tv Nightly Business Report PBS April 30, 2014 1:00am-1:31am PDT
. this is "nightly business report," with tyler mathisen and susie gharib brought to you in part by. >> thestreet.com, by stephanie link who shares her market insights with actionalerts plus, the multi million dollar portfolio she manages with jim cramer, you can learn more at thestreet.com. will april showers give way to may showers on wall street. >> twitter tumbles, quarterly results tumble, why? what is the one key takeaway for investors? >> and the big move target is making to secure its payment pipeline in the wake of the massive gains late last year. we have all that and more on "nightly business report" for
tuesday, april 29th. good evening, everyone, and welcome with just one more trading day left in the month wall street looks to be wrapping up a very volatile april with a big push to the upside. and it got help from another round of better than expected corporate earnings. upbeat quarterlies before the bell from companies as diverse from the drug make merck, and sprint all helped the major averages climb today, with the dow and s&p within striking distance of all-time highs, today on wall street, dow up 86 points, nasdaq higher by 29 and the s&p added nearly nine. but earnings late today from ebay and twitter could set a negative tone tomorrow when the opening bell sounds, first, ebay posted better than expected quarterly profits but it issued a disappointing outlook and shares fell as much as 4% in after-hours trading. as for twitter, profits beat
estimates. but when you take out one-time charges but they were not big, less than a penny a share, quarterly revenue beat analysts estimates. but twitters shares sold off in after hours trading, during the regular session they were up more than 5%. more on the twitter numbers and one big take-away for investors. >> investors hoped for a blowout number when it comes to user growth but that is not what twitter essentially delivered. 255 million monthly active users up only 5.8% from the previous quarter. analysts were expecting a higher number, now slowing growth concerns have kept a lid on shares of twitter down about 40%, just this year. the weaker than expected number does come ahead of twitter's lock-up expiration, when traders are concerned that insiders will sell off shares. from the new york stock
exchange. and as investors look to tomorrow and as the up and down ñ dominic chu takes a closer look at whether april showers may give way to brighter days ahead in may and maybe even beyond. >> for many investors april will be a month they soon want to forget. a lot of stocks that made investors a lot of money the last couple of years took a big beating, think about facebook and twitter or on-line video streaming company netflix. even the world's biggest internet retailer amazon.com. >> we think that some of the high fliers which have come down are still at very lofty valuations and hard to really justify. we contrast that with other kind of old technology dinosaurs like microsoft, cisco, hewlett-packard, where the numbers have been quite good. >> the big question to investors is whether or not the coming summer months will generate more
market pain. traders have an old saying, sell in may and go away. and there is a reason why. according to s&p capital iq chief u.s. strategist sam stovall, since world war ii the s&p reported the strongest months since april, gains 7% average. meanwhile, the months of may through october generated gains of just a little over 1%. some experts are saying to expect stock market volatility in the coming months. >> i believe we're in the middle of a transition, i think they're clunky. we're driven by a market that is monetary policy, into one that is more fundamentals. earnings always matter. volatility is here to stay. >> the bulls will say the stockings are near record highs, the bears say it is good to do a significant pullback, it is good to keep a seat belt even if you
don't think you will need it. our guest tonight is one of those bulls, nick, nice to have you with us. >> thank you so much. >> let me first start by asking you about ebay and twitter because their stocks have been down sharp ily in after-hours trading. >> well, i tell you over the short-term it can be a bit damaging, a lot of folks have made very good money in all the momentum names we've seen rally. underlying market fundamentals are more important, so what the entire economy does and what corporate profits do in general thankfully over the medium and long-term is more important. >> do you think these two companies are healthy? i'm not asking you to recommend the stocks, but is there anything in the reports that leads you to believe they're not? >> no, i tell you, the bottom line with any of the stocks, investors are drawn to them because they have interesting long-term potential and very good fundamentals.
