWEENEY: Well, it`s interesting. It`s like a health care. The
doctor has been trying to get you to come in for an appointment. The same
thing is happening this week with our representatives. So, they have been
calling people all summer trying to get them to come in and establish
plans. This was the precipitating event that actually sparked people to
call us and say, we need to now come in and have a plan. We need to feel
So, we`ve turned our phones out bound. We have been proactive at
communicating with customers and trying to get them to say, now is the
right time to come in and re-establish that plan.
HERERA: What about trading activity? You mentioned that the bold
investors are buying. How significant has been the pickup in trading
SWEENEY: So, Monday was a record trading day for Fidelity. Tuesday
and Wednesday were a top ten trading days all in. Across the week, it`s
been buys almost two to one. You have seen a lot of activity, a lot of
people stepping in and looking for bargains in the oversold market.
HERERA: All right. Thank you so much for the insight, John.
SWEENEY: Great. Thank you, Sue.
HERERA: John Sweeney from Fidelity Investments.
And it`s not just the individual investors that are keeping watch over
all that market volatility, but also small business owners because those
concerns on Wall Street could trigger a change in thinking and spending on
Kate Rogers (NYSE:ROG) reports.
RUTH TZANETATOS, NONI`S COFFEE SHOP: Very slow this June, July,
KATE ROGERS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Noni`s Coffee
Shop in Bronx, may be far removed from Wall Street and the deepening fears
about China that have roiled global markets in recent days, but shop
manager Ruth Tzanetatos has been watching the stock market closely. After
a slow summer, the business which has been around for 40 years was hoping
for a pickup in the fall. This week`s events have her concerned.
TZANETATOS: If this continues and the economy takes a hit, yes, it
will happen that we won`t be able to pay the rent. And it`s just going to
look like — lock up the shop and go home, because it`s really, really bad.
ROGERS: Recent market moves come at a time when optimism among many
small businesses is arguably holding steady.
The National Federation of Independent Businesses` index for July
showed gains in lending according to the “Thomson Reuters (NYSE:TRI)”
paynet small business lending index hit its highest level since 2005 for
the month of June.
But having survived the ups and downs of the last recession,
Tzanetatos is cautious.
TZANETATOS: For the past five years, we haven`t raised the price, and
we`re not hoping to raise the price and now we are afraid. Eggs went up
twice the price and we cannot raise the prices.
ROGERS: While volatile market swings have little impact on the day to
day operations of the America`s small businesses, if sustained, mom and
pops may have some cause for concern.
Many Main Street businesses and their staffers rely heavily on 401(k)
and IRA plans, which are subject to move in the stock market.
JACK MOZLOOM, NATIONAL FEDERATION OF INDEPENDENT BUSINESS: Most Main
Street businesses invest in their own retirement. Their self-funded plans
like 401(k)s and IRAs. And when they fluctuate, it makes everybody
nervous. The market has done well for the last several years. Main Street
hasn`t done all that well, but at least there was the confidence in the
ROGERS: Tzanetatos learned that lesson the hard way during the last
downturn, having lost her 401k entirely. She no longer trusts the market.
TZANETATOS: No, no, no more. Yes, a little saving now and then, here
and there, working, trying to save a little on the side.
ROGERS: Like many on Main Street, she`ll be watching Wall Street from
For NIGHTLY BUSINESS REPORT, I`m Kate Rogers (NYSE:ROG).
HERERA: And still ahead, a well known company that`s not seeing the
slowdown in China, at least not yet. That story is next.
HERERA: A glitch at DNY Mellon in calculating the prices of mutual
funds and exchange traded funds could continue into the weekend. This was
all caused by a failed software upgrade last weekend, which has impacted
calculations. The issue of course came right as we started this very
volatile week. It affects about 20 mutual fund companies.
Copper producer Freeport McMoRan is cutting its spending, lowering
production and slashing jobs. This as it deals with the decline in copper
prices and slowing growth worldwide, especially in China. Freeport plans
to cut capital spending by nearly 30 percent and reduce head count by 10
percent. That was enough to stem the drastic decline in its share price
over the past few months and send that stock soaring 28 percent in the
regular session. In after hours, the stock rose even more after Carl Icahn
reported he`s taking a stake in the company.
Tiffany (NYSE:TIF) reported a decline in profits and cuts its earnings
outlook for the year. That pressured shares, which finished down 2
percent. But the high end jeweler isn`t blaming China where it does
because for its lackluster quarter, at least it`s not blaming it yet.
Courtney Reagan has that story.
COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Tiffany
(NYSE:TIF) and Company does 25 percent of its sales in Asia-Pacific region,
including China. In recent years, that region has been a source of growth.
But lately, it`s also a source of growing concern. In China, Tiffany`s
second quarter sales improved by double digit, but the there`s weakness in
the numbers coming from Hong Kong and Macao.
The retailer says it believes many Chinese tourists have shifted their
traveling and shopping to other markets. The high end jeweler also relies
heavily on tourist spending in many regions around the world. That iconic
blue box has long been the object of destination shopping for many
international travelers. And almost half of its sales still come from the
Americas. However, Tiffany (NYSE:TIF) says the strengthening U.S. dollar
and subsequent weakening of foreign currency against the green back has
decreased tourist travel and spending in the U.S.
