tv Nightly Business Report PBS April 5, 2014 1:00am-1:31am PDT
this is "nightly business report" with tyler mathisen and susie gharib. >> stocks are not after hitting all-time highs stocks drop like a rock. the nasdaq tumbles, dragging even the bluest of the blue chips down with it. why and is there more selling ahead? the labor market hits a milestone. american businesses have regained all the jobs lost to the recession. after adding almost 200,000 in march, who's wihiring and what does it mean for the economy? we have all that and more tonight on "nightly business report" for friday, april 4th. and we bid you good evening, everybody. i'm bill griffith. >> i'm susie gharib. topping our news tonight, a nasty selloff on wall street today. the selling came despite a strong jobs report from march that initially sent stocks
higher, even pushing the dow and the s&p to record high levels. but then investors began to sell so-called momentum stocks, companies that had been some of the sharpest and fastest price gains over the past year. big name technology giants, biotech companies, internet and social networking darlings, all of them suffering from big drops. the dow fell triple digits down 160 points. but the nasdaq was the hardest hit, losing 110 points. that's a drop of more than 2.5%. and the s&p lost almost 24 points. sheila dharmarajan watched the market drama from the nasdaq exchange and explains what's worrying investors. >> reporter: the selloff was broad-based as 97% of the nasdaq 100 finished the day in the red. amongst the big losers, biotech stocks. the big run up we have seen in those names losing favor this year. the nasdaq biotech index was down more than 4% on the day.
also high-flying so-called momentum stocks, these are stocks that consistently move in a directionmetimes regardless oe moment up switch direction and names like netflix, tesla, green mountain coffee, micron technology all posting losses of 5% or more. and finally, it was a rough day for the large cap tech stocks as well. stocks like google, amazon and apple, which are heavily weighted on the index, also ended in declines. as for why we saw such a big selloff in the nasdaq today, traders we spoke to said after the 37% gain we saw in the nasdaq last year, it's natural to see some pull backs and perhaps investors taking profits or rotating into different parts of the market. a breather as they call it. on a more cautious note, traders do point out the weakness we have been seeing isn't just contained to certain sectors or groups of stocks. the selloff is becoming more and more broad-d-based, indicating that overall sentiment could be shifting and perhaps more
selling on the way. for "nightly business report," i'm sheila daughtharmarajan. despite today's selloff, more evidence the economy is gathering steam. pretty solid jobs report for march with 192,000 jobs added to the economy and sharply higher revisions in job gains for the previous two months of this year. and even though half a million more americans began looking for work last month, many of them found jobs, keeping the unemployment rate unchanged at at 6.7%. hampton pearson has a look at some workers who are benefitting from the growing economy. >> reporter: the march jobs report shows the economy withstood harsh winter weather, adding more jobs than previously thought in january and february. up 37,000 for the two months with a revised february headline number topping 197,000, which also topped today's report.
half a million americans got back in the labor force last month, and most of them found work. >> that's a sign that people think they can find work. and we know because the unemployment rate stayed steady that they actually were able to find work. so we're getting into those people now, we're beginning to pull those people back into the labor force. >> reporter: the job gains were broad-based. professional and business services adding 57,000 workers to payrolls, foodservices and drinking places up 30,000, both construction and health care adding 19,000 workers. >> when we look at the composition of job growth in this report, it was extraordinarily broad-based, almost every sector added jobs. >> reporter: in fact, says the bureau of labor statistics, since 2010 the private sector has added 8.9 million jobs, making up for all those lost during the recession. in the washington, d.c. area, bus boys and restaurants are part of that recovery. since opening their doors in 2005 with just 30 employees, they now have five locations and
more than 500 workers. combining bookstores with a heavy emphasis on black literature in a restaurant attracting a diverse audience. >> we've grown because of the need of the community. we're a place where people can gather, a place that looks and feels like washington, a place that has a lot of history in it, a lot of culture. people are hungry for this kind of an environment where they can come and connect with each other. >> reporter: among the new hires, denasha bullet, who joined the straightiadministrat in february. even now the anxiety of what it was like to be unemployed has not completely gone away. >> you start to question everything. you start to question what skills have you actually acquired? has it been enough? does your resume' really reflect what you're capable of doing, and is the resume' enough? you begin to really wonder like what can you do? and when will the door open? and when will somebody finally give you that chance. >> reporter: businesses large
and small hope the broad-based job gains in march will lead to more consumer spending in the months ahead. for "nightly business report," i'm hampton pearson in washington. with more analysis on today's market action, the head of u.s. equity and quantitative strategy at bank of america merrill lynch. savita, we've had some choppy trading over the last couple of days. but there was something -- >> we sure have. >> pardon? >> we sure have. >> but there was something different about today's selloff. what's changed? why now? >> you know, i'm not sure if it was sort of some signs of it building momentum in the economy. and i am terrible at kind of diagnosing one day's performance. but i do think that what we've seen over the last we'll call it a couple of quarters has been rotation out of stocks that have been helped by falling interest