it always comes down to valuation. that is where it is very tricky. you can be very enthusiastic about a company and sell off stock because you think the valuation is too high. >> you said a moment ago nick it would be the economy here that is the real driver. the u.s. economy has been anemic for a while, really, the recovery has been sub-par, what is the catalyst for the economy that would be the catalyst for the stock market. >> the bottom line here is corporate profitability has been very high. if you want to be bullish on stocks you have to believe the economy can recover modestly but progressi progressively over the year, and that will be a credit for the companies that have good cost structures. >> nick as we enter may, that is seasonably a time when the market stumbles. some of the roughest months have been the summer months, what do you expect over the next three
or fix monthsix months? >> it will be important to take the longer view as we get that volatility and really focus on incremental growth in jobs and incremental growth in things like auto sales that are indicative of the economy as a whole and think about the next half of the year. >> so any advice you have for investors on what to do with their portfolios over the next couple of months that could be volatile? >> absolutely, the key is stay diversified. the bonds kept pace with stocks all the way through the end of april where we are right now even though people really did not like them very much. so the key is to keep the focus on the long-term, stay diverse, and use the volatility, rather than try to bail on the market. >> do you like bonds here at these levels? if the economy heats up as some people believe you would think
that interest rates might rise? >> yeah, i tell you bonds have been the surprise story of 2014. and they have had an impressive rally. i would say there is still sufficient concern about things like macro issues, for example, oil prices and the problems with russia and ukraine that would keep us still trying to keep a portfolio of bonds just in case. >> and we see utilities doing phenomenally, what do you think about utilities? is that still a good place to park your money? >> i tell you utilities are doing great, they beat most hedge funds in the market. utilities are still a good place to be. they may be for the classic widows and orphan's portfolio but they have still had a robust group. >> thank you for coming by. well, mixed news in housing to tell you about. the commerce department says that home ownership in the u.s. fell during the first quarter of the year to just 65%. that is the lowest level overall
in nearly two decades, part of the problem, home prices are too high for many would-be buyers, especially for first timers. just today, the home price index for february reported a 12% increase in prices in the nation's biggest cities year over year. but prices barely budgeted from prior months. and people who helped to guide the interest rates, the federal reserve policy makers began a meeting in washington, no change expected in the fed's key interest rate but the central bankers are expected to reduce their bond-buying stimulus plans by another ten a month. and looks like the board of engineers has reportedly accepted ge's more than $12 billion offer to acquire the energy business. the announcement could come on wednesday, but before it is a done deal, siemons says it will
buy if given enough time to go over that company's books. apple returned to the bond market today and investors are eating it up. the tech giant put $12 billion worth of corporate debt up for sale which is higher than the 8 to $10 billion expected. maturities range from three years all the way to 30 years. and to show how big demand is investors reportedly put in orders for more than $40 billion in bonds. more now on those strong earnings from merck, the biggest gainer in the dow rising almost 4% after first quarter profit, a jump 7% helped by cost cutting. the diabetes pills were higher, but overall, pharmaceutical sales fell 5% because of competition from rival generic versions of other drugs. target is starting with new management and more secure type of credit cards.
mary thompson explains. >> reporter: red, white and still bruised from last year's massive data breach, target expects to better protect its customers with a new type of card. >> target has to move quickly to make sure they have the best up to date standards for their security base. >> target's plans to use the chip and tin technology by early 2015. meaning all red card debit and credit cards will carry a customer's information on an imbedded computer chip, rather than on the magnetic stripe found on the back of most credit cards. these chip-enabled cards cut fraud as they're harder to counterfeit. one expert is the new chief information officer.
