this is "nightly business report" with tyler mathisen and sue herera. >> walmart's big warning. it took investors by surprise, sank the stock more than 10% and dragged the broader market down with it. $50 billion target. the best performing stock on the dow this year just set an ambitious target for itself. netflix stumbles. there was one thing in the company's earnings report that disappointed investors, and we will tell you what it was. all that and more tonight on "nightly business report" for wednesday, october 14th. good evening, everyone. a stunning admission from walmart. the world's largest retailer by sales shocked the financial markets when it said profit and revenue for the year won't be as strong as it once thought. and according to some, far worse than anyone expected. the reasons include higher wages

for employees and big investments in e-commerce. that sent shares plummeting, down 10%, its worst day in 27 years, knocking more than $20 billion off its market cap. the revelation underscores the difficulty that company is having reigniting growth. courtney reagan has more on walmart's unpleasant surprise. >> reporter: well, no one saw that coming. today, walmart lost nearly $20 billion in market cap after surprising wall street with new earnings guidance at its annual investor meeting at the new york stock exchange. the world's largest retailer lowered its sales outlook for the current year, citing negative currency impacts and said the cost of higher wages and investments in e-commerce will lower earnings by as much as 12% in 2017. walmart's ceo, doug mcmillen, is asking investors for patience and told analysts that these investments are the right ones to make for the future.

the company forecasting it will return to current levels of profitability in fiscal year 2019, though investors are hurting now. retail consultant and former department store executive jan niffin was at the meeting today and thinks the pain is necessary. >> i don't think they have a choice of how they're going to compete. they've got to be competitive with the amazons of the world. they've got to be competitive in the grocery space. they've got to do what they're doing. they had to raise salaries, which was part of the hit they're taking here. i don't think there was an option for them to do something different. the pain is howenuch it's going to cost to get from here to there. >> reporter: while walmart announced the wage increases back in february, some say the retailer didn't detail the cost impact beyond the first year as much as it's doing now, which is part of the reason for the surprise and subsequent stock plunge. but mcmillen tried to ensure analysts that he isn't losing track of shareholders. >> we'll protect shareholder value. i'm not one that believes in

just writing something off because it might be perceived well by some. i'm trying to manage this situation like it's your money and my money, because it is my money, and i know it's your money. so, we've got to be thoughtful about what we do, and not everything will happen overnight, but we're clear that we have to win in some certain areas. >> reporter: one of those areas is investment in walment's hallmark. everyday low prices. the retailer didn't go into detail about how it will execute, but one analyst expects it to spend roughly $2 billion to continue to deliver cost savings to customers. walmart didn't bring a win for shareholders today but did say christmas will be "fine." for "nightly business report," i'm courtney reagan. >> even though walmart's issue is specific to the company, retailers across the board fell along with walmart today. discounters dollar general and dollar tree fell more than 3%. rival target off 3.5%.

and even the department store sears and high-end retailer nordstrom slid today. joe feldman joins us now to talk more about walmart's warning and what nay mean for the rest of the retail sect your. he is senior managing director at intelligencie advisory group. nice to have you here. >> thanks for having me. >> were you as surprised as almost everyone on the street was by walmart's announcement this morning, and what does it mean for this company? >> yeah, no, i definitely was as surprised as everybody else. it was -- you know, we were forecasting, say, earnings to be up 5% or so next year. now they're talking about being down 6% to 12%. that's a huge swing. you know, we knew there was going to be investment spending. we knew that they were going to raise wages by a dollar to $10 is the minimum level, and we knew there was going to be some e-commerce spending, but boy, the impact of that was definitely not as well telegraphed as i think they could have done that over the past year. and this is like the third time now or so in the past three quarters or so when they've, you know, come out and had to add

