this is "nightly business report" with tyler mathisen and sue herera. apple on wall street's eye. a strong quarter sends shares of next?ch company to a new record >> split decision. there's a widening divide between invest a vulnerable ands who absolutely don't. what should you do when wall street can't agree? >> and a growing threat. as the tension mounts between the u.s. and north korea, possibly economic hazards are starting to become more clear. all that and more for tuesday, august. good evening, everyone and welcome. so, how do you like them apples? apple's ceo is a modest sort,

but tonight, no one woul criticize him for crowing because the king of cupertino, apple, shut down the worrywarts and beat profit and revenue estimates and oh, yeah, they sold more iphones than expected, too. apple earn 1.67 a share. a whole dime ahead of wall street's forecast. sales rose 7% to a shade below $45.5 billion or about a half billion a day. the company even grew its enormous cash reserves 13% to $261 billion. shares took off after the numbers came out. pushing them to an all time high. josh lipton has the biggest take away from apple's big quarter. >> 41 million. that was one big number in apple's latest earnings report. refer to the number of iphones bette than expected. analysts thought they would ship

40.7 million units. i had a chance to speak briefly with tim cook. he says the demand was better indice be he took down iphone inventory by more than 3 million units in the quarter. he said there is pause going on here. in order, consumers aren't buying because they're waiting for the new iphone to come out, which we expect in the fall. for "nightly business report," i'm josh lipton, cupertino, california. >> let's turn to timothy for more on apple's earnings and what he sees for the company. nice to see you again. welcome back, tim. >> thanks for having me, sue. >>t with apple itself from a stock performance. hit a new high. you're still bullish though. >> right. we you know, when we look at stock, we look at what we its fair value is. we feel it's been trading at a discount really for a long time, so, you know, trailing earnings

like we saw today are a nice validation of the opinion we've had, but it didn't mean there's not more earnings to come, perhaps mos u 41% in the past y. sits at $150 share. where do you see it a year from what's the upside here? >> well, the upside even if apple doesn't earn a whole lot more in earnings per year, it still at a discount to the market as a whole. part of your l about the investo think the market is overvalued and those who think it's just fine. apple has stayed in that just fine valuation for some time. if you just put a market valuation on, you could see another 10% in the stock. >> what at all, need to improve? >> well, i think what impressed us the most were the relergs of mac sales and ipad sales. after a really nearly a

five-year decline in the category and they introduced new products in the spring that seem gaining traction. pwhat we really see apple as rather vehicle is a company that allows you to manage your digital life, your social media, photo, internet access, e-mail, really, whatever it is and there are a lot of different devices you have to choose from to use. and really, apple wants to be call it front of mind for the high-end consumer. >> is there any, a lot of manufacturing, let me come at this a different way. ibm was a time when dell was the king of the world. and other manufacturers of computers or phone, nokia comes to mind, that they were very, very good. could apple conceivably get displaced? >> i think that's a great point, tyler. if you look at ibm and dell, they were really selling based on the low margin computers

where somebody else was making the system nokia's probably a better example, where nokia with the system they had for cell phones really opened the cell phone market before the iphone came along and they saw you know, nearly 80, 90% kind of market share dgo to next to nothing no. >> blackberry, too. >> right. or blackberry for that matter and i think the real key is in the software. yet everybody pays so much attention to the hardware. if you turn to hardware for a second, apple since its infancy, has maintained a higher margin on its computers they believe in vertical integration. everybody wells was making beige boxes. >> they're innovation is evolutionary. doesn't always have to be revolutionary. >> absolutely i think you've seene inception. there were other touch screen phones. there were other music players before the ipod. apple just took a device and a need and made it many much more consumer friendly.

so, if you look at the magic of apple, it's really their abi to read how people work and want to work. to deliver them the software. >> they're delivering for investors tonight. thank you, tim. nice to see you again. stocks closed the first day of august, which is usually not such a great month, but today, closing at another h the dow's 31st record close of the year, but it didn't have quite enough steam to break that 22,000 mark. dow closed up 72 at 21,963. check back tomorrow because the apple number may shoot it before 22 grand. the nasdaq added 14. s&p 500 tacked on six. and the president took to where else. twitter this morning, to tap the fact that the dow is in rarefied air. he tweeted stock market could hit all time high again. 22,000 today. was 18,000 six months ago on election day.

