. this is nig"nightly busines 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. sat became over time, a vartble magnet for market cheaters. >> indicted, the government tightens the net around one of wall street's biggest fish. the hedge fund. does the move signal a fresh push to make wall street fairer for investors on wall street. corporate america's report card. the half way mark of earning season is here. we have the winners, losers and a look at the health of the companies you're invested in.

>> the upside of downsizing, a smaller home, fewer expenses, less debt. a way to make your nest egg last longer, but how practical is it really? the series how to not out live your money continues tonight. that and more on "nightly business report" for thursday, july 25th. good evening everyone. it is the story the business world is talking about. the federal government indicting one of the largest and most profitable hedge funds in the country, sac capital. the steve's founder was not charged personally but the multibillionaire investor is at the center of the yoear-long investigation. they traded on stocks based on confidential information unavailable to the broader public. the u.s. attorney in manhattan is charging them with wire and securities fraud and permitting a quote system make insider

trading scheme from 1999 to 2010. >> it was deep and wide and spanned more than a decade in time, involves securities of at least 20 public companies and multiple sectors of the economy and benefits sac to the tune of at least hundreds of millions of dollars. >> the hedge fund released a statement saying sac never encouraged, promoted or tall rated insider trading and takes the compliance and management obligation seriously. sac will continue to operate as we work through the matters. joining us with more insight on the case and if the government is getting serious on clamping down on wall street. represents investors in high profile cases. tom, great to have you here. this story has so much drama and color to it, big egos, big money

but prosecutors came down with one simple statement saying this is a case about corporate conduct and corporate responsibility. so as you look at this case, do you think that wall street -- that the prosecutors have a fresh approach, a fresh strategy to get tough on wall street, to really make it fair for main street investors? >> it looks that way, and i hope they keep it up. this is an important case for a lot of reasons. the main reason is we need the stock market and financial markets to be honest. we need to rule out cheaters. it affects everybody through 401 ks, pension funds. the government is on a roll, they got convictions. some people pled guilty, flat out said they were guilty and they are going after the company and will go after the big guy himself. >> not just at sac capital have these pleas come out. other ones and cases as well.

the rhetoric he used is intention, a vartble magnet for cheaters. the company seeded itself with corrupt traders em plowered by a culture that looked the other way despite red flags. simply put tom, do they want sac to die and will it succeed? >> it will succeed, yes. i think the united states attorney wouldn't use those words unless he had facts backing him up. the indictment is full of information and bad facts of a lot of people at this company cheating, using insider information and doing wrong things to get ahead. >> at the end of the day sac collapses, what does this mean if you're an investor and have funds with them? can you recoop it? >> the government will work with sac to make an ordinarily

transition out of the company and i'll take the government at their word. the government wants this institution shut down. it's tired of these companies out there cheating to get ahead and not making profit in honest way. >> we should point out, obviously, these are allegations. this is the government's claim against sac capital but let me broaden it out. how ram ent, he previously said it's rampid on wall street? >> those aren't reassuring words. we have a chance in certain types of stocks and companies but clearly, guys like steve cowen if they have done what the government says he have done and people at his company have done what they say they have done, we need cops like the united states

attorney cleaning up things from time to time. >> real quickly, we've been reporting on this as journalist for years, so have you, and now this case. really are these government prosecutors going to be able to clean up wall street? >> they can't stop people cheating to make money. that happens every day and will continue to happen. there is always bad apples there. we need to stop people who rob banks and sell illegal drugs. we need a policeman on the beat stopping these illegal insider traders. >> thank you so much. on wall street today, the big drama surrounding the indictments didn't translate into a big move for stocks one way or the other. gains from gm and facebook were not enough. more on these earnings in a couple moments. in the end, the dow finished up 13 points 15555, fives are wild

on the board there and the nasdaq gained 25 and the s&p 500 up by four. corporate america at the half way mark of earning season and today two well-known companies reported earnings after the closing bell each with different stories. starbucks first beat street estimates and raised the full year earnings forecast. results at the world's biggest coffee chain were helped by strong sells. amazon swung to a loss of two cents a share and issued a cautious forecast for the third quarter, as the neinternet company's expansion plants weighs in. the single biggest day for companies earnings and more than half the firms in that index said what they made or lost last quarter. to put the numbers in context, john butters. welcome back. good to see you. simple question, how are we doing? >> relative day. it's an average quarter.