some things that are investment spending that are driving down earnings a little bit. >> you know, i think of the walt kelly quote from "pogo id, "we have met the enemy and he is us." is this the case with walmart? >> well, it's a very big ship and it takes a lot to turn it, and i do believe that this investment spending that they're doing is necessary. they are seeing benefits from it already. if you think about the investments that they've made in labor, in their staffing in the stores, they're actually seeing better same-store sales trends. this year, sales have not been the problem. it's really on the expense side. >> so, joe, they obviously had to do this because they had to upgrade the technology, so it's an investment in the future. >> mm-hmm. >> can the street see past that? because they took down a lot of the retailers today in sympathy with walmart. was that appropriate? does it have that kind of a ripple effect through the rest of the retail stocks? >> i think the street put one and one together and they said that, okay, well, walmart sounds lousy, and the retail sales data

coming out of the u.s. government this morning was a little bit softer than expected. it wasn't horrible, but it was a touch softer. and so, everybody said, boy, get out of retail, it must be bad. and i think it's a misread to say that walmart's pressures are really going to impact everybody else. i think they're doing things to change their business model a little bit to focus more on digital, have a seamless experience for the customer, to have better in-store experience. that's very walmart specific versus the rest of retail. i think there are some opportunities that came up today with some of the selling. >> all right, perhaps. maybe people will go in and buy that dip. >> yeah. >> joe, thank you very much. joe feldman with the telsey advisory group. walmart's drop lower weighed on the market and weaker than expected economic data didn't help, either. more in a moment. the dow jones industrial average fell to 16,924, back below 17,000. the nasdaq was off 13 points, and the s&p 500 fell 9. netflix disappointed

investors with its after-the-bell results. earnings of 7 cents a share missed estimates by a penny and revenue also missing consensus slightly but rose from the same period last year. shares tumbled before coming back a bit in initial after-hours trading, but there was another key metric that wall street was watching -- user growth. julia boorstin has more on those numbers. >> reporter: the most important number netflix's result, subscriber additions. while the company added slightly more total subscribers to finish the quarter with 69.17 million, better than expected, its u.s. subscriber growth fell a bit short. netflix added just 880,000 new u.s. subscribers compared to the 1.15 million the company itself projected. it attributed that shortfall to what it called involuntary turn, its inability to collect as people transition to chip-based credit cards and fail to update their payment information. similarly, the company's fourth-quarter outlook also

forecast smaller u.s. subscriber growth than wall street analysts projected. but international growth is compensating for that domestic shortfall. netflix added a greater-than-expected 2.74 million subscribers overseas in the third quarter. this projecting stronger than expected international growth in the fourth quarter as well as it continues its global expansion. back over to you. >> all right, julia boorstin. a number of big companies reported their quarterlies this morning, including a handful of banks. and although the results may look good on the surface, there's more to them than meets the eye. >> reporter: the mortgage business has made wells fargo pailar of strength among banks. so far this earnings season, it's the only major bank to grow revenue in the third quarter. but despite an earnings beat, by a penny, and despite growth in the number of loans it's making, the profit margins on those loans fell because mortgage rates are so low. >> we definitely make more money in a higher-rate environment, but the results that we've generated in a zero interest

rate environment for several years now have been record results for wells fargo. >> reporter: among the other big banks, bank of america beat by 4 cents. it's now gone a full year without having to worry about legal fees eating into its profit, and it continues to cut costs. the bank now has about 215,000 employees, down more than 6% from a year ago. still to come this week, reports from citigroup, goldman sachs and morgan stanley. among the regional banks, pnc beat estimates by 11 cents. profits rose, but revenues were down. again, low interest rates are the culprit here, but the bank made more loans and managed to cut expenses, too. blackrock, the world's largest asset manager, posted an earnings beat by 43 cents. profits, though, down 8% from a year ago. during the stock market's worst third quarter since 2011. and while low energy prices make it riskier for banks to make loans to energy companies, they

are good, very, very good for travel. delta air lines beat estimates by 3 cents. it reported record quarterly profit $1.4 billion, and did so even though revenue was down slightly. >> in 4q, we expect another record quarter, 16% to 18% op margin. and as we get into 2016, we'll be lapping higher fuel prices. and right now in the s&p 500, i think if you look at analysts' forward estimates, we probably have some of the top eps growth expected by the street in 2016. >> reporter: delta says it's using profit from lower fuel costs to help keep its ticket prices down. >> and here's how shares of those companies finished the day. wells fargo and bank of america moved fractionally. pnc fell, while blackrock and delta were higher. to the economy now, and a report from the federal reserve that shows the economy growing at a modest pace. the fed's beige book, which is a