mainstream media seldom mentions. >> while we sit at record levels on the dow, there are growing divergences on wall street. from opinions to where the money e splits on the street are starting now to become very pronounced, very obvious. bob pisani takes a look. >> the markets continue to climb to new height, but there's a series of generalsi occur iring thaktd give investo betwe the dow industrials, up 3% in july and the transport, they were down 4% in july. this is after they hit new highs, so these stocks were lower across the board. whether we're talking b about planes, trains or automobiles. what's going on? you can only stretch your rubber band so far. for transports, there's some disappointment about the trump agenda mixed in with better opportunities overseas. also lower business from key sectors like retail and autos that track would depend on.

thro on pricing and you have reason for a divergen diverg. when it strayed from industrials, it's considered a negative markets. this is the major indices are at new highs and strategists are split over the direction of the markets for august. the bulls are touting strong earnings, that's true. low interest rates and a synchronized global recovery as reasons for the rally to roll on, but bears are concerned b about rising stock price, low volatility and central banks that could reign in stimulus. a growing divide over where the money is going. so, for example, etfs have now topped $3 trillion in assets after seeing huge inflows last month. they held $1 trillion more than hedge funds for the first time ever. that m costs efts are winning out over pricier rivals. i'm bob pisani at the new york stock exchange. so, what should you do when wall street is divided over the future of the stock market?

tim mauer is director at bam alliance and joins us now to talk to us about that. nice to have you with us. welcome back. >> great to be here. >> there's always kind of a divide. that's what makes the market. you have some wh so bearish. however, when you get a divide like we're starting to see on wall street, what should the individual investor do? >> well, the individual investor a natural part of the market process. there's always going to be a buyer, a seller. it's not even just a zero sub somebody's going to be m game losing. tlen there we shouldn't be surprised of se opposing forces. wall street has often been on both sides because they're selling investment products that benefit from being on both sides of those transactions.

what you need to remember as an financial plan, investment plan, not necessarily the plan of these bigger corporationcorpora. >> i have good news since the last time we spoke. i have learned thousa eed how tn bow tie. >> congratulations. >> i was speaking last night with a financial adviser who went to the point you made. he says that what you need to pay attention to is what your baseline allocations are. domestic stocks, international stocks. say you have 20% targeted for international stocks. when that number goes down to 17%, you would then add more. if it goes up to 23%, you would trim back. is that a good smart, whether it's up 3 percentage points or something else, is that what you need to keep in mind? >> absolutely and that's why i tell p it' not just an action. it's not that you set it and forget it forever, tyler. when we see these market moves, hear these loud voices on wall street, honestly, it's often a

good sign that we probably should be going back and taking a look at our portfolio. i invite investors to take a look at rebalancing. if you have a plan in place, if you know it's a good, solid allocation, then that is the work of the investor to go back in times where the market goes up a lot or down a lot and to make that reallocation taking from the winners if you will and giving to the losers so that you can benefit from the next upswg a different allocation. >> does it make a difference with the market at all time highs and near the round number for the dow any way of the 22,000 mark? should that matter to an individual investor? >> if you own an asset that continuely goes up, that you expect should make money over time, we should expect it to raise its all time high quite often. hopefully so, right? don't get me wrong. i absolutely do expect that we

could see a correction. , but one of the things that i've learned in my 20 years in this business and working with th. we don't know when it's going to happen. right. >> active investors have proven over 95% wrong over time so you can give it your best shot to be b in that 5% or stay on the side of pro ba, stay invested with a good allocation. >> good advice. thank you, tim. >> thank you. auto sales shifted into a lower gear in july as the industry wrestles with a slowdown in demand and it's a pronounced one. overall, sales fell down 7% to an annualized pace of $16.7 vehicles. that's down more than a million from a year ago. phil lebeau has more on the summer slowdown in the showroom. >> summer is traditionally the big e time of the year for auto dealers, but in july, sales

