this is "nightly business report" with tyler mathisen and susie gharib. >> show me the money, stocks retreat as investors turn their lonely eyes to you. corporate america, hoping profits haven't left and gone away as earnings season begins. >> first out of the gate, alcoa with a big earning beat. >> cutting cancer costs, quality care that's less expensive? tonight a new studs did finds it's very possible. that and more for "nightly business report" for tuesday, july 8th. good evening, everyone. here is the new worry on wall street. earnings, investors want to see u.s. companies deliver strong profits and revenues as the new quarterly earnings season kicks off this week but dow said

corporate america won't come through, a sign that super high stock prices are not justified is one reason stocks sold off today. technology, internet, biotech stocks and a lot of small cap companies were swept up in the sell off. here is are run down, the dow lost 117 closing below the key 17,000 mark, the nasdaq tumbled by 60, a decline of 1% and s&p off by 14 points. the first company to report numbers, alcoa earned 18 cents a share that excludes special accounting items and a beat of six cents a share. management says global aluminum demand will grow 7% this year, shares moved higher in after hours trading. that strong second quarter at alcoa reflects a new strategy as it transitions from a commodity provider.

morgan brennan has more. >> reporter: alcoa shed light on a big much er shift from aluminm to industrial. >> it's a transformation in high gear, you see the value at business makes up roughly 59% off the revenues but almost 70% off the profits. >> reporter: alcoa is concentrating on producing parts for airplanes, heavy trucks, turbines and building supplies going from aluminum but nickel and titanium. it's a transition from three years ago when aluminum prices were tumbling and over production in china. that forced alcoa to cut back on mining and focus increasingly on finished products. a higher margin business. rolled out expansion plans of

several area space related facilities and last month announced the acquisition of a jet engine parts maker for $3 billion. >> we think the next leg is aerospace. the first accusation highlights what alcoa can put together. >> reporter: so far the strategy seems to be working despite being booted, the stock claimed dramatically as products accounted for more and more of the revenue. >> the business which area space is a component went from 43% to 80%. with the stabilization, any upside from there is icing on the cake. >> reporter: there are head winds. alcoa faces increased competition from other aluminum produces and steel makers and despite diversification, aluminum prices weigh on the

company's mining businesses. for "nightly business report", i'm morgan brennan. >> andrew berkeley joins us to talk for about second quarters earnings and the market. he's a portfolio strategist. we got the news and samsung warned of a possible 26% drop in its quarterly profits. how is it shaping up in your view and how will it play up in the markets? >> hey, susie, it will be a good earnings season. 7% year over year growth for operating profits on about 3% revenue growth, which is what we see the economic data tracking. so it looks like after the soft bach in one, the economy is reaccelerating here. we think profit growth probably, you know, will be good here in the second quarter. probably most importantly for the markets is going to be hearing what companies say in terms of forward guidance for

the second half of the year because we know that analysts expectations for the second half are already pretty optimistic. for them to push the numbers higher, which is what the market would need to push significantly higher, you know, we'll need to see better guidance coming from the companies as they report. >> andrew, which sectors might be standouts or laggers and where might we spot surprises? >> i think, energy is an interesting sector because we haven't seen energy sector post year over year growth since early 2011. it's been quite a period of time and the sector seems to be hitting on all cylinders, higher crude helped. on the equipment side, we saw infrastructure and refiners have been doing very well, also. so energy is an interesting one. really a key one will be tie nationals because expectations for financials are relatively low. it's the only sector expected to have negative year over year

growth and we think when it's said and done, that might be a slight positive. we think financials could be a key and really the important one for the overall market. >> andy, how vulnerable are the markets to a correction, especially if some high profile stock reports an earnings miss or some negative number? >> yeah, i mean, whatever you come into an earning's season, you're close on all time high and the dow 17,000 milestone here, you're likely to have a correction or vulnerability of correction goes up, especially because evaluations have crept up quite a bit on a pe multiple bases. we're at the high end of the range. i think there is a lot of good news priced into the market that will be up to earnings to come through. we think maybe somewhere in the 3 to 5% correction is more likely if we see misses. we don't see a bigger correction than that. really, in terms of interest rates really moving higher and we think we're quite a bit away