snapshot of the economy from its 12 regional banks, showed steady consumer spending and an improving housing market, but the strong dollar slowed activity in manufacturing, energy and tourism. retail sales and the latest report on inflation disappointed. the commerce department reports that sales at stores and online rose 0.1%, which was below expectation. producer prices posted their biggest decline in eight months, dropping 0.5%, and that sent the yield on the ten-year bond back below 2%. this weaker-than-expected economic data isn't going unnoticed by the federal reserve, which as steve liesman reports, is becoming more divided over the timing of a rate hike. >> reporter: chances of a fed rate hike this year seems to be slipping away after the government reported lower-than-expected retail sales in september. there was weakness in gasoline station, grocery store and electronics sales. that was offset somewhat by strong car, clothing and furniture sales.

and the overall numbers eked out a small gain. but there was a downward revision to overall spending in august, adding to the sense of an economy that has weakened, if not stalled in the fourth quarter. two fed officials said in recent days they were more worried about risk to the economy and did not support rate hikes this year. >> right now, my expectation is, given where i think the economy would go, i wouldn't expect it would be appropriate to raise rates. but i wouldte hasten to add tha that is an outlook that changes based on developments in the economy and our being forward looking about it. >> reporter: the fed governor's comments have wall street thinking the first rate hike in nine years looks more like a story for 2016 than 2015. >> the market's pricing in a fairly low probability of a hike in october. whatever level that probability is at is too high. at this point, you have to assume it's zero for october. the probability of a hike in

december's currently being priced in around one-third. that's probably two high as well at this point. >> reporter: comments from the two fed governors raised another issue, whether fed chair janet yellen controls her committee. yellen has said she expects rates to rise this year. it's rare for governors appointed by the president and confirmed by the senate and with offices right next to yellen to disagree with the chair, let alone descent. the 12 district fed presidents are often more outspoken than the washington governors, having fed observers wondering if there's been an internal revolt at the fed among the doves closest to yellen. it certainly led to a confused message. >> if the fed's message is garbled, it's not necessarily because the fed is doing something wrong, but it's more about the fact that the economy and the data continues to sort of interfere with what the fed expects it's going to do. >> reporter: come december, if the data is clear about the direction of the economy, then fed officials may be clear and united about the direction of rates. for "nightly business report," i'm steve liesman. still ahead, the ambitious,

long-term goal nike is setting for itself. nike set some big goals for itself. the world's largest athletic gear-maker has a plan to increase its growth not only in the u.s., but across the globe. sara eisen has more from nike headquarters in beaverton, oregon. >> what we've discovered -- >> reporter: global consumer giant nike announcing an ambitious, new plan to grow sales to $50 billion by 2020. that's $20 billion ahead of where it is now. that growth starts in its home market. >> the growth for north america for nike's actually quite exceptional. we have a strong category

offense in play, we have great relationships with our wholesale partners, and nike expects to grow our e-commerce business to $7 billion by 2020. it's at $1.2 billion today, so that's healthy growth. >> reporter: another part of the growth story is china. at a time when its economy is slowing and other companies are struggling in the region, nike sees double-digit growth there. analysts say nike is also doing a good job appealing to the right demographic group. >> the millennial consumer is driving the business across the world. so, even though maybe the luxury business in china's not as good right now because the economy has cooled off, et cetera, we're really still seeing a strong trend with millennials in sport. >> reporter: nike says that will help drive its jordan brand beyond sneakers to a $4.5 billion business in the next five years. >> we will go into the training category as a great example, where you know, if you want to be fit and you want to be, you know, just be a part of that brand, that will be a great opportunity for us, but we'll also, obviously, continue in

