>> announcer: this is "nightly business report" with tyler mathisen and sue herera. strong signals. the federal reserve sends its clearest message yet that a december rate hike is likely, and stocks take off. raids in france. elite police units move against a terrorist hideout in a paris suburb. at least two were killed, seven detained, but the mastermind of last week's carnage is not among the arrested. we have latest details. what's in your fund? why regulators are taking a closer look at some mutual funds that are popular with small investors. all that and more tonight on "nightly business report" for wednesday, november 18th. good evening, everyone, and welcome. new developments out of paris tonight, and we will have a full report later in the broadcast. but we begin tonight with the stock market and the federal reserve.

it said the economy "could well hand handle" a rise in interest rates. the minutes from the central bank's last meeting in october provided the clearest evidence yet that most but not all policymakers think the time is right for a rate hike and that a delay could increase market uncertainty. that helped stocks extend their gains. the dow jones industrial average rose 247 to 17,737. nasdaq jumped even more in percentage terms, gaining 89 points, and the s&p 500 added 33. steve liesman has more now on the thinking inside the central bank. >> minutes of the fed's october meeting make explicit what the statement had already said, that the fed is fast on its way to its first rate hike in nine years at the upcoming december meeting. the october minutes say that most fed members thought economic conditions would be met in december to hike interest rates, and they made clear that the october statement was designed to send a message that

will be appropriate to hike at the next meeting. to be sure the meeting took place before the horrific terror attacks in paris, but one hawkish member of the fed said in an exclusive cnbc interview that he did not expect much change in the economic or the rate outlooks as a result. >> we've been through episodes like this before in which, you know, some disruption of certain geopolitical or military nature affects things. and you know, for a time, people can get cautious and pull back a little bit. these tend to be transitory. so, keeping our fingers crossed and waiting and seeing. >> the october minutes say specifically that no decision had been made. a rate hike remains contingent on the economic data, and there are obviously some dovish members on the committee who remain unconvinkoconvinced and about global weakness and economic weakness, but the center of the committee believes that those risks have diminished and the economy's in pretty decent shape, a point driven home by the recent strong

october jobs report that came after the meeting. all members of the committee agreed that once rate hikes start, they're likely to rise slowly afterwards, and there was general agreement that starting hikes earlier would allow future hikes to be gradual rather than forcing the fed to play catch-up. so, as much as any central bank ever does, the fed is telegraphing a december rate hike, a rate hike that only very weak economicyata at this point could derail. for "nightly business report," i'm steve liesman in washington. housing, an important pillar of the economy, saw new home construction slide in october. housing starts fell 11% from a month earlier with construction of multifamily units, including apartments and condos, plunging 25%. multifamily construction drove much of the demand during the summer, but new applications for building permits, a key indicator of future construction, did rise 4% last month. higher mortgage rates are not deterring home loan borrowers. mortgage applications rose more than 6% last week from t prior

week, this according to the mortgage bankers association, and most of that gain came from new home purchase applications. and a strong housing industry helped lowe's report an increase in sales and profit during the third quarter. the company also backed its forecast for the full year. the ceo says consumers are allocating more of their budgets to home improvement projects. shares finished the day on the up side. >> while lowe's bucked the broader retail trend, target did not. the company saw traffic at its stores pick up but says it's facing margin pressure and will not meet its fiscal year forecast for online sales growth, but target's ceo was nonetheless optimistic. >> we saw traffic growth in store and online last quarter, so i feel good about our overall strategy with digital. obviously, we significantly out-performed the industry. i just saw the october e-commerce numbers for the u.s. last night, up 8.6%. with that as a backdrop, our 20% looks really strong.

so, we'd better make sure we're growing share in that space. we're continuing to out-pace the industry, which we are. >> shares, though, declined more than 4% on the day. oil prices briefly fell below $40 a barrel, first time since august, but the commodity recovered after the minutes from the fed's last meeting were released. by the settle, domestic crude raised slightly on the trading session. below oil prices and cheap gas have made it one of the most profitable years ever for almost every automaker with one very big exception, volkswagen. the diesel emissions scandal has hit vw hard, but as phil lebeau reports from the l.a. auto show, executives for vw's audi brand believe they can ride out the storm and keep the luxury mark in the fast lane. >> at the los angeles auto show, audi executives are all smiles, despite a growing diesel emissions scandal which is keeping audi dealers from

selling diesel versions of five models. >> we're still continuing our record sales growth, so there's good demand for audi. but to me, honestly, it's not about sales or not sales. to me, it's about these customers were impactnd it's my responsibility to make it right. >> reporter: volkswagen admitting it rigged emissions of 8 million vehicles worldwide and has impacted the brand. but audi is also impacted. while the diesels in question make up a small percentage of sales in the u.s., the cheating scandal has the potential to tarnish a brand that has raised its image with luxury car buyers. >> certainly, their engines have been affected by this, but the publicity has not surrounded audi so much. so, as long as they can stay out of the public eye or not be the biggest dog in the fight, they can probably steer clear of this problem. >> reporter: still, audi is optimistic about business over the next decade. in fact, it's targeting strong annual sales in the u.s., and by 2025, more than 25% of those