a technology payment processers visa and master card want as the standard by october of 2015. at that time, liability for fraudulent transactions for card present transactions meaning those made in the store will fall to the weakest link of the payment's chain. the threat of having to cover the cost of potential fraud expected to spur retailers to buy new chip and pin terminals that are needed to process the payments on the more secure cards. while the adoption will be a big step in reducing credit card fraud, the analysts said pettersson wouldn't prevent the fraud. it is harder for a thiefo steal. >> when the information is being transmitted across the system from say the merchant, there is no way for that to be broken. >> the token and chip-enabled
are used. and still ahead, saving more for retirement, is it enough? details on what you can do to make sure the golden years stay go golden. last night we told you about the growing list of big name advertisers and sponsors suspending or terminating deals with the nba's los angeles clippers over racist comments made by the team's owner, donald sterling. today it was league officials at the association coming down hard on sterling, he has been banned for life from attending any nba gangs, practices, or other
events and was fined $2.5 million. the nba commissioner, adam silver is urging other team owners to force sterling to sell the team. a big power company from texas has filed for bankruptcy. dallas-based energy future holdings was facing more than $100 million in debt payments for this week. payments that they will not be able to make. but filing to bankruptcy protection lets them negotiate with creditors as it reinstructs the business. an upcoming on the deal update on the deal, botoxñr mak allergan looks to do anything to avoid being bought by allergan. they reportedly approached johnstone & johnstone, and other
firms to gauge their interest in buying the company. shares of coach plunged after the retailer reported quarterly profits and that is where we begin tonight's market focus. earnings fell 20%. the handbag accessories said that the sales fell due to competition. the sharp drop sent the stock to $45.71. bristol myers helped by cost cuts and lower taxes. but revenues, missed estimates and shares fell on concerns over a possible delay in completing the marketing application for the high-profile cancer drug. bristol fell to 49.32. and biggest u.s. tire maker hurt by severe weather in north america. and a labor dispute in venezuela also took a $132 million charge related to a drop in the value of venezuela's currency.
shares fell 7 and a half percent to $25.11. ibm's board improved a 16% increase in the quarterly dividend which is now $1.10 a share. paid to stockholders in june. this is the 19th year in a row that the company will up the return. shares up 1% to $195.11. the stock market is doing better since the financial crisis but is taking a bit longer for america's retirement prospects to get back on track. the nation's largest provider of retirement plans revealed today some positive results for millions of americans in the five years since the market downturn. but there is still plenty of room for improvement. a surging stock market has helped the recovery of many workers' retirement plans over the past few years, new data from fidelity shows an impressive 92% gain in the
average 401(k) account balance, since the economic low in 2009. the average 401(k) was up from $46,000 five years ago. >> about 3/4 of the balance growth has been due to the market and about 25% or a quarter was due to employees putting more money into their 401(k) plan. when we look over a ten-year period what we find is 50% is due to the market growth and 50% is due to an employee contribution, so what that really drives home is that it is really important over the long-term not only to put money into the 401(k) but also to make sure that you're invested appropriately for your age. despite market gains most workers still don't have enough money to retirement. a married couple retired at 65 may need as much as $365,000 in savings, more than four times the average 401(k) balance today. but most workers have no idea
how much money they will need in retireme retirement. >> only four in ten w'ffo)ç.e using retirement savings calculators and that is important because that means the majority are still guessing and don't really understand how much they need to save for retirement. >> reporter: they may not be saving at all. fidelity found out almost a third of workers who have access to a 401(k) plan are not contributing. and those who are offered a matching contribution from their employer may not take advantage of it. if financial experts say for most workers the amount is less than what is needed to ensure a comfortable retirement. we really recommend to replace a good amount of your income in retirement that we save 15%, we understand that, when you're in the beginning and young you may not be able to start out at 10 or are 15% so you start out where you can. and then every year we recommend increasing that annually. >> reporter: the first step, no matter what age, is to figure
out where you stand right now. >> no savings plan is going to be implemented without a really honest assessment and a look at how i'm spending money, where i'm spending money and more than likely making changes in how spending patterns occur, in order to free up the capacity for savings. >> reporter: the solution is simple but takes discipline. for "nightly business report," i'm sharon epperson. to read more about fidelity's study and what you can do to keep your retirement on track go to our website, "nightly business report." and still ahead, the most influential businessman in the past 20 years, his vision and the change in consumer buying hab habits. that is next.