basketball, but we'll also have great products for young athletes. >> reporter: all of these growth initiatives have helped them reach the top of the dow, up 35% this year. under armour stock is doing even better. it's because in a world where apparel spending has been sluggish along with overall glow consumer spending disappointing, at leisure is a bright spot. it's going to be up to these companies to keep the innovations coming and the new products exciting to keep that fashion trend alive. nike says its pipeline has never been better. for "nightly business report," i'm sara eisen. we begin tonight's "market focus" with a $1.5 billion deal. the consumer products company jarden is buying the parent company of jostens, a firm that makes class rings and other memorabilia. jostens generates nearly $1 billion a year in revenue. shares rose a fraction to $51.08. priceline and tripadvisor are teaming up. the online travel company announced an instant booking partnership with priceline.

now tripadvisor users will be able to book through priceline's booking.com. tripadvisor surged to $83.72. priceline was off to $1,311.08. goldman sachs reportedly the target of an fbi and justice department probe. according to the "wall street journal," it's being investigat investigated for its role of an advisor to a fund. they fell a fraction. lower fuel costs helped j.b. hunt post better-than-expected proftst profits. demand grew for moving shipping containers. shares were more than 3% higher to $75.09. and xilinx saw its earnings fall in its most recent quarter, but it still managed to beat estimates. revenue came in short of consensus, however. still, shares surged initially after the close during the regular session. the stock was 2% higher to finish the day at $45.38. despite low oil prices, some companies are spending a lot of

money to upgrade the infrastructure that helps haul crude safely from one place to another. and one of those companies is tasoro. morgan brennan has our report tonight from vancouver, washington. >> reporter: even with oil prices stuck below $50 a barrel, tasoro is proposing one of the biggest oil infrastructure projects in the country. >> this is a fantastic spot. it's in the port of vancouver in washington. it's been an active port for over 100 years, and what we're proposing to build here is a crude-by-rail transfer facility, to be able to bring north american crude to the west coast refineries. >> reporter: the $210 million facility part of a joint venture with logistics firm savage companies, would receive up to 360,000 barrels of crude per day, much of it from the bakken oil patch, coming by train, then loaded on to tanker ships headed to regional refineries, including tasoro's. >> if the infrastructure's not in place, we don't have access

to the oil. so, with the infrastructure, then it's the price of the crude, the price of transportation and the quality of the crude, which the quality really means how much gasoline and diesel can you make out of that crude oil. >> reporter: energy analysts say the strategy makes sense, since bakken oil is light and sweet, meaning easier to process and better on the environment. >> it would be a benefit to the refineries in the area. they'd be able to use domestically produced crude oil, versus importing it. >> reporter: west coast refineries used to get most of their oil from alaska, but dramatic declines in production there have forced them to import more from the middle east and elsewhere. and while the shale revolution unlocked vast quantities of crude, the region has lacked infrastructure to access it. pipelines are at full capacity, and no new ones are being constructed. that makes train the only option to bring more domestic oil to the west coast. according to the eia, crude by rail to the region soared from an average of 23,000 barrels per day in 2012 to 157,000 in 2014.

>> what we've seen is refineries in the pacific northwest have put in these crude by rail facilities to take advantage of the increasing production not only in north dakota but as well as in the rocky mountains in order to supply their refineries given the declines in alaskan north slope production. >> reporter: tasoro and savage's vancouver energy as well as other companies, including nustar and shell, have all proposed new crude by rail facilities, but all are inching along through a review process. meantime, tasoro has just begun receiving some of the 210 brand-new tank cars it ordered in 2014. ahead of the final oil train rules issued by regulators earlier this year. these more accident-resistant tank cars, d.o.t.-120s, will begin transferring the crude before the year's end on bnsf railway. sturdier cars are important to safety and preventing an oil train accident, especially as

this site goes through the approval process. for "nightly business report," i'm morgan brennan in vancouver, washington. coming up, even as home prices rise, there is still a way to find a house at a relative discount. what to watch tomorrow. dow components goldman sachs and united health group report earnings. the consumer price index is out. that's, of course, the main indicator of inflation. and we will find out how many americans filed for unemployment benefits last week. and that's what to watch thursday. digital payments company