rates like your higher-yielding areas of the market or your super high growth areas of the market, into maybe some of the more beaten down, cheaper, cyclical names that could actually start to show some signs of strength in an economic recovery. in a way what i think is happening is that a lot of these stocks that are very expensive -- like today's move, you saw a lot of really expensive, high growth names get hurt the most. and in a way, that makes sense to me. because if we are in this economic recovery and growth is going to accelerate, why pay these really high multiples for scarce growth if all of a sudden you can get a growth pretty much everywhere in these cheaper, unloved, cyclical companies that haven't really done much of anything for the last few years now. so i think that might be a little bit of what's going on. granted, the moves have been very violent. some of the data we look at suggests it's less about selling single stocks and more about etfs selling. so i don't know if it's really
fundamentally driven. it might just be liquidating large positions in etfs. >> so what's the individual investor supposed to do through a this, savita? if the momentum stocks are losing that momentum the high flyers, internet, technology, biotext, and they're going to take the market with it do you start to scoop up those undervalued stocks? or do you wait for the selloff to end? >> i think that it's tough to call the end of a selloff. i think at this point there are some high flyers that actually look reasonably valued. and it becomes a much more of a soft picker's market to your point. but i do think that behind the scenes we are undergoing a big rotation within the equity markets. so the way to make money for the last few years was by buying either high yields, no growth, or by buying high growth, no yielden stocks. it was kind of like going out to the extremes was the way you did really well. because we were in an environment where yield and
growth were both very scarce. but now you're starting to see some interest rate up side pressure. you're starting to see some momentum in the economy. hopefully this lasts. and in that backdrop i think we could see this rotation that we've been seeing a little bit of a glimpse often. >> we have about half a minute left. real quickly, next week really begins earnings season. do you think that what we hear from ceos especially about the outlook for the rest of the year could change the tone of trading for the better or for the worse? >> you know, i think that the forward-looking guidance is going to be important. and i also think that what companies are going to be doing with cash is going to be a big driver. i see the market -- the economy as shifting from fed easing to companies spending money on capex or hiring. i think that could be the next leg of economic growth. that's what we're looking to hear from companies over the
next couple of quarters. >> savita, thank you so much. from bank of america, merrill lynch. now to general motors, a federal judge in texas has refrained from issuing an emergency order that would have parked more than 2.5 million g.m. cars that have already been recalled for defective engine switches. according to reuters, the judge needs more time to study the briefs and will make a decision in the coming days. everybody's been waiting for that decision to come out. meantime, so-called high frequency trading is still in the spotlight. the justice department now announcing an investigation into possible have hadd possible insider trading charges. u.s. attorney general eric older says they need to insure the integrity of the financial markets. >> this practice, which consists of financial brokers and trading firms using advanced computer algorithms and ultrahigh-speed data networks to execute trades has rightly received scrutiny from regulators.
i can confirm that we at the united states department of justice are investigating this practice to determine whether it violates insider trading laws. >> and this comes just days after the fbi announced its own investigation into possible illegal activity by high frequency traders. eamon javers joins us now from washington with more on this story. eamon, what do we know about the investigation so far? >> reporter: well, we knew earlier in the week as you mentioned that the fbi in new york was looking into this. they actually put out a 212 area code phone number for people with tips on high frequency trading to call them. but this really rachets it up to the level of the attorney general of the united states, a much different degree of scrutiny here. we also know that the new york attorney general is looking into this. and the s.e.c. says it's got a detailed and data-driven investigation of its own. we haven't seen much publicly from them on this. but maybe we're about to see a lot more. >> so we've got a couple of these investigations going on, eamon. what is this justice one going to be looking into that might be
different from the fbi's and the s.e.c.? >> reporter: i think the s.e.c. is looking at civil issues. what the department of justice is looking into is whether there's any criminal violation, whether anybody actually violated insider trading law. now, we've known for a long time that you can trade on a millie second level and execute trade that fast. can you insider trade on an milisecond level. does that knowledge on that millisecond level basis count as insider trading knowledge. >> no easy answers to all these tough questions. eamon javers reporting from washington. still ahead on "nightly business report," our market monitor guest says today's pull back is healthy. and he has a list of stocks you might want to consider investing in.
