this is "nighlty business re" with tyler mathisen and sue herera. 15 years in the making the nasdaq closes topping the.com era high and reports could set the tone for tomorrow. >> message to the market what caterpillar, and procte biggest global companies are saying about the health of the world ec why this earnings season is turning out to be a big one for small caps. all of that and more tonight on "nighlty business re" for this thursday april the 23rd. good evening, everybody and welcome. i'm bill g tonight for tyler mathisen. >> and i'm sue herera. the nasdaq closed at an all-time high. we'll have more on that momentarily.

but we begin tonight with three of the world's biggest companies and what they are saying about the gloiblt economy. caterpillar, the maker of construction and mining equipment, which reaches more than 180 countries blew past earnings estimates. but it also issued a warning. procter and gamble the largest household product firms which touched consumers across the global said revenues fell a sign of weakening demand or something else. and 3m cut the full year outlook. together the three companies are sending a message to the markets about the global economy. >> the multi-nationals caterpillar, 3m and procter and gamble all components are feeling theects of a stronger dollar and geopolitical uncertainties. caterpillar beat revenue profits but said it is bumpy. and lower oil prices have cut

demand for cats exploration equipment. other sore spots inclu mining hardware locomotives and in china, construction equipment. >> i'm going to be very realistic with you. we'll not repeat this quarter the rest of the year. >> we've seen a real dichotomy here in the world. a u.s. growing fairly slowly but growing steadily and everywhere else there is not much good news. >> in some locations it could get worse because cas yet to feel the full impact of the free fall and petro exam in brazil. >> and there is a manana economy. >> our survey told us that north america will be better than expected. kiwi will make it happen. >> the europe economic stimulus is one reason the dollar has strengthened though and 3m joins the chorus of companies blaming a stronger dollar when it missed

earning estimates. 3m makes post its and coatings and ceramics lowered the forecast and sales dropped by more than 8%. p&g does two-thirds of the business outside of north america. cfo john foaler said it can change the product mix locally and work on efficienty. >> the good news these are things we should do in the normal course of business and we sharpen the focus and keep everything going. it is part of everybody's job. markets like russia the ukraine, argentina are selective where we are ting growth. and china are others are better off and that is where they are hoping to find growth. >> now to another global brand which late today issued a earnings beat. we're talking about microsoft. they reported a profit of 61 cents a share, ten cents better than estimates and revenue came

in at $22 billion as sales of the hardware and cloud computing products offset a decline in the windows business. and investors liked what they saw with shares riding after that -- rising after that report. josh lipton has more on microsoft and the one thing shareholders should pay attention to. >> it is the revenue microsoft generated in the commercial side of the business where specifically the software sales to company, that is the real bread and butter for the software giant. wall street expected $12.4 billion and many expecting a real miss so that number was a welcome relief from the microsoft bulls. that is not growing from prior quarters from rising headwinds like the rising dollar but today was a step in the right direction for the ceo. for "nighlty business report," i'm josh lipton in san francisco. it was a different story for

another big tech company, google. the search giant reported earnings sher pair of $5.60 and revenue missg in at $17.3 billion but up from a year ago helped by a jump in the number of ads, investors brushed that off miss and sent shares higher. jon fot looks at the key takeaway. >> the most important thing out of google is you tube. that property is performing better than a lot of people knew and the auto play ads on you tube people are watching them. that are making the google results look worse than they are because it looked like people were clicking on a bunch of ads that weren't paying out a lot of money. it turns out they were enjoying watching the you tube ads. that and tight expense controls at google sent the stock up after hours. for "nighlty business report," i'm jon fortt. e program, we'll look at e of google's projects and how it is changing

the game for start-ups in the midwest. >> and microsoft and google results could impact now the nasdaq trades tomorrow but after the record close today the first all-time high in 15 years. but the end of the trading session, the dow jones rose to 18,058 and nasdaq took the index to where it hasn't been since march of 2,000. at 5056. and the s&p is five points shy, up about five points today. the nation's biggest automaker hilting a speed bump. the gm recalls are mostly behind it and solid sales in parts of the world and expectations are high but the automaker missed analyst estimates for earnings and revenue and that weighed on the shares. down more than 3%. phil lebeau has more on the road ahead for gm. >> for general motors another quarter of solid profits that

left investors saying it not good enough. the automaker made over $2 billion last quarter. but fell short of estimates. blame it on currency issues in south america and higher than expected tax rate. but the underlying business did well with north america profits surging thanks to truck and suv sales and gm is on track to hit the financial targets this year. but still gm shares have stalled. on the earnings call the ceo down played the possibility of general motors merging with another automaker as some have suggested. >> we have a well articulated plan and executing that and we are not going to entertain anything from distracting us from that. >> and they are planning on returning more cash to investors which they are doing through a higher dividend. so far that move has failed to have a big impact on gm shares. phil lebeau "nighlty business re chicago. and from cars to trains now.