from that. >> so do you think the market, s&p and dow can end higher and if so, by roughly how much? >> i think so. we've been looking for a 10% year. we did 6% in the first half of the year, so we have less in the second half, probably about 4%. you'll see volatility pick up. you can get another 4 to 5% on top of this, which is another double digit year, which will be good. >> good note to end the conversation on. andrew berkeley. the chair of the federal reserve is gearing up to testify before congress next week. ian njanet yellen will deliver the report on july 15th to the senate banking committee. some good news about jobs, the labor department says that in may, u.s. businesses posted the most job openings in seven years, more americans also quit their jobs, which usually happens when they find a better or higher paying one. some economists see this as a

strong trends in hiring is likely to continue. small businesses are hiring more workers, even as optimism retreated in june from a six-year high. chief economist at the national federation of independent business says new hire ing is a big driver. >> the two that did well were labor market components, job markets hard to fill and plans to create new jobs, that went up again and of course, we are hiring more now. we have nine months in a row now that the small businesses have on average added new employees. >> but the survey notes that the optimism index fell because firms appear less confident the overall u.s. economy will improve much in the coming months. with those new jobs, the ceo of walmart is worried about the financial health of his shoppers. walmart met with u.s. manufactures to get more

american made products on its f itselv itselves. >> reporter: more than 900 meetings between small businesses manufacturing products in the u.s. and the world's largest retailer in arkansas. walmart is looking for venders with products 90% made in the u.s. to add to store shelves and online to add to a $250 billion comment to support commerce tick products and jobs. vice president of sales of loose plastics traveled to arkansas from new york to participate in the retailer's made in the usa open call. walmart's version of shark tank. rosenburg said it went even better than he hoped. >> this will take us to the next level. doing business with walmart will put us on the map and grow our company more. >> reporter: getting a distribution deal with walmart offers an incredible deal with them. the company seen sales decline

for five quarters and the stores open a year here in the u.s. walmart's u.s. ceo says while the unemployment rate is at the lowest in six years. the core consumer isn't a part of that job growth. >> the unemployment numbers particularly have been difficult to read with the number of people dropping out of the work force, and i think it's going to take a while, six months or a year for the numbers to balance out. hopefully, after six years we gain traction in the u.s. and that traction is coming at the top end. the middle and down is challenged. >> reporter: joe rosenburg is anxious to do what he can to help walmart grow sales and traffic, one box of sustainable garbage bags at a time. for "nightly business report", i'm courtney regan in arkansas. walmart isn't alone in needing to grow sales. late today the container store reported weak earnings. the ceo went so far to call it a quote retail funk, that the weakness isn't just due to the

weather and calendar shift but environment other retailers are experiencing. that sent shares sharply lower after the bell. still ahead, cutting the cost of treating cancer. can it be done without sacrificing patient care? we have the results of a new study on that. the justice department appears closer to reaching a multibillion-dollar deal with citi group to settle lawsuits with risky mortgages. dows is reporting that citi is expected to pay more than $4

billion next week to avert the federal suit. the cost of cancer care is growing 15% a year. it's expected to top $175 billion by the end of this decade. costly cancer drugs one reason but a study out from unite the health group finds there are other ways providers can cut costs dramatically. bertha coombs has more. >> reporter: the study aimed to cut costs by removing the profit motive to order costly proced e procedures and higher priced drugs. >> we froze the profit margin that a doctor could make on chemo therapy and we thought that would reduce the amount of high cost drugs used. >> reporter: they worked with five cancer centers over three years including northwest georgia oncology giving them a fixed fee for each patient. >> we showed them all the things that were happening in their practices, their use of