sales will be hybrid or electric models. >> when we get something right, we know how to do it, it gets executed. we feel this revolution is coming on electric, and we're going to be ready for it. >> reporter: the sales forecast is ambitious because it counts on growing demand for hybrids and electric vehicles, even though many believe gas prices will remain low for at least the next couple of years. but if audi is right and if it can get past the emissions scandal with limited damage, then it could continue a strong run of sales in a u.s. market where luxury vehicles remain in strong demand. phil lebeau, "nightly business report," los angeles. still ahead, the raids in paris that had wall street and the world watching.

investors had been watching developments out of paris, where french s.w.a.t. teams raided a cell that was ready to launch new attacks, but the ringleader's status is still unknown as of this evening. michelle caruso-cabrera has our report tonight from france. >> reporter: this is the street where a s.w.a.t. team raided a second-floor apartment in the hunt for those responsible for the attacks friday night that left 121 people dead. the raid began at 4:30 in the morning. on video recorded at the time, you can hear the tremendous and continuous volume of gunfire. [ shots ] during the raid, a woman inside the apartment detonated a suicide vest, killing herself and another man. hours later, police had arrested eight people, seven men and one woman. however, the two men for which there has been an international manhunt, the suspected

accomplice, salah abdeslam and the alleged mastermind, abdelhamid abaaoud, were not among those arrested. prosecutors declined to say if they were among the dead. they said they could not or they would not because they weren't certain of the identities of the bodies that they found. the police are still searching the building. it's slow going because the third floor collapsed and they needed to bring in reinforcements in order to keep going. this neighborhood is about a mile from the stade de france, the stadium attacked by two suicide bombers friday night from the northern periphery of paris, and it has a heavy concentration of immigrants from north africa. the people who lived here said it was a terrifying night.gh from france, michelle caruso-cabrera, "nightly business report." house republicans are moving forward with a bill that would temporarily halt the president's plan to allow syrian refugees into the u.s. house speaker paul ryan called for a pause in the program until authorities can verify that those entering don't pose a security threat. the legislation is expected to be brought to the floor for a

vote thursday. the president's plan calls for 10,000 syrian refugees to be allowed entry into the u.s. next year, but how exactly does a refugee enter this country, and what systems are in place to help them integrate into the american economy? dina gasofski explains. >> reporter: he is no stranger to sights and sounds like this. whether at this refugee camp in jordan or from the place he fled. >> translator: i left syria in april 2013, and the reason why i left syria is because there was death, destruction, dead bodies everywhere. >> reporter: but he considers himself lucky. his is one of only a few syrian refugee families who were able to resettle in the united states and become part of the american economy. >> the i-94, which is a legal documentation provided by the united states citizenship immigration services is given to

a refugee as they arrive at the airport. they also receive an employment authorization document. >> reporter: the family has been living in this new jersey apartment since june. >> the way hasam came to our organization is through the department of state, because the department of state administers the united states refugee admissions program. >> reporter: that organization is church world service, one of nine resettlement non-profits that helps families like hasam's get back on their feet, but only after the state department clears them for entry. a number of federal agencies, including the fbi, department of defense and department of homeland security are part of the vetting process, and in terms of health care -- >> we take them to social services to have them apply for medicaid. social services allows that to happen, as far as receiving health services, for eight months. >> reporter: the state department gives a little over $2,000 per refugee to these resettlement agencies to cover things like rent, clothing and food for the first 30 to 90 days. in 2015, the state department s provided over $406 million for

refugee admissions programs. for fiscal year 2016, the president has asked for over $442 million. the united states takes in more refugees than any other resettlement country in the world. as for hasam, he's one of only a few people willing to speak out, especially in the midst of political controversy, about whether or not america should even let people of his nationality into the country. >> translator: the syrian conflict has to be told from my point of view, because all the doors that are closing to syrians and the refugees that are fleeing, they've been fleeing from all of this terror. >> reporter: for "nightly business report," i'm dina gusofski in jersey city, new jersey. >> hossam now works at a local bakery and he and his family are learning to speak english. coming up, why regulators want to learn more about the value of securities in some of the most popular mutual funds.