union pacific, the largest u.s. rail posted first quarter profits and sales below analyst estimates the compy sited congestion at ports and weak coal demand and shares were lower by 2% as a result. and while union pacific and other rails come under pressure it is a different story for another transportation sector trucks. morgan brennan has more. >> trains versus trucks. on the the tale of two stories of transports. as oil is weak growth is transitioning to trucking's bread and butter. this is playing out in earnings. >> railings are strucking to put mid single-digit enk together and a big beneficiary of cheap

diesel fult is posting phenomenal earnings growth. >> due to large demand and rising earning cost. union pacific reporting this morning. until now they had rock solid results but the first quarter missed analyst estimates with volume at 22%. saver kansas city southern had lower guidance. and as fuel costs fall. other companies have all beat on earnings posting big year over year growth. >> we've seen an average increase in earnings of 45%. in the rail space that have reported earnings we've seen 12% if you include the canadian 12% so pick your poison. >> and so for this reason wall street is suggesting you buy trucking stop and steer clear of

the rails. for "nighlty business report," i'm morgon brannan. >> while much of the focus during earning season are big, it is small caps getting big results. according to small cap, earnings are growing 3.5% with revenues up last year. while large caps are seeing a drop of more than 3%. the reason is likely because of the strong dollar which small caps tend to be insolated from. joining us to talk about this is steven wood from chief market investments. good to see you, steven. welcome. >> thank you. >> does it come down to something as simple as that. they are domestically based so they don't have the currency exposure. >> i think a large part is that. by definition they can be exposed to foreign markets so currency for them has become a nonissue at least in the current earnings season. with large caps with national exposure and euro that is much more of an earnings corporation.

>> where do you put small caps on the risk scale, steve? are they risk ier than investing in europe because of the dollar currency exchange rate situation? does that make the small caps riskier or not? >> as a general statement small caps are volatile or riskier than the small cap names but the bigger issue in the u.s. one of valuation large or small. markets are fully valued in the united states so valuation is something of a head wind even though the economy is improving and even though the federal reserve is stimulating. so we do l and we've upgraded europe and we think there is better domination in europe. >> so if we have full valuations what does the up coming quarter bode for the small cap stocks. >> i think small cap stock will continue in line with what we've seen in the first quarter with a little bit of a pickup. the first quarter very cold and the winter played in. and we have the dollar which you

mentioned appreciate considerably and so the second quarter will not look dissimilar from the first quarter but you'll see a pick up of earnings in small cap and large cap space but the dollar is not an issue for the small cap but an issue in large cap space. >> very quickly, if you were to invest in small cap, who are theerners? >> health care and financials and areas of the consumer that will benefit from oil prices coming down and with the dollar being more powerful they can add to their consumption. >> phil wood with russell investments. >> thank you. coming up. drying up as the race to save the state from the epic drought continues. some are looking to the pacific ocean for help.

products. we had our products boost in loyalty so we kicked it out to the park in the market side of the business but nothing works unless our franchisees are open and despite the snow our franchisees got their stores open. >> starbucks popped after the close and shares of dunkin had the best day ever up 8% today. we begin tonight's market focus with quarterly results from tech conglomerate amazon. they reports a loss despite rising sales as they continue to spend heavily on projects like drone delivery and gave financial details about the secretive cloud computing business which posted revenue of about $1.5 billion. guidance from the online retailer was light. shares were volatile after the

close. stock ended up a fraction to $389.99. and just one day after coke reports strong results, pepsi disappointed the street. the soda and snack giant said it expects to take a bigger hit from foreign exchange in 2015 and more than expected and that overshadowed the better than expected revenue expectations and shares were down 1.5% to $95.73. eli lilly profits beat by a margin after a boost in sales of animal health. and lower research and marketing help the bottom line but revenue slipped as the strong dollar hurt sales outside of the united states. where have we heard that before. shares were up a dime closing at $72.40. dow chemicals saw the earnings pop more than 40% as they focus on the high-margin business that caters to the packaging and electronics

industries. the company ceo explains how dow managed to navigate around all of those headwinds. >> we saw the same currency volatility and the oil price effects going on in markets around the world, so in terms of realtime growth the bottom line matters and we managed strong volume and good margin management through productivity and launching new products. >> shares closed up almost 2% to $51 per share. lower fuel prices haved united continental post a profit but the airline sales saw a dip and post their forecast as once again the strong dollar weaken demandabroad shares slump to $62.82. and pulte home builder saw the profits drop more than 20% as home closings fell and it was soft. part of the problem is northeast because of construction delays due to weather. shares tumbled 18% to $19.79.

and johnson and n announced a dividend increase to 75 cents a share. the ceo said that is due to a strong financial position and confidence. the yield on the payout is now about 3%. the stock was up a fraction to $100.46. now to the drought out west. california has for decades neglected to build new water infrastructure. no new reservoirs and dams and now everything is on the water table, if you will. even desallination, which removed salt from sea water. jane reports from carlsbad california. >> bone dry california sits next to the largest source of water in the world. the pacific ocean. turning saltwater into fresh is expensive, requires a lot of energy and isn't good for nearby fish but california is running out of choices.