we had over half the companies report earnings at that time and 74% of companies beat expectations. that might not sound like a high number but a little higher than the average over the past four years, 73%. on the revenue side we seen 54% of companies beat the sales estimates and that's below the average of 58% but better than the performance in recent quarters. more companies missed revenue estimates than beat. so more performance on the revenue side. >> everybody looks to see what is the guidance they hear from company executives. we heard from caterpillar, weak guidance. as you look at that, what can we expect for the third quarter, current quarter and fourth? >> 39 companies issued eps guidance and some negative guidance, 80% and that's consistent with the previous

quarter. it's much higher than the long-term average of 62% and guidance in companies in the technology sector and we've seen significant cuts to estimates at this point in time. >> if i'm a long-term investor as opposed to a trader, what i care about most is not whether a company beats the wall street estimate or not on profit or revenue, what i care about is what is the absolute level of growth. so in terms of earnings, how fast are profits growing, and how fast are revenues growing? >> well, in terms of earnings and revenue, having a fairly weak quarter. the growth rate is 1.8%, an improvement from where we were at just an expectation of eight tenths of a percent but if we finished at 1. 8% that would be the third lowest growth and similar growth around 1.2%, better than recent quarters over the last three or four quarters

revenue growth is spotty. again, on the earnings side while companies beat on expectations, the earns is relatively weak at under 2%. >> we're at the half way point, is there is another half of companies to hear from. retailers like walmart have yet to report and oil companies like exxon. what can we expect to hear? >> coming into the second half of the earning season, we'll hear from companies in the energy sector and utility and later on from the retailers, and they are such an important be beerometer. these are part of the consumer discretionary sector. they are reporting growth of 4% now. so keep an eye on that to see if it moves that growth rate -- >> john, if you have profits growing at 2% but prices of stocks growing at 20% so far this year, you got to wonder, don't you? >> right, it could be a kams for

t -- case for the markets looking ahead. for the third quarter, growth rates come down analysts looking for 6% growth and that's expected to jump up to 11.5% in q 4. so they are looking past q 2 and looking for better expectations for earnings through the second half of 2013 and into 2014. >> john, thank you very much. more earnings in market focus starting with gm. touching a new two-year high as profit topped expectations. north american sales offset losses in europe and july sales should be up 15%. shares sold off a bit, gm down a fraction to 37 dollars and change. the company raced the full year guidance and increased the stock buy back plan and told investors they will pursue acre sipgss to

grow father. 3 m is $16.55. quarterly earnings tumbled at bristol myers. the company blamed it on the loss of patent protection of plavix and a blood thinner developed. disappointed investors sold shares down 1.5%. a strong performer raising the outlook on stronger sales of myloma treatment. investors boosted shares by 3.5% and closed at $140.65. many investors took a second look at facebook's mobile strategy after those blowout ee earnings we told you about yesterday. facebook shares sold at ten times the normal levels today. at day's end, facebook shares up almost 30% on the day.

the close at $34.36. it's being called the largest hacking fraud case in history. prosecutors indicted russian hackers for stealing at least 160 million credit card numbers from institutions ranging from j.c. penney to the nasdaq resulting in losses of hundreds of millions of dollars. andrea day reports. >> this type of crime is really the cutting edge of financial fraud. >> reporter: it's the largest hacking and data breach scheme prosecuted in the united states. >> they targeted some of the largest companies in the world, stealing millions of credit and debit card numbers and causing hundreds of millions of dollars in losses to their victims. >> reporter: the five alleged russian hackers using sophisticated software and breaking into institutions like nasdaq, dow jones and jetblue. 17 companies compromised and three alone left with at least

$300 million in damages. >> the individuals charged and arrested in this case are the ones at the top, the ones who steal the data that they sell to the folks who cash out. we believe we have take an major step towards dismantling the organization. >> reporter: the alleged hackers were so relentless they would spend months at a time trying to break into a company's computer system to steal credit and debit card numbers and reams of personal information and then sell the information on the black market. >> charging $10 for an american credit card number, $50 for european credit card number. he offered quantity discounts and discounts for repeat custome customers. >> reporter: law enforcement intercepting text messages between the suspects. in this one after they hacked into the nasdaq stock market, the hacker texted nasdaq is owned. >> i think this prosecution also demonstrates that while the

hackers are persistent and patient, so are we. >> reporter: for "nightly business report," i'm andrea day. more trouble for the embattled smart phone maker blackberry. the company laid off 250 people at the headquarters in ontario as part of the move to trim cost. they reported weak quarterly results as the smart phones came in well below expectations. still ahead on the program, the benefits of downsizing. is it the best option for most retirees looking to stretch their savings? we'll get an answer to that as we continue the series how to not out live your money, but first, here is a look at how the international markets closed today.

. the fifth home builder to go public is this year began trading today. waci communities which has luxury residential communities and homes made it's debut with a wimper. shares finished from the ipo price of $15 a share. a different builder got pulmobled today. the second largest home builder reported earnings that missed expectations selling few farer units than expected. dr horton reported better than expected profits, thanks to higher home prices but say rising mortgage rates are increased cancellations and a drop off traffic in june. how the stock did today, dr horton off by 8%. builders like pulte say buyers demand greater energy

efficiency but the same worry about the price of those invasions. once more, in valuing a home they don't give due credit for going green. that may change in congress. diana olick has the story. >> reporter: solar panel, tankless hot water heaters and extra insulation can save homeowners hundreds of dollars a month there is a bill to have lenders factor the savings in when figuring a mortgage. >> it's about energy efficiency, savings, i think it's a win, win proposition for the industry. >> reporter: the bipartisan save act does two things, requires lenders to factor energy savings into how much a borrower can afford into the mortgage payment and subjecting the savings in the energy bill from the monthly expenses and tells lenders to add the value of expected energy

