this is "nightly business report" with tyler mathisen and susie gharib. >> stocks jolted, blue chips have their worst day in three months as the malaysia airliner with 295 people on board crashes in ukraine. was it brought down? if so, by whom. what might the deadly incident mean for the investing climate worldwide? >> israel moves in to gaza adding to the tensions that royaled stocks and drove money into bonds. what you need to know about rising risks and how it could affect the market. deep job cuts, microsoft will lay off up to 18,000 workers, the largest number in the history as the new ceo tries to reshape the company. that and more tonight on night by business report for this

thursday, july 17th. good evening, everyone and welcome. political risks hammered stocks leading to a triple digit loss on the dow jones average and s&p 500's worst decline since april. it began late morning withews a malaysia jet from amsterdam crashed over eastern ukraine. all 295 on board were killed. immediately speculation arousal that the plane flying close to the russian boarder in an area controlled by separatists were brought down by a miss l. the stock picked up steam when the israeli prime minister instructed the ground attacks supported by tanks, artillery and naval guns. the dow fell 161 dropping below 17,000. nasdaq all 6 2 to 4363 and s&p

500 down 23 off 1.2%. safety seekers poured into treasuries sending prices higher and yields lower. gold gained more than 1%, even the price of wheat rose because ukraine and russia are producers of the commodity. unanswered questions about what happened to the boeing 777, what brought it out of the sky as it cruised above eastern ukraine at 33,000 feet. phil lebeau has been following the story all day and joins us with the very latest developments and what we know now, phil? >> tyler, what we know is the u.s. said that it was a surface to air missile that brought down mh 17 earlier today while it was flying over eastern ukraine. here is what was involved in this entire incident when you look at today. the number of passengers on board, 295 -- 280 and a crew of 15. it lost contact.

the plane lost contact at 33,000 feet. there was no signals. it was clear whatever happened was catastrophic at 33,000 feet and surface to air missile is no longer a question. the u.s. government says intelligence confirms for them that this was in fact a case of the plane being shot down out of the sky, that's according to vice president joe biden. those were his words, shot down out of the sky. if you look at maps of the incident, it's clear as the plane went from amsterdam, we looked at the same maps from flight radar 24 an hour or later, all airlines flying around the air space of ukraine, not surprising given the fact shortly after this happens, almost every major airline that flies anywhere near ukraine, all came out and said we're telling our pilots to steer clear. all flight paths will go around there and some airlines

suspended flights into kiev. this is a place where they are still investigating what happened in the final moments but it is according to the u.s. government a case of the plane being shot down. >> what do we know, phil, about who is investigating the crash site on the ground and whether the black boxes have been discovered? who is in control there? >> well, the black boxes have been discovered. whether or not they are being held by ukrainian insurgent or the russian government, that's a big question at this point and who will take control of the debris field that stretches over 10 miles, that remains to be seen. >> thank you very much. >> joining us now, larry mcdonald, senior director where he deals with macro policy issues. as you heard from phil's report, this is no longer an accident, it was an intentional act. how does this information affect the business climate? how significant is all of this? >> susie, as we came into the summer, brokers, financial

advisors, wall street has been telling viewers watching us now this will be the summer of low volatility. stay away from bonds and stay away from gold and if you look at today, that's been turned upside down. bonds, the 35 year hit the lowest yield in almost a 24 -- over 24 months and then if you look at volatility, we had one of the largest surges in many, many months, and there is just a whole different upside down world relative to what wall street is telling viewers. >> so what is your advice to people who are wondering what i should do with respect to this? is this a time to basically stay still and let things develop or is it the time for moves? >> you want to consider, tyler, air travel. you want to watch carefully because this affects air travel, that affects consumption. global gdp estimates going into the year were above 5%. now they are down to 3.75. the u.s. gdp goings of the year

in terms of economic activity were higher. the expectations. so we have less air travel, people staying at home it hurts consumption. you want to look carefully at the trends over the next five days to figure if this really is a terrorist attack and what are the next stems. >> yeah, and what are sort of the next steps to expect here? because this is coming a day after sanctions were declared against russia. now we've got this incident and we don't know the connections here, but if this turns out to be a prolonged super power conflict, what does all that mean for us? you said the world has been turned upside down. what does that exactly mean? >> opportunities. if you look at russian equities, i was on cnbc in march and we recommend long equities. those stocks will get absolutely destroyed. emerging markets, foreign stocks, russian equities. everybody is terrified of them. so investors want to buy things

that really are the greatest moment of fear and best buying opportunities. this will play out over ther net month. >> money moved into mondays and gold today. is that an enduring trend? >> i think so. tyler, there are so many things with both bonds and gold. the bond market has tried to sell off three or four times and each time we had vicious rallies. there is just a tremendous amount of -- there is a lack of supply really because the feds have done a lot of qe, even though qe is coming off, there is issues behind the scenes. gold and wall street hates gold. while every firm on the street had a target below 1300 on gold going into the year and now gold is going up. so i think you do the opposite of what the crowd is doing and think gold and bonds over the next couple months will be a nice place to be. >> what if we get a lot more information over the next 24 hours? could everything turn the other way around and go back to quote,

normal? >> well, you still have uncertainty in the region. you got mr. putin and you have the midterm elections. so remember, republicans, you've seen, watched mr. mccain on twitter has been going after the president a little bit. the midterm elections, we did a study over the last 60 years, volatility around the midterm elections is twice the normal, the rate of off years. this is a midterm election year and you'll see both the white house and the congress throw bashes at each other that creates volatility and i think that's what you'll see going forward. republicans need to pick up six seats in the senate. the republicans take the senate and changes dynamics for the economy. >> larry, thank you for coming on the program. larry mcdonald from new edge. >> thank you. there was other market moving news today and microsoft led the way. we told you this week that job cuts were coming at the company and today we found out how deep those cuts would be and they are

deep. microsoft will lay off 18,000 workers over the next year. it's part of the company's plan to stream line operations and become the dominant player in the cloud. shares up 1% on this down day. josh lipton has more on microsoft's move. >> reporter: investors knew job cuts were coming at microsoft but the big surprise is how many employees they are letting go. microsoft is cutting up to 18,000 jobs, that's 14% of the work force and double what wall street expected. most of the cuts are coming in the nokia division. microsoft bought nokia's phone business for 7 billion a year ago and cutting about half of its employees. >> it's a pretty bold move, and i think what it does is it signals that microsoft is not going to get on the slippery slope with nokia. they are actually going to trim

the nokia cost structure substantially and that was something worrying investors that this acquisition could really dilute earnings going forward. it will have an impact but this will help mitigate that. >> reporter: in a memo to employees, the ceo said the first step to building the right organization for our ambitions is to reorganize the work force. we'll start with 14,000 cuts right away expected to be completed by next june. the restructuring will result in a pretax charge of $1.6 billion. microsoft stock moved higher on the news hitting a 14-year high this morning. the stock is now up nearly 20% this year. since taking the helm from steve balmer in february, he steered the company away from the pc focus and emphasized mobile technology and cloud where web-based software sold subscriptions. >> he really needs to put a lot

of strategic endeavors on mobile and cloud. i can see more in those areas and big data, and at this point, he's really the general taking the troops to where they need to go, and making sure microsoft competes with the apples, the amazons, goggles on the horizon. this puts them in a much better position to do that over the next coming years. >> today's job kucuts are the example of bold moves to make microsoft his own. so far his decisions have been cheer cheered. we'll get more information when the company reports earnings next tuesday. josh lipton, "nightly business report" silicon valley. for more now on whether the massive layoffs will help reshape the future of mike soft, we're joined by david garrity. david, welcome back, good to have you with us. >> thank you. >> is he on the right track? >> i think so.

bear in mind nedella came avenue getting the cloud operations up and running and to the extent that he had the great success there, it certainly positions him well from a vision standpoint to lead thest compan going forward. taking the costs out and investing in areas of higher growth certainly should get the company up to where earnings right now are going to be down 10% year over year but ref knve is growing. the stock probably moves higher than now. >> so talk to us a little bit about what is microsoft going to look like, let's say, five years from now. a lot of talk about mobile, about the cloud, about restructuring. what is microsoft going to be? will we say about it? >> the cloud operation will prep sent 1/3rd to 50% of the revenues in terms of services. with respect to the core products we know microsoft for now, the office productivity suite and windows operating system, they face major competitions for the likes of

google with android and apple with the ios operating system there. that will be a far more competitive business. one question is is that the xbox where the company certainly has been moving into our living room, does that get spun off to shareholders? possibility. i think microsoft will have to stay with the search advertising business which they might take over entirely from yahoo who seems to be fumbling. the major pieces you'll see obviously rise in terms of cloud, certainly mobile services offerings and delivery by the internet over mobile devices. >> what would you like to see them do with respect to the xbox. you anticipated my question and second, the stock is already up this year, you say it can go higher, how much? >> well, we'll have to see, clearly, how well the execution goes in the second half of the year but i would say it's probably not out of the question question, if we have a positive market, you might see a $50

share price between now and the end of the year. >> david, thank you very much. appreciate you being with us. >> thank you. >> david garrity of gva research covering microsoft for us. staying in the tech arena, google posting a big jump in second quarter revenue and that's thanks to strong demand for advertising. google revenue surged 22% to 16 billion that topped wall street targets but earnings came in below. google earned $6.08 shares still climbed. let's bring in morgan brennan to talk more about google. morgan, you've run through the numbers. what's the key take away? >> i think the key take away with google, we can talk about google glass, driverless cars but at the end of the day its biggest business is online advertising and that's why we saw revenues jump 22% because of strong ad demand and the biggest, most interesting thing about the report, this is the first time google has broken

down it's ad data to differentiate between youtube and google and versus network partners like aol. this shows that google's sights have been performing relatively better with advertisers versus those networks, so the key take away here, google's advertising platform has been doing better than perhaps earlier reports had suggested. >> morgan, stay right there. we'll move on to ibm, which, stay with me, reported higherre than expected kwaurquarterly re as it expects to big data and cloud computing. total revenue fell 2% to $24.04 billion in the second quarter. it's a long streak of declining revenue. never theletheless it was above billion, the world's largest tech service company up to $4.32 a share. that was three cent ace above estimates. shares of ibm rose on the news and fell back, as you see, in

the graphic. it's an interesting story here, morgan. what's the take away? >> it certainly is. i think you hit the nail on the head when you said revenue. that's the story with ibm because even though it did post better than expected results, we saw shares fall and it came down to the revenue number. it's down 2% versus last year and this is the ninth consecutive quarter that we've seen revenue decline year over year for the company. so growth has been slowing there. it's been falling there, and the real culprit here once again, it's the hardware division. that has been falling, everyone -- all but one of the past eight quarters, we have seen hardware sales fall by double digits. this year is no different. >> thank you so much, morgan brennan reporting. >> meg whitman who is president and ceo has taken on a new title of chairman of the board of

directors and replaces ralph wit worth who stepped down for health reasons. whitman led the world's largest computer maker since 2011. why senators are demanding the chief executive of general motors fire one of the company's top executives. on capitol hill today, general motors came under attack. the senator demanded he fire the chief attorney after the legal staff acted too slowly and didn't alert engineers or top executives to a potential safety issue in some vehicles. but ceo mary barra came to his defense. >> how do you have a system in

place that doesn't make out for that? >> we had senior lawyers who had this information and didn't bring it forward who are in longer with this company. >> debra is no longer with the company and she had the knowledge. >> as we went through the details of the report very carefully and i would say when in doubt, we reached further to take action, there are many lawyers that are no longer with the company. >> i think there is a blind spot here, i really do. my time is up. i think the failure of this legal department is stunning. and the notion, i mean, you look around government, when something like this happens, you know what? secretary shinseki didn't know about those problems with scheduling. nobody told him. he's gone. >> senator richard bloomin grksz thal sames the investigation will likely find evidence, these are his words, coverup, fraud and more. quarterly earnings doubled

beating eastimates and that's where we begin market focus. offset a decline in trading revenue. that revenue from trading stocks and bonds and commodities town 13% in the quarter. shares were down a fraction today to 3 2.30. united health job reported strong second quarter results sending shares higher. the health insurer saw revenue increase helped by growth in the public and senior markets and sited the affordable care act for its strong enrollment. on those results, the come panel knee hiked the full year revenue forecast and that sent the stock up to $85.11. shares of auto nation moving the other way dropping after the auto dealer posted earnings and revenue that missed estimates. the ceo noted it was the 15th consecutive quarter of double digit earnings growth but investors still weren't impressed. shares were more than 8% lower at $55.82. disappointing news at matte

lerks. way down by costs tied to the acquisition of mega brands. sales of the barbie doll declined. the biggest drop since 2009. the stock was off 6.5% to $36.46. >> regional lender fifth third bank corp mortgage banking revenue declined and took litigation related charges. it lowered it's full year guidance because of continued pressure on the mortgage business. shares fell almost 6% to $20.28. and then there is key corp, another regional bank that posted sole limit second quarter profits and revenue thanks to loan growth and the company announced it reached a deal to buy a technology investment bank and capital march ketkets firm. shares of some regional banks have been on quite a run this year but after questionable

earnings today, what is the state of the sector? dominic chu takes a look now. >> reporter: banks come in all shapes and sizes. you've got the wall street investment banks like goldman sachs or morgan stanley. then you've got the big money center banks that have all kinds of operations from investment banking to traditional lending and then there is the regional banks, smaller firms that tend to lend mostly to small and medium size businesses as well as home buyers. those more optimistic about economic growth and a stronger consumer often invest in these types of banks. >> the right approach, i think, would maybe be for diversified investor to have exposure to each and they are covered on the micro and macro level. >> reporter: larger regional prank players and atlanta based sun trust banks posted gains betzer than the overall sector. at the same time, cincinnati based fifth third bank and salt lake city bank have lagged. one of the reasons for the gap

is the uneven nature of the economic recovery. that's why many advocate taking a more diversified approach and investing in financials because overall, the sector could be of good value for investors. >> we think the health of the financial services sector will be part of a rally in the stock market. you know, financial firms provide the liquidity and grease and oil of keeping the economy going and growing, so financials under performed the broader market and improved a little this year but that means they are a little more of a better value proposition for investors going forward. >> financial stocks lagged the overall market since the deaths of the financial crisis but if the economy gets better, these stocks may be the ones that benefit more than other stocks in the market. for "nightly business report", i'm come nudominic chu. phoenix real estate rose but now it might be stumbling again. that's next.

almost as soon as housing was declared to be coming back, it relapsed. housing starts down 9% in june and building permits down 4%. nowhere has the road to recovery been more ridden with potholes than phoenix where dianna na ol takes a deeper dive. >> reporter: julia and mike put their north phoenix home on the market last march listing it at $300,000. >> my real estate agent says it's like fishing. throw your reel in and it's just how deep do you need to get to

hit some fish. >> reporter: after 107 days and several price drops, they still had no bites so pulled it off the market. >> we thought, well, i don't want to sell it for a song. >> reporter: phoenix over built and over bought by flippers during the housing boom, it crashed hard. home prices fell 56% from the peak in 2006 bottoming out in 2011. foreclosures were rampid. prices up 45% from the bottom but investors priced themselves out of the market and left it to regular buyers, buyers who can't afford the higher prices. >> they are looking at it from the distressed property mind set a little bit that they should be getting this great deal whereas a lot of the folks like us who have been maintaining properties well, we're not just willing to give them away for a song so buyers are very picky.

>> reporter: phoenix home sales are going down and prices flat. >> it's masking the fact supply is also weak. >> reporter: the reasons like the rest of the nation, some people are still repairing their credit, others don't have enough equity in their homes to sell and move up. demand is also weak because prices are high, credit is tight, and younger americans aren't buying. >> i'm starting to think if demand gets back to normal, then the supply is not going to be able to get back to normal as quickly. >> reporter: builders are slowly coming back to phoenix, but they have had to drop prices dramatically this year. >> i feel like it's ground hog's day where we're over building. i feel like they are over expanding for what there is out there. >> reporter: and perhaps, building on a foundation of recovery that still has too many cracks. for "nightly business report", i'm diana olick in washington. >> before we leave you, we want to recap tonight's top story. stocks selling off on concerns

at midday a malaysian airliner from amsterdam went down over eastern ukraine. senior u.s. officials have since confirmed to nbc news the plane was shot down. then late in the day, israel's prime minister gave the go ahead for a ground offensive in gaza and the dow dropped -- >> a very busy day. you're going to be away for a couple weeks. >> i got a little surgery to take care of, but i'll keep you posted. >> we wish you -- we want sel e selfies now. >> you can count on that. >> that's "nightly business report." thanks for watching. i'll be back in a few weeks. >> i'm tyler mathisen. good luck, susie. i'm tyler mathisen, we'll be back. see you tomorrow night. 

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