cooled off with general motors reporting a 15% drop in sales as the big three all reported weaker than expected business. toyota bucked the trend with positive sales. fueled in part by solid demand for crossovers and suvs, but in fact, edmunds.com says it took an average of more than two and a half months once it got to the dealership, the slowest rate since 2009. what's hurting business? in reality, americans have bought so many new vehicles over the past seven years, just not as much demand. meanwhile, there's a flood of cars coming off lease that pric especially on three and four-year-old models that have relatively low mileage and are still in good shape. as a result, automakers are wrestling with how much they can cut production and in some case,

whether to phase out some slower selling models. for example, cadillac is rebalancing its lineup of cars to better meet demand. that will ultimately mean it offers one fewer model. there is one thing helping automakers. it's the fact that trucks, suvs and crossovers are still relatively strong and those are the most profitable vehicles in the dealership. phil lebeau, chicago. coming up, why limited options in dealing with north korea crisis could come wi

data points on bik parts of the economy. consumer spendinged in june as personal income was stagnant. june income was unchanged. it's a key number of course. consumer spending makes up more than two-thirds of u.s. economic activity. acceseparately, activity at the expand, but was slightly below expectations. manufacturing counts for about 12% of the economy. one area of concern, construction spending fell while economists had expected growth. >> one of the pillars of the president's agenda is grow the economy. and yesterday's gdp number showed a bounce back from a sluggish first quarter. as steve liesman tells us, when it comes to a growth effect, there are ways the president quarter into his presidency, how much credit can president trump really take for the economy? economists say not very much. there could be some ways on the margins he's helped and others

where he may have hurt. most view the better growth numbers as a bounce back from the weak first quarter and e are early days for the president to influence the economy. >> in terms of the impact of the presidency, our impact has been around for 2018 around 2%. about 2.3, now, 2.1. i could say nothing's has changed much. maintaining ilts 2% average while the rest of the wo here some of the positive and negative effects economists are citing. the positive of deregulation, stock market gains leading to wae l increase in business investments but the negatives are policy uncertainty, the aca repeal failure, which has pushed back expectations for tax cuts, immigration and trade are two policies of the trump

administration not well liked by economists. the end of rising regulatory costs under president obama could be having a bigger impact than any deregulation by the president. business spending did go up in the second quarter, but it seems more tied to mining and rebound in oil prices. taking out mining in the second quarter, business spending growth acted according to work by macro economic advisers. economists of both parties agree. the confidence of both can be gone in an instant. if the president's going to have a real impact on economic y congress.will come from that so far has moven elusive for the president. i' liesman. >> one thing the wall street experts are pointing to is a possible external issue for stocks as well as korea. today, rex tillerson said stability is key. >> we do not seek a regime change. we do not seek the coll we do not seek an accelerated

reunify kags of the financial. we do not seek an excuse to send our military north of 38th parallel and we're trying to convey north koreans, we're not your enemy, your threat, but you are presenting an unacceptable threat to us and we have to respond. >> john harwood joins us with more. john, what was the secretary's messe overall there? >> the overarching message was we want to talk. we want to negotiate. this has been a rolling crisis across multiple administrations that's gotten worse over the last few months and we've seen some displaced saber rattling, moving military assets, exercises, that sort of thing. but this is rex tillerson at a moment where concern is rising, stepping in and saying let's talk about what we can do to defuse the situation. that's a different tone. >> it was a very blunt does it change though the administration's policy? >> well, not fundamentally yet,

although there was a nuance difference he offered. he said we don't blame china for this situation. remember, president trump said in the beginning of his potsy, it will be b easy for china to solve this problem, then met with president xi and said they tried, but couldn't get it done. just over the weekend, in his frustration, he said that china had not done anything but talk. now, this is rex tillerson trying to remove the idea of blaming china from the equation because he's hoping to engage china in those discussions negotiations that we would like to have. >> what's the view in washington or your view. are we at the crisis point and when could this issue begin to affect investor psychology or the u.