today's strong jobs report for march really belies an ongoing problem that many u.s. manufacturers face, and that is finding enough skilled workers. and as part of our ongoing series, where the jobs are, mary thompson now reports from houston, texas where national oil well varco brought employee training in house developing their own pipeline of talent. >> reporter: 24 feet above ground, service technicians in training are getting a lesson in safety. this training required at national oil well barko technical college in houston. >> i think we could grow a little faster if we could source great employees. ceo clay williams says technical colleges are helping to solve a problem detected seven years ago when it faced a jump in demand for the multimillion dollar drilling systems is makes and a shortage of skilled workers to repair, install and maintain
them. >> we try to take people with a different background, with different skills, and teach them the skills they need to progress in this field. >> reporter: paul gunderson is a trainer at the college. over 6 to 12 months his students take classes in hydraulics, electronics and mechanics. in a simulator, they learn the software systems controlling novs drilling systems. and the high training that you see behind me? well, that assures emplnov thei workers are competent. 43-year-old mark evans is a military veteran. he entered the program in february. >> i like to be the guy on the spot. >> reporter: a trait nov can't teach but wants to see in employees who will be solving problems for clients, losing millions of dollars if they can't drill. victor soto, a project coordinator who went through the college, says the depth of training he received helped build a strong bond with
clients. >> i want them to trust us, to come to us for anything in general. anything nov related, twlooer to help. >> reporter: the training program success is not without some draw backs. >> it can be hard to keep them. one of the things that we do, we ask each of these new employees to enter into an agreement with us. >> reporter: the agreement is, trainees stay on the job for three years or repay nov the estimated $70,000 it took to train them. if they stay they're paid to attend classes and get a raise once they're in the field. >> we typically start in the 50 to $60,000 per year range, and then after they leave the tech colleges and move out into the workforce at nov, their total compensation can approach six figures. >> reporter: n ov spends $50 million each year on training. and investment returning a steady flow of skilled workers to fuel its growth. in houston, texas, i'm mary thompson for "nightly business report."
and for more on how national oil well varco is retaining and training skilled workers you can head to our web site for another information, nbr.com. two ipos bucked today's selloff. that's where we begin tonight's market focus. first of all, grubhub priced its shares above the expected range at $26 each at its current price the company is valued at nearly $3 billion. the ceo says grubhub is trying to change the way people order take out. >> there's $70 billion annually in take out spend in the u.s. of that, 3% is placed on line in any way. so really what we're doing, we're trying to accelerate thane he inevitable conversion. >> shares surge about 31% to $34. now ims health also popped in its trading debut. this health care company provides data and consulting services to drugmakers and
health care providers. it priced at $20 a piece. shares here jumped 15% to $23. >> meantime, shares of mylan surged after the pharmaceutical company made a bid for swedish drugmaker meta. the combination would have created a $24 billion generic drug group but meda rejected that offer. shares were higher finishing up 1.5% to -- shares of amgen tumbled after the company's melanoma drug failed to improve survival rates in patients in a late-stage study. treatment is able to shrink tumors as the company previously reported, but its inability to improve survival rates has worried investors. that stock fell 4% as a result to $119.11. our market monitor tonight says the bull market is still alive and pull backs will be short-lived. he's hank smith, chief
investment officer at haverford investments. >> hank, why should investors feel good about these pull backs? >> pull backs and corrections are a healthy process of a normal bull market. they're used really -- they're healthy really because they flush out excesses. and that's exactly what is happening today, susie. look at the nasdaq. look at the former high flyers in biotechs and social media. they are getting their socks knocked off them. that is good. that's really where the only speculative excesses have been. will this carry into next week? perhaps. but we do think it will be short-lived because there's a ton of cash on the sidelines that has missed this bull market, and they're looking to get in. >> let's pin you down, hank, on what you would buy right now. if these are stocks that you like you can give us a sense of why you like them. they're all brand names. starting with ww granger. >> sure. so they're a leading distributor of maintenance and repair and
operating products. they have number one share in the united states, which is only 6%, so there's plenty of room to grow through acquisitions. it's not a capital intensive business, so they throw off a lot of free cash flow, which they've used to increase their dividend for 41 consecutive years and reduced their share count by 10% over the last five years. so we think this is a good entry point here for long-term investors for really a three to five-year hold. >> tell us about anheuser-busch. looking at the stock it's trading today at the same price it was on january 2nd. so why do you like this? >> well, look. just the opposite of granger. this is a much more defensive company. they are the leading global brewing company with multiple great brands distributed both in emerging and developed economies. this is a classic steady eddy.
if you have any worry about the economy both domestically or globally, you're not going to worry about the earnings here of this company. in fact people probably drink more when there's economic difficulty. and why now? because they've announced that they are going to return 65 to 70% of their earnings going forward in terms of dividends. that means large dividend increases over the next 3 to 5 years. and it's going to make it look a lot more attractive than the low-yielding fixed income in our opinion. >> a long time ago, a savvy investor friend of mine said the first place you look in any stock market is how the brewers are doing. if they're doing fine the rest of the market's going to be okay. what about a company like union pacific? very economically sensitive. the rails have been doing pretty well. why do you like unp? >> they are one of the leading rails with east to west, west to east lines, taking advantage of
business with emerging markets. and speaking of emerging markets, they control the six lines into mexico. and that is one of the exciting emerging economies today. so they are a great operator, they're a low-cost operator. it is more cost effective to ship on rail than truck, so you don't have to worry as much about fuel price increases. and the valuation is reasonable. >> all right. all good suggestions, hank. do you have any disclosures to make about these three stocks? >> yes. our firm owns all three, and i do personally as well. >> all right. thanks so much, hank smith, chief investment officer at haverford investments. coming up diagnosed with diabetes at 12, an entrepreneur by age 16, meet the man who's helping to fight that epidemic and building a successful company at the same time.
and finally, we conclude this jobs friday with our latest bright idea. it belongs to a 27-year-old who grew up in connecticut. he's one of almost 26 million americans diagnosed with diabetes. and there are millions more who may not know they have it. that's why he's hoping more and more people will be looking for snacks with a little less sugar. tyler mathisen has the story. >> reporter:6 and chocolate, to. probably not where you'd expect to find ethan lewis, who learned at age 12 he has type one diabetes. the prognosis was scary.
>> you'll probably get 25 good years out of life before you succumb to the traditional diabetes complications. >> reporter: suddenly blindness, kidney failure, amputation and heart disease were very real prospects. careful management can help diabetes patients avoid or postpone those outcomes. but that message had a profound effect on young ethan. >> i said to myself, gosh, if i'm going to fall apart by the time i'm age 40 i have to do more at a younger age. >> reporter: so he did. at 16 he made his own low-carb soup crackers and sold them to gourmet food shores and restaurants. but when he graduated in 2009 from the university of tampa and began working, he realized it wasn't easy to pay $60 a month for the glucose gels he needed to fight blood sugar lows. >> left untreated, low blood sugar can lead to coma and death in a matter of hours. i said gosh, if i have steady income and i can't afford my diabetes supplies, there must be other people out there going
through the same thing. >> reporter: his bright idea, a cheaper, best tasting, easy to carry glucose gel called gluco pouch. >> we sell sugar water. there's no reason why it has to be expensive. the other companies were being greedy. >> reporter: finding a manufacturer wasn't easy, and neither was the cost. $10,000 for the first batch. but it all paled compared to a scare before the night before a big trade show in 2011. >> i had a low in the middle of the night. i could barely walk or crawl. and was lucky to have the product with me at the time. otherwise i'm not sure if i would have made it. >> reporter: which is exactly why merge services in all 50 states are required to carry some formm of glucose gel jack fink el stein's of brooklyn heights medical center uses ethan's product. >> it's like a dollar less per
pouch. very easy to read the expiration date. patients are saying it tastes much better. >> reporter: by mid 2013, annual sales had grown to almost $1 million. that's when boulder brands in colorado bought 80% of ethan's company for for an undisclosed price. why? the community of people with diabetes is continuing to grow at a staggering pace. by 2050, one in three americans may be afflicted. this year the company's new shake drinks and snack bars, these are caramel chocolate peanut flavor, hit the shelves in target stores. >> people are trying to remove not only sugar from their diet. >> reporter: later this year, lewis hopes to introduce a line of candy-like treats even willie wonka might like. >> we're going to take every item you said you could never eat and we're going to change that and make it good for you. >> between snack bars and shakes and gels, level is making more than 1 million units of product
each month. and the company is just gearing up still working on more deals with retail stores. it's so impressive, bill, not only about this young man but earlier we were talking about grubhub, another young ceo doing great things. that's it for "nightly business report" tonight. i'm susie gharib, have a great weekend. >> i'm bill griffeth. have a great weekend from me as well. we'll see you on monday.
>> money, politics and power. at the supreme court the white in congress. tonight on "washington week." >> money in. money out. > the supreme court opens the flood gates. >> i think this means freedom of speech is being upheld. faced with is a supreme court across the street that celebrates oligarchs. >> how the constitution, big donors, eager candidates and retirement sional are changing the face of politics. victory white house lap. >> the debate over repealing this law is over. the affordable care act is here to stay. sign-ups crash past seven million. >> that is a total that shatters original