the u.s. is reportedly pursuing criminal cases against executives at jpmorgan and rbs. according to the "wall street journal," the bankers may have been involved in selling flawed mortgage securities before the financial crisis. trying to re determine whether they ignored warnings about those securities and whether that constitutes fraud. barclays agrees to pay $150 million to resolve an investigation related to its foreign exchange unit. regulators say the bank used super fast trading systems to reject on profitable client orders and failed to say why the

trades were rejected. back in may, barclays was fined more than $2 billion for manipulating the currency market. a multibillion dollar deal is where we begin tonight's "market focus." on siconductor will buy fairchild for about $2.5 billion. they say it will increase its presence in the industrial, automotive and smartphone market and will add to earnings right away. they were down nearly 8%. fairchild went 8.5% higher. and while two companies merge, another separates. conagra will split into two publicly traded outfits, spinning off its frozen potato products unit into another business. the ceo says the move will enhance each business. >> as you can see from the market reaction today, we think our investors agree that they will be rewarded by creating these two peer plays, which will unlock the value that we think is inherently within each. >> and some value on lock today. shares up 4% to $40.93. staples reporting profit

that slipped in its most recent quarter as sales continue to fall there. this comes as the retailer awaits regulatory approval for its buy of office depot. shares down nearly 3% to $12.11. meantime, canadian pacific made a cash and stock proposal to acquire norfolk southern for about $28 billion, while norfolk southern said it would consider the offer, its response was luke-warm, said the number was below premium and the deal would face significant regulatory hurdles. both companies, however, up more than 5.5%. qualcomm is facing antitrust charges in south korea. the company says the antitrust agency has alleged that the company violated anticompetition laws, and they say that qualcomm should be fined. shares tumbled more than 9% to $48 a share. nokia says it has received approval from french authorities for its offer to exchange its shares for those of alcatel-lucent. this is part of the company's proposed nearly $17 billion bid for the firm, which it announced

in april. nokia's shares were up a fraction. alcatel rose more than 1%. and sales force posting results that beat estimates on both the top and bottom lines. the cloud computing company also hiked its full-year revenue guidance. shares jumped initially in after-hours trading. during the regular session, the stock was up just a fraction. and the same story for keurig green mountain. results came in better than expected and they hiked its quarterly dividend. the new payout is a little more than 32 cents a share. the stock surged right after the market closed. during the regular session, the stock was almost 1% higher. mobile payments company square is expected to price shares for its initial public offering tonight and begin trading tomorrow. square is one of the so-called unicorns or private companies valued at $1 billion or more that plan to go public this year. kayla tausche takes a look at the challenges square faces. >> reporter: it all started with a small plastic square plugged into a smartphone, giving small businesses an affordable way to

take credit cards, but now square, once a small business in its own right, is trying to convince wall street it's worth billions of dollars. on the conservative side, $3.5 billion, but that alone is a steep drop from the company's last private market valuation. in an attempt to woo new investors who want more assurance the stock will trade well once it trades publicly. first, it takes into account volatility in the ipo markets. so many of the newly traded stocks are below their offer price. second, there's the fact that ceo jack dorsey also has another day job, running twitter. and number three, there's increasing competition in the payment market. square charges merchants using this simple payment process or a flat 2.75% fee, but square's customers are trying to win its business. smaller rivals are charging merchants less. bigger rivals are adding data and analytics, so square branched out, too, offering now marketing and also loans for

merchants to grow, trying to retain these customers as they become bigger. and investors are optimistic that last piece of the puzzle, square capital, promises huge growth. but for now, the bulk of square's revenue, about 95% of it comes from those core transactions, those credit card swipes. we'll see how square can do tomorrow with a large transaction of its own. for "nightly business report," i'm kayla tausche in new york. according to the "wall street journal," the securities and exchange commission is looking closely at how some big mutual fund companies are valuing tech start-ups that don't trade publicly and whether that process gives an accurate estimate of a company's worth. ross kinnel slnk director of research at morning star and joins us now. russ, good to see you. thanks for joining us. i think many people out there might not even be aware that these types of securities are in their mutual fund. >> that's right. you think of a fund owning

publicly traded stocks, but for years, we've seen funds dip aip toe into venture capital and own privately traded companies that don't trade on stock exchanges. >> is it a big toe or a little toe, and are there limits as to how much they can own of these illiquid securities? >> that's the big question, and the answer is, it's a little toe. so, the exposure for typical investor via some major funds from a fidelity or a t. rowe is probably small, so the issue is not too big. overall, a fund is limited to 15% in illiquid securities. that's 15% of the total fund can be in however many illiquid securities they want. now, very few funds come close to that level. >> you know, russ, one of the things about mutual funds is you get a price at the end of the day, but how do they then value these companies if they don't trade publicly, and is the price that gets posted at the end of the day actually accurate? >> yeah, that's the tricky part,