savings to the value of the home in the appraisal. since mortgage amounts are based on a percentage of the value of the home, this would allow borrowers to get a bigger mortgage. that's where homeowners likely ons who already have green technology will be able to make more money when they sell. the value of green will be in the appraisal. >> a lot of my neighbors feel that it's too much of a initial investment and they don't want to put that money down, but if they see that it's going to add to the value of their home for resale purposes, i think it would make the idea more appealing. >> reporter: it would also help companies investing heavily in green products like dow, home depot, whirlpool and insulation manufacturers, not to mention, of course, solar. >> this would give manufacturers, retailers, builders and retro fit companies an opportunity to reach consumers to say if you take

advantage, you put these products in, you can have an expanded value for your home. >> this would be for loans bought or backed by the federal government but that's about 90% of the market today. the hope is to get the big banks all on board, and make green technology as hot as those solar panels are right now. for "nightly business report," i'm diana olick in washington. for retirees who have a mortgage and house to maintain, downsizing could help them stretch the retirement budget at a crucial time. sharon epperson continues downsizing as we continue the series how to not out live your money. john and carol visited florida beaches many times but when they calculate the cost of living there, they decided to leave new york and relocate. >> financially, florida is a very easy place to live. you know, there is a low income tax state and living arrangements down here and the

cost of living down here is a lot less than it is in new york. >> we still live the way we lived in new york. it's just easier. we go out when we want. we go out for dinners and travel. it's fine. it's just -- it's like living on vacation. it's easy. >> reporter: the couple who are both 9 already downsized once from an 8 80--year-old home to condo in new york and moved into their vacation condo in florida permanently. john a retired hospital administrator and carol a retired psychologist reduced debt and live comfortably on a fixed income. >> we don't have a mortgage. we own our car. it's so -- we just this year remodelled the kitchen and two bathrooms in this place. we're fine. >> reporter: when it comes to stretching retirement dollars, financial advisors say downsizing is overlooked by retirees that become attached to their family home, neighbor hood and lifestyle.

>> if you're trying to downsize right where you are and change life and make it less expensive, often times it would have the appearance that life was better working than when you were retired. >> reporter: but for some people, it's the most practical and affordable option. >> there are many folks out there feeling the pressure having not made a lot of money in the market in the last decade or so, they feel like they are behind in retirement savings. for them it may feel like a need they have to downsize. what i encourage people to do is think of it as an adventure. >> reporter: for this couple moving to florida began another fulfilling chapter in their lives. >> for more on downsizing log on nbr.com and tomorrow sharon will wrap up the series whether starting an encore career is a smart way to not out live your money. amazon wants to be a major player in the big business of grocery delivery. how does it measure up?

we put the service to the test, but first how the commodities, treasuries and currencies faired today. the tunnel that connects the city to canada followed the m i municipmun municipality into bans resukrup. they said it's not the result of the recent detroit bankruptcy filing but the decline in population contributed to the tunnel's unmanageable debt burden. one thing working for detroit is the auto industry and today consumer reports is

calling the 2014 chevy impala the best new said dan and one of the best it tested two. cars have a better score than general motors newly designed impala, the hatch back and bmw 135 i coup. earlier in the program we told you about amazon's quarterly results and a few weeks ago about the online retailers move into the big business of fresh groceries. tonight jane wells puts all that service to test. >> reporter: groceries are a 650 billion-dollar business but one category that's not been a big hit online yet. >> everybody wants bacon. let me start with that. >> reporter: amazon, the 800-pound gorilla of retail is joining a growing food fight expanding a grocery business. >> if you think about a 650 billion-dollar market, 10% of

that is 65 billion so it would -- even that piece alone would be one of the biggest categories in retail. >> 7.08. >> reporter: the key to success is showing up on time. my order was set to be delivered between 7:00 and 8:00 a.m. amazon's experiment is only for prime members who must pay $299 a year for the service. everything was in order with my order, plus some free water. >> i don't remember ordering these. >> reporter: amazon may not get people ordering but they want people to stop going to the store. >> they want slim operating margins. they want to drive volume and drive market share and make customers happy. >> reporter: rivals like yummy.com have been growing in los angeles, yummy guarantees delivery in 30 minutes, a tight turn around amazon can't meet but yummy's ceo said no grocery chain should sit idly by.

>> if they ignore the treat of amazon and amazon fresh, it's not that they are going to lose 50% of their sells, they risk losing 5 to 10% of sales that make them profitable. >> reporter: this is a decade after web vans failed in the.com bubble before people used smart phones, broad band and comfortable putting credit card numbers on the website. what happened to web van? amazon bought the do main name. >> i like jane wells had bacon and/ oreo cookies in the order. it's about a 1.5% margin. it's a very, very tough competitive business. >> i like going down the isles -- >> i do, too. >> and smelling the fruit before

i buy it. that's nig"nightly business re " report." i'm susie gharib thanks for joining us. >> and i'm tyler mathisen. everybody have a great evening and we'll see you here tomorrow. "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 river cruises, exploring the world in comfort.

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