square has filed to go public. the firm run by twitter's ceo, jack dorsey, plans to raise up to $275 million in its initial public offering. it will trade on the new york stock exchange under the symbol sq. separately, dow jones is reporting that first data priced its ipo at $16 a share, below target. first data is expected to be one of the biggest ipos of the year. and according to reuters, albertsons postponed the pricing of its initial public offering. it was expected to happen tonight. well, there's a chronic shortage of air traffic controllers, so warns the union that represents them. the national air traffic controllers association says the number of controllers is at the lowest level now in 27 years, and if left unchecked, the shortage could lead to widespread flight delays. the faa says budget cuts and the government shutdown contributed to the shortage, and it is working to hire at an increased rate to meet staffing needs. real estate has always been about location, of course, but

never has that been more true than during this unique housing recovery. and that's because the price differential between close-in metropolitan homes and the far-out suburbs has never been greater. diana olick explains why. >> reporter: this nearly new colonial will cost you more than twice as much as this nearly new colonial. why? because the first one is in bethesda, maryland, a close-in suburb of washington, d.c. the second home is in ashburn, virginia, an hour's commute from downtown d.c. >> we're still a little bit under prerecession pricing, where the inner jurisdictions are now above their previous pricing. >> reporter: the suburbs usually recover from a housing downturn more slowly than their urban neighbors, but the divide this time around is greater than ever according to a study by john burns real estate consulting. take chicago. home prices in closer-in deerfield are about 15% below their recent peak, but keep going out the interstate and you

see prices are still as much as 30% below peak, the same in l.a., where glendale is already 2% above peak, but farther out, palmdale is 37% below. and in d.c., the close-in suburb of arlington, virginia, is almost 8% above the peak of the housing boom, but head out to ashburn, and you see prices are nowhere close to recovering their peak values. >> just the size of the house you can get for the dollar, it just drops dramatically as you get a little bit outside of the city. >> reporter: 40-year-old ian walsh and his young family moved out to ashburn three years ago, and walsh does not regret the choice, despite his hour commute to downtown d.c. >> when i get out here, especially i get into the neighborhood, i kind of feel sort of the stress of the city roll off my shoulders little bit, and i can just sort of relax kind of instantly. >> reporter: walsh may like the quiet of ashburn, but the price to buy between city and suburb is growing because of demand from two very large generations on either side of him,

millennials and active baby boomers. they want the walkability and socialability of urban areas like bethesda. >> it's becoming more popular to have walkability to downtown areas, to restaurants, to metro everything that's down here in bethesda. that's exactly what people are paying for. >> reporter: for now, at least, the sky is the limit in downtown prices, but as millennials age, the suburbs could see a rebirth. so, with the price divide so great now, those far-out homes could see bigger price growth down the road. for "nightly business report," i'm diana olick in washington. and the chicago cubs are heading to the national league championship series. maybe you know that, but if you were hoping to score a ticket, you're going to have to pay. the current average asking price on the secondary market is more than $1,300. that makes it the most expensive ticket price for any nlcs game, according to ticketiq, a ticket aggregation site. and here is a final look at

the day on wall street. the dow jones industrial average fell 157 points to 16,924. the nasdaq was off by 13 points, and the s&p 500 fell 9. we'll see what tomorrow holds with walmart. >> yeah. >> see whether they come in and buy the dip or not. we'll see. that does it for "nightly business report" tonight. i'm sue herera. thanks for joining us. >> and i'm tyler mathisen. thanks from me as well. have a great evening, everybody. we'll hope to see you back here tomorrow night.

find out how the return of a feared predatort"... is altering a vast wilderness... wirsing: we live in a world where big predators are largely missing. sethi: ...why a movement to save seeds helps safeguard our food supply... and how a photographer captures the wild spirit of a changing landscape. forsberg: everything is connected to everything else. announcer: major funding for "quest" is provided by the national science foundation. sethi: for nearly two centuries, scientists have been assembling collections like this one