because as you say, you've got people coming in buying or selling a fund every single day, and obviously, it's important that the fund company give both people, both sides of that transaction a fair price with stocks that don't trade like this, they just have to make a best estimate. that is, they might say assign a valuation based on multiples or say whatever the industry's trading at, we're going to keep adjusting that way, but there is some art to that, for sure. >> so, the presumption or sort of the subtext here is that there's a lot of risk involved in this, or that sort of seems to be the cloud that's hanging over our conversation here, but there can also be reward. if i'm recalling correctly, t. rowe price funds did extraordinarily well with some private holdings of facebook, among others. so, how do i know whether my fund has these illiquid securities in it how much they have and what they are? >> yeah, you can look at the annual report or any display of the complete portfolio holdings,

and you can see those names. usually, they're displayed separately. you may notice they don't have a ticker. so, you can see how they're displayed. and you're right, there's a lot of up side. and one of the things that limits the down side is even a fund that might, say, have 4% in these kind of names, that 4% could be spread out over 30 names. i was looking, fidelity contrafund has a 19 basis point position in uber. so, obviously, the risk to investors of contrafund of uber having problems is not great at all. >> is not great, yes. all right, russ, thanks for clarifying all of those issues for us. russ kinnel with morning star. coming up, grocers know that consumers like cheap turkeys, and that might be something to be thankful for this thanksgiving.

here's what to watch tomorrow. the weekly jobless claims number is out. the philadelphia federal reserve will release its business outlook survey, an important read on manufacturing and the economy in the mid-atlantic, and we'll hear from some prominent members of the federal reserve, and that's what to watch thursday. the american medical association is calling for a ban on direct to consumer ads for prescription drugs. the group of doctors says that it contributes to rising costs as patients demand treatments that may not always be appropriate. according to the ama, drug makers have spent $4.5 billion on the ads in the past two years. that's a 30% increase. the pharmaceutical industry opposed the american medical association's stance. the new york attorney general has reportedly added yahoo! to the daily fantasy sports investigation. until now, eric schneiderman's

office had just gone after draftkings and fanduel, but according to reports, yahoo! has also been subpoenaed. yahoo! runs the third largest daily fantasy site. new york attorney general alleges these companies violate gambling laws by offering games of chance, rather than skill, and he wants their operations shut down in new york. and finally tonight, there have been a number of warningum about the price of your thanksgiving meal following the country's worst avian flu outbreak earlier this year. but as it turns out, consumers won't be the ones bearing that extra cost. morgan brennan has our story. >> reporter: thanksgiving is fast approaching, and that means turkeys. [ gobbling ] but that traditional dinner centerpiece has gotten more expensive. after bird flu wiped out nearly 8 million turkeys earlier this year, production is down 8% for the quarter. according to the u.s. agriculture department, the lowest level in more than a decade. while it hasn't led to shortages, it does mean higher

prices. >> what the usda is predicting is compared to last year's cost of $1.14 a pound for turkey, this year they are predicting in the fourth quarter that average turkey prices are going to be $1.34 a pound, and that's up 20 cents or 18% relative to last year, and that's a very big food cost increase. >> reporter: that's for eastern market whole turkey, and it's the wholesale price, an increase that may not actually impact consumers. >> while wholesale turkey costs are on the rise, the prices paid at grocery stores tend to be stickier. experts say that's especially true at this time of the year when retailers roll out offers to lure shoppers who will likely buy other thanksgiving products as well. take stew lenors. between its stores, they plan on selling 1 million pounds of turkey between now and thanksgiving. the company says it's seen a tightening in the turkey market with wholesale costs it pays jumping 10%. in response it raised the price of fresh turkey only slightly

and didn't change the price of its most popular and expensive offering. ceo stew leonard jr. says he's okay with pocketing less for the product. >> we want everybody to come in and buy mashed potatoes. we want everybody to buy the gravy. we'll sell like 15,000 quarts of gravy this year, already made. obviously, it's more profitable than turkey. so, we want people to come in, and of course, buy their turkey, and then buy the mashed potato, gravies, brussel sprouts. you make more money on those than the turkey. >> reporter: and stew lenors isn't alone. many are eating less for foot traffic. as we recover from the worst bird flu outbreak in history, turkey supplies are expected to return to normal by next spring, meaning next year, the roast won't likely be accompanied by this year's plump costs. for "nightly business report," i'm morgan brennan in yonkers, new york. >> look at the size of those turkeys! >> those are big birds.

>> how many people are coming to dinner? >> lots. >> lots, yeah, exactly. that does it for "nightly business report" for tonight. i'm sue herera. thanks for joining us. >> and thanks from me as well. i'm tyler mathisen. have a great evening, everybody, and we'll see you right back here tomorrow night.

narrator: tonight on "quest," giant sequoias can live for a thousand years and grow taller than a 30-story building. but the drought is taking a toll on these iconic california trees. now scientists are scrambling to figure out how to save them. and the hayward fault may be the most dangerous earthquake fault in america. is the bay area ready for the next really big one? and find out how chefs are using chemistry to expand the world of flavor. ♪ announcer: support for "quest" is provided by...