Moving forward, it`s difficult to paint a clear picture. Oppenheimer
and Company analyst Brian Nagel points out recent market volatility both in
China and around the world isn`t captured in Tiffany`s results.
BRIAN NAGEL, OPPENHEIMER & CO.: I think we have to be careful here.
These results were as of the end of July, so much of the stock market
volatility happened after the Q2 results. But, look, the real key positive
in local currencies, you saw very good sales in Europe and in Japan, solid
sales in China and even the U.S. is actually holding up OK.
REAGAN: On the earnings call, Tiffany`s chief financial officer
reminded investors that when it comes to China, quote, “It`s not possible
to quantify the positive wealth effect from a rising stock market on our
sales growth. It`s similarly difficult to predict any potential negative
effect on sales in magnitude or duration from the recent stock market
correction or currency devaluation.”
The high end jeweler also says it remains focused on serving Chinese
consumers around the world and it`s not altering its strategies in any way.
For NIGHTLY BUSINESS REPORT, I`m Courtney Reagan.
HERERA: A number of other retailers reported earnings today. Dollar
General (NYSE:DG) reported a rise in second quarter profits as people
flocked to the discounter for bargains. Off price retailer Burlington
stores topped analysts` estimates for both revenue and earnings and raised
its full year outlook. And arts and crafts chain Michaels posted earnings
guidance for the year. The CEO attributed the strong sales in part to its
partnership with Pinterest.
Dollar General (NYSE:DG) fell, while shares of Burlington and Michaels
Coffee sales caffeinate J.M. Smucker`s quarterlies. And that`s where
we begin tonight`s “Market Focus”.
The Folgers maker saw its coffee business surge, helped by higher
prices. Profit and revenue came in better than expected. Shares were 6.5
percent higher to $116.29.
Solid sales helped Signet post results that topped estimates. Same-
store sales were better than expected. Those results were helped by the
firms recent acquisition of the Zale (NYSE:ZLC) brand. The stock popped 14
percent to $138.82.
Caterpillar (NYSE:CAT) announcing plans to cut nearly 500 jobs because
of declining revenue. The construction and mining equipment maker said it
will consolidate several units of its customer services divisions. Shares
were more than 2 percent higher to $75.66.
Apple (NASDAQ:AAPL) unveiling plans for a new product event on
September 9th. The tech company is expected to present new iPhones and
other devices. Apple (NASDAQ:AAPL) has introduced a new iPhone model every
year around this time for the past three years, but it`s only dropping
vague clues about the event. Shares were nearly 3 percent higher to
The Food and Drug Administration has approved Amgen`s drug for
patients with hereditary forms of high cholesterol. Last month, the FDA
gave the OK to a similar treatment from Regeneron and Sanofi. These are
part of a new class of injectable cholesterol drugs that work differently
from statins. Shares were higher in after hours trading. And at the end
of the regular session, the stock was up 1 percent to $155.72.
After 80 years of testing cars, “Consumer Reports” has done something
few would have ever expected. It has given its first perfect score of 100.
The car — the newest version of Tesla`s Model S. And this helped send
shares of the electric vehicle maker up 8 percent.
Phil LeBeau has the latest details on the latest Tesla road test.
PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT: Hold on to your
seats. The performance version of Tesla`s Model S has made history, doing
so well in “Consumer Reports” testing, it went off the charts.
JAKE FISHER, CONSUMER REPORTS: So, it really kind of blew up our
system really. It scored actually above 100 before we actually had to make
some changes to our scoring system to account for this car. It really does
almost everything better. Something we aren`t used to seeing from cars at
LEBEAU: What`s improved with the Model S P85D?
With double motors, it accelerates much faster, it has better handling
and is more efficient according to “Consumer Reports”.
For Tesla CEO Elon Musk, the praise validates his vision of building
an electric car that also delivers great performance.
The company says, “The Model S being the first car to receive 100 out
of 100 points is truly a testament to our commitment to continually giving
our customers enhancements in range, performance and value, and ultimately
a better driving and ownership experience.”
An experience that comes at a hefty price. The P85D Model S sells to
well over $100,000 and “Consumer Reports” is careful to point out this is
the best car it`s ever tested. But it`s not perfect, especially the center
FISHER: A lot of the controls are actually this big giant iPad
basically. It drives the car. There`s a full web browser there. You can
access it while you drive. I think Tesla went a little too far with that.
LEBEAU: This review gives Tesla a boost as it approaches a critical
moment next month. That`s when it will unveil its next vehicle. The Model
X, an electric high end SUV.
Phil LeBeau, NIGHTLY BUSINESS REPORT, Chicago.
HERERA: Coming up, Katrina, ten years later. The uneven recovery in
the city hit so hard by the costliest natural disaster in America.
HERERA: Here is what to watch for tomorrow: A report on personal
income and spending and another check on the consumer with the consumer
sentiment index. And that is what to watch for Friday.