medications, the hospitalizations, use of diagnostics. >> reporter: they cut costs, but the end result was a surprise. >> even though we lost the battle, so to speak in controlling the drug cost, we won the war in terms of controlling the global cost of care. >> reporter: they estimated drug cost at $7.5 million, the actual cost, $21 million. but they were more than offset but lower medical costs for high priced hospitalizations and radiation. the estimated tab under a normal contract nearly $100 million. under the pilot program, costs were 1/3rd lower with in change in the outcomes for the cancer patients. >> their survival was exactly the same as our national averages for service. so quality is not taking a hit. >> reporter: dr. bruce credits the change to sharing data. >> being able to put numbers to those different aspects of costs makes me more thoughtful in terms of how i use those resources. >> reporter: one way he cut down

on costs, hiring a physician's assistant to coordinate the hospital care of patients. >> they would end up spending an extra night in the hospital and being discharged the next morning. with a full-time physician's assistant assistant, the patient can be discharged that day. >> reporter: it cost the practice money which he hopes they make up by the savings of the program. at a time when medicare and insurers are cutting reimbursement. doctors will have to pay a role in cutting cancer costs without sacrificing patient care. bertha coombs, "nightly business report." sweetening the offer to buy shyer and that's where we begin the market focus. the new cash and stock proposal is worth $51 billion, that's $5 billion more than the last bid or 11% higher.

shire's board said take over approaches under value the company but no comment on the latest one. shares of abbvie fell 3% to 55.69 and shire down 3%. cummins announced plans to increase the dividend. it upped by 25% to 70 cent as share. the board authorized a stock buy back of $1 billion after it completes the current $1 billion repurchase program but despite that shares fell to $155.96. elon musk's plans to expand in china hit a detour. they face a trademark inflingment lawsuit in china. tesla announced a settlement of the case between the company and a chinese businessman in january, but now, he is taking the auto maker to court and demanding that he stop all sales and marketing activity in that

country. shares of tesla were down more than 1.5% to 219.07. this dividend from kla, increased by 5 cents to 50 cents a share and also announced a $1 billion stock buy back. shares of kla tencor up a fraction today, $74.09. a warning from samsung ahead of the official earnings report, as we mentioned earlier in the program. the south korean electronics giant warned fewer consumers in china and europe are buying the galaxy mart phone. the nation's cupcake craze may be ending, three years after going public at the height of the boom, the crumb's chain shut down all of the 48 stores in 12 states. this is after several years of losses, a dwindling cash supply and sales that were, forgive us,

crummy. the market to build rental apartments is super hot and so is a play that's just as hot. student housing, private developers are moving into the market and right on to campuses. diana olick has the story. >> reporter: these are not the 1960s cinder block sales, these are high rise, high style dorms. >> this is an industry ripe with opportunity. the student housing sector was ignored by the real estate industry for more than 40 years. the modernization is taking place. >> reporter: modernization to put it mildly, american campus communities, real estate investment trust is the largest player in the student housing space. it is grouping in, putting up swanky new dorms like this on campus in downtown philadelphia. is it a dorm or a day spa?

suites, a full-sized fitness sent we are a virtual golf driving range and all for a comparable price to older dorms. >> you definitely got the most you can get out of what you're paying. >> reporter: here at the university of maryland, there are 37,000 students but less than 10,000 university owned beds and as universities want to focus the dwindling funds on academics, they are inviting private housing in. >> they know how to do the housing right. they have a good grip on market and what students what. >> reporter: and what the growing population of international students want. >> international students are a big component of student house income america today. this property, the international population is 9% of the resident based and next year it's 19%. >> reporter: the boom is being fueled by baby boomers, moving into college towns and eating up off campus apartments.

ironically, it's the student housing built for them in the 60s that now needs to be replaced. for "nightly business report", i'm diana olick at the university of maryland, college park. coming up, ali baba is much anticipated but can you add it to your abort follow owe or google? the global rival series continues. a big auto recall from ford. ford is recalling more than 100,000 vehicles in the u.s., six separate recalls in all. it's to fix a variety of safety

defects including leaking roofs and corrosion. most of the recalled cars, 92,000 are for 2013 and 2014 ford tauruss and lincoln mks models to fix a problem with the drive shaft. in injuries reported. to see a full list of the recalled cars, go to nbr.com. world cup semi finals being battled out, host nation brazil took on germany in the world cup semi finals and in the latest round of nbr's ultimate stock cup, two giants of the internet square off in the global marketplace. representing the u.s., it's google, going up against china, alibaba. >> reporter: at the core, google is a search engine, a company that helps you find stuff. it's profits embedded in search-related ads. how big is it? how many companies have ever become a verb? founded in 1998 by a stanford

hpd students, it's headquarters in california. 2013 revenue, more than $59 billion. page and brynn posed hoping to keep their page uncluttered. it's since become clutters with money, which allowed them to buy the companies that have given us the likes of youtube, google earth, google maps and android and that's only a short list of google's gaggle. only a year later in 1999 alibaba was founded by a one-time english teacher. it's head quartered now in china and soon to go public in new york. alibaba service gives smaller businesses a chance to sell direct to consumers. sellers buy ad space hoping to get noticed. another service is where companies like nike, gap, apple pay alibaba so they can sell

online in china. alibaba is expanding into mobile phones, mobile payment, banking and tv and film production. alibaba and google, it's a battle of a lifetime. >> so who will dominate in this global rivalry? google or alibaba? channing smith ways in, he's portfolio manager at capital adviso advisors. i know you favor google. tell us why, make the case. >> well, i think one of the things you have to look at and kind of looking at germany and brazil today, i kind of like in google to germany. they are very controlled and play possession type of game. if you look at google search, they have 70% of the desktop market and 70% of the mobile market. this is bread and butter but they also are able to set up opportunities in other areas. if you look at mobile

advertising, this is an $8 billion business growing. we think it can double or triple. they have youtube, which is an enormous franchise, if you look at views, page views over the last year, it's up 50%. we think that this could be, you know, a $5 billion business this year, probably triple. they have a number of google payments, they have all types of different businesses that can grow revenues and earnings going forward. >> there is bound to be tremendous excitement this year, probably this summer when alibaba comes public. what would you advice american stock investors to do when they hear inevitable on this program and other places a lot of that talk about alibaba? >> we would be careful. we're very interested new with alibaba. look, this is a company that controls 84% of the market. they dominate. they have a strong network. this is a company that's going to benefit from an urbanization

trend, growing middle class, wages increasing from internet increasing in china. the evaluation reflects a lot. i've heard 200 billion to 250 billion is the evaluation. to assume that is right, you have to assume 40% revenue growth over the next couple years and if you look at google, it's much cheaper. the revenues and earnings are five times greater than alibaba and take a step back. can the company produce this? can they grow at this? can they meet ex mapectexpectat? look at facebook. a recent example would be twit there lost 50%. we would take a step back and kind of wait for an evaluation. if it comes under $150 billion, we think it's a buy. >> while people are waiting, another area to compare these two companys is in terms of invasions and creativity, both have a very broad product mix. who has got the edge when it comes to disruptive invasions

and creativity? >> well, i think both companies are very strong. i mean, if you look at alibaba it's a china play. i wouldn't say global play. most of the growth is from google right now is coming outside of the boarders but we like google because of the android. there is a $1 billion installed base for users there that create as big opportunity for advertising within the space. we like the video they are in. it's really two different companies. we think google is more broad at this point but don't count alibaba out. the growth opportunity is enormous within the boarders, that country has tremendous growth opportunities and alibaba can grow at a very high rate. >> it will be interesting to watch the competition. channing smith, thank you so much. so you just heard what our guest thinks. we want to hear from you, which stock do you prefer? google or alibaba?

go to vote at nbr.com. to the results of last week's challenge where we asked you to choose between nike and adidas. the winner big-time, nike. 60% of you voted for them while 32% of you thought rival adidas was the investment. >> competition around the ones we've been doing over the last two weeks. that's it for us. "nightly business report" for tonight, i'm susie gharib, thanks for joining us. >> thanks from me, as well. i'm tyler mathisen. have a great evening, everybody. we hope to see you back here tomorrow night.

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