today, in connection with its 25th anniversary, cnbc, which produces this program announced its list of the top 25 people who left the biggest marks. amazon.com, founder, number four, the google guys founders larry page and sergei brynn, plus, the ceo who pulled it altogether, eric schmidt, and alan greenspan, ben bernanke, and topping the list, apple's steve jobs. pioneer, innovator, genius.
steve jobs transformed the way we think about technology and the apple. walter isaacson is job's biography. >> steve jobs is the creator at large, he started a company in his parent's garage with the kid from down the street and turned it into the most valuable company in the history of the world. >> growing up in silicon valley, jobs became the oddest fusion of california's engineering and hippy cultures. he was not a programmer, so much as a marketer and dreamer whose big idea was to sell his friend, steve wozniak's creation. >> he was smart enough to know he needed other's engineering. but what he was able to do is bring everything together into a package and then figure out how to build a business around it. >> and what a business he built,
more than anyone, jobs put the personal into personal computers, creating elegant machines that sometimes looked like a toy and often as not were as easy to use as one. >> technology was barrelling along in the mid-'70s when he starts apple. but he said let's make it intuitively, simple and beautiful, he connects art to technology. >> but his managerial style was not as simple. >> i talked to people about his managerial style, yes, he was passionate and could be sharp with people. but he also recognized talent and passionately believed in the quality of the products that apple was going to create. the personality of steve jobs was somebody who believed that the ordinary rules did not apply to him. he was special. he could distort reality and make things happen. >> later, though, after a 1985 power struggle with the apple
board and john scully, jobs left the board he founded. >> after he left he formed next, well, he really indulges his passion. and what he learned is you have to make some tradeoffs, because it was not very successful in the marketplace. but he has this incredible drama of being kicked out of his own company, going off with a scrappy little an animation studio he got, and then coming back to apple, riding in and saving the business. >> the year was 1997. >> he says focus, he cuts out all sorts of product lines and says we'll simply do a desk top and laptop for the home and office. >> but job's focus was not just on desktops and laptops, he loved music, dylan, and the beatles. he wanted to carry it with him. it was 2001. >> he launches something that nobody expects which was the ipod and it sort of changes the
music industry just like he changed the home computer industry. >> the ipod legendad to all rig innovation. >> and we are calling it iphone. >> one of the interesting things about the iphone is that everybody at apple new it would c cannibalize the ipod. he said we have to cannibalize ourselves before somebody eats our lunch. >> jobs was not done, if anything, a 2003 diagnosis of cancer quickened his research pace. >> i think people were puzzled in the year from 2000 to 2010, about why steve jobs kept going into different industries. but it totally transforms what our view of the phone is and then he does it again with the
tablet. people that made tablets before, nobody expected apple to do it. >> some called him a retail genius on the par of itune. >> the full 360 degree experience in apple's world really caught the consumer's imagination. and steve jobs, at least as far as business is concerned became larger than life, right around then. >> in august 2011, he stepped down as apple's ceo. zabriskie weeks later he was dead. >> i think a generation from now in fact a century from now, steve jobs is a person we'll most remember as being the center of the business in the digital age, the personal and home computer industry, the music industry, the digital and i -- animation, over and over he disrupts and he will be the one reremember. >> how was the list put together, what was the thinking
behind the rankings? what were you thinking? to get more information head to our website at nbr.com. >> i don't think anybody would argue with the steve job's choice, but was there anybody on the list? >> i think michael del, who was an industrial revolutionary who invented the just in time manufacturing for you. >> all right, great list, great job, tyler. that is "nightly business report," i'm susie gharib. >> and i'm tyler mathisen, thank you for joining us. we'll see you back here tomorrow night. have a great evening.
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