And the city of New Orleans is proclaiming itself resilient today, ten
years after Hurricane Katrina nearly wiped out the city. By many measures,
the city has recovered and then some. But in other ways, it hasn`t even
come close. And all of that ties back to a federal response that has been
as uneven as the recovery has.
Scott Cohn covered the storm and its aftermath in 2005 and he`s back
in New Orleans for us tonight.
SCOTT COHN, NIGHTLY BUSINESS REPORT CORRESPONDENT: It wasn`t the
storm itself that killed so many people and left 80 percent of New Orleans
UNIDENTIFIED MALE: They`re trying —
COHN: It was the failure of the levees, designed, build and
maintained by the federal government. They broke in 50 places.
UNIDENTIFEID MALE: The surge barrier was built to interrupt that
COHN: Today, more than 100 miles of new protection encircles the area
at a cost of $14.5 billion. And the Army Corps of Engineers says these
barriers will hold.
COL. RICK HANSEN, U.S. ARMY CORP OF ENGINEERS: I think we`ve become
competitors with the Dutch in doing this, and we have learned a lot from
them and now, they are learning a lot from us.
COHN: The system of levee, pumps and gates is supposed to protect
against 100-year flood. But even the local flood control commissioner
questions whether it`s enough.
G. PAUL KEMP, LSU PROFESSOR: Most cities in Europe have 500 to 1,000
year protection. This is a hundred year protection considered minimal for
a major urban area in the developed world.
COHN: This guards the city that`s about 20 percent smaller than a
decade ago. A $9 billion federal housing program administered by the state
was supposed to make it easier for people to come home and 130,000 families
PAT FORBES, LA OFFICE OF COMMUNITY DEV. EXEC. DIR: This is completely
unprecedented. This is the largest rebuilding program in the history of
the United States.
COHN: But thousands more haven`t come home, in areas like the Lower
Ninth Ward, which local activists blame on a program racked with
MELANIE EHRLICH, CITIZENS ROAD HOME ACTION TEAM: There are many, many
residents, homeowners, who didn`t come back and part ways that`s because of
the unfairness of the road home program.
GEORGE W. BUSH, FORMER PRESIDENT: And, Brownie, you`re doing a heck
of a job. FEMA director is working —
COHN: Almost from the beginning, the federal government has been
trying to make up for the initial response.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: What you`re seeing here
is an example of the incredible federal, state, local partnerships that
have helped to revitalize this community.
COHN: Today, another president came to praise the recovery, the first
African-American president in a much wider and forever changed city.
COHN: The hope is that the changes will mostly be for the better. If
not all for the better an example behind me, just part of that massive
flood control effort to keep surging waters from Lake Pontchartrain out of
the city unlike 10 years ago, a massive investment to keep history from
repeating itself — Sue.
HERERA: Scott, as we mentioned, you covered this story for us ten
years ago, and you have been back periodically since then. So, I`d like
your sense of how the recovery is going.
COHN: You know, in some areas, Sue, it is truly impressive. A lot of
this has happened in the last two years. You see a lot of new
construction, you see traffic jams. You see a really great influx of
people and investment in this city.
But it is uneven. You go to the Lower Ninth Ward, for example, and
you can see still just a lot of bare foundations that are sitting there,
areas where it hasn`t come back. The poverty rate here is back to pre-
Katrina levels or about twice the national average. It`s a very uneven
HERERA: You said that about 20 percent in your package, about percent
of the population is below that ten year ago level. Is that going to be
permanent, do you think or will people relocate as the recovery continues?
COHN: Well, you know the people that look at this say nothing is
really permanent. Nothing is — nothing is static in a recovery. And that
people will come back, but the patterns are different. The demography is
different. The racial makeup of this city as we said much wider city, much
more Hispanic city than it was before, but still majority African-American.
So, it really is a moving target.
HERERA: You mentioned culture. What about the musical culture which
is so legendary for New Orleans? A lot of the musicians relocated. Have
they come back after the storm? Has that recovered or has that also
COHN: Yes, you know, we really wondered about that in the immediate
aftermath of the storm. Everybody was gone. The local artists, the
musicians, the restaurants, of course, were closed down. That`s really
come back and it`s one of the bright spots of this recovery. There are
more restaurants here than there were before. The musicians are back.
There`s a — it`s a younger population. More young people have come back
in part to make their commitment to the city of New Orleans.
So, that cultural aspect of New Orleans is back. But people are a
little more cautious about Mother Nature and about being prepared.
HERERA: Understandably so. Thank you, Scott, so very much.
Scott Cohn in New Orleans.
And coming up tomorrow, Scott will be back, he`ll report on the state
of the recovery and what companies have done and continue to do to try to
And finally tonight, Facebook (NASDAQ:FB) reached a mind boggling
milestone. The social network reported for the first time, 1 billion
people used Facebook (NASDAQ:FB) in a single day on Monday. To put that
into perspective, one out of every seven people on earth logged in to
Facebook (NASDAQ:FB). Pretty amazing.
That does it for NIGHTLY BUSINESS REPORT for tonight. I`m Sue Herera.
Thanks for watching. Have a great evening.
We`ll see you right back here tomorrow night.
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