>> we are standing in the middle of the reverse osmosis plant. >> josica jones is showing off the $1 billion plant built by poseidon and providing 70% of the water to the county. >> behind me is a feed line. >> they are financing the plant and san diego has agreed to buy the water at a fixed price for 30 years. >> water from the desallination plant is double the cost of imported water. >> that means water bills will go up an estimated $6 per month for the customer but the plants price will never change and never run out of water. it will be pushed through fine filters to reduce the sult at 900 pounds per chance of pressure. >> if that were to break, it would shoot the water into the air at 9 miles per hour. >> and they plan to use it as a turbine to reduce costs.

>> the carlsbad project has been under development since 2000 and at that time we weren u in a drought and that has changed and we're coming online at the perfect time. >> and this process does kill fish but joan said -- jones said not as many as you may think but they are offsetting it with restoring wet lands down the coast an while this may be the first plant it is not the last. a dozen plants are being considered up and down the state. jane wells, carlsbad california. back to google. they are working on google fiber which provides super fast internet to locations. and one is kansas city kansas and many start yuchs have -- start-ups have flocked to the area because of it. the internet connection may

be blazing fast but the rollout an entirely different story. >> as google fiber gears up to expand the footprint around the country, businesses have flocked to kansas city kansas and kansas city missouri to capitalize. the google high speed fiber has braunt entrepreneurs to the region from as far as europe. this business relocated to the area from france in 2012. three years later, he's still waiting for fiber to deliver. >> the business application hasn't come as quickly as we had hoped. but certainly we're in the implementation process and we expect to have it here in the next couple of weeks. >> but for those who have fiber, it has been a game-changer. >> buffering is something you won't see here in kansas city where internet connectivity speeds are up to 100 times faster than what you see in homes across america, thanks to google fiber. >> the hype is very real but

some are trying to fe out how to leverage it. it has had more than 100 start-ups launch in the past few years. >> when google chose kansas city to bring fiber it ignited passion and innovation just simply because they chose kansas city. and people rallied around it. when google comes to your town and brings a brand new service nowhere else in the world, you're going to get excited about it. >> the energy reminds google of another game-changers from the past. >> what we're seeing so far is looking a little bit like the early days of going from dialup to broadband. we don't know what to expect but the innovation followed. >> and while there is no set time line for the rollout into five new cities, including atlanta, charlotte, nashville and raleigh durham and salt lake city both google and customers agree, speed is what matters. for "nighlty business report," in kansas city kansas i'm joan

rogers. now one entrepreneur is hoping she has found the next mitch market. the final part of our "marijuana and money" series is next. here is what to watch for tomorrow on the data front, we'll have durable goods orders

and big ticket manufactured items and earnings from biogenetics and xerox are due out and consumers will get their hands on apple watches. that is what is on the agenda for friday bill. >> whoo-hoo. big day. meanwhile petro bross put a price on the massive corruption scandal we told you about last night. the company will write off $17 billion due to losses from graft and overinflated assets. the disclosure came in the first financial statement in more than eight moz. in an interview with our michelle cab uso cabrera, the ceo said those could get bigger as the criminal case expands. >> that is the best information that we have at this moment. but it is impossible to say that you -- that this enough will

cover everything because information that we don't have access or that -- or is available, all in the future it is impossible to know about that. >> so it is possible there could be more down the road? >> or -- or more or less. we really don't know. >> well some apparently had estimated the cost of the corruption would be greater it. helped shares rising more than 5% today. and finally tonight, we all know that people spend a lot on their pets. to the tune of $58 billion last year. and with the legalized pot industry growing, some entrepreneurs have found a new niche market. pot for pets. dina gusovsky has more in the final part of our series "marijuana and money." do you want a treat? >> this is sprout. she only has three legs and that is one of the reasons her mom is feeding her marijuana. >> we are giving her treatables to help prevent arthritis down

the road. a treatable is a dog or pet treat that is baked with compound the nonpsycho active substance of the plant. >> she suffered from separation anxiety and gets the treats daily. >> as for the critics? >> i think they would be crazy to give their dogs to feel dopey and out of touch rather than happy and calm. >> this brother and sister are investors in the maker of treatables. >> they are actually delicious. they taste like graham crackers. we're not interested in getting our dogs high but interested in providing a wellness regimen that is safe and nontoxic. the idea is if adults can enjoy cannabis animals should too but we stick to the ones that are appropriate for them. >> and the kitchen has plenty of edibles for humans as well. >> last year we sold a quarter of a million units.s o pretzels and

i think we sold 50,000 of these last year. >> for "nighlty business report," i'm dina gusovsky in san francisco. and last night we told but a story offering a rare glimpse into the life of a marijuana farmer. that is on our website, cnbc. and that will do it for "nighlty business re i'm sue herera. >> and i'm bilgriffeth. we'll see you tomorrow.

announcer: a kqed television production. kacyra: it kind of was like the bang that set off the night.

rogers: that is the funkiest restaurant. man: the honey walnut prawns will make your insides smile. klugman: more tortillas, please. khazar: what is comfort food if it isn't gluten and grease? man #3: i love crème brûlée. woman: the octopus should've been, like, quadropus, because it was really small. sbrocco: and you know that when you split something, all the calories evaporate and then there's none. man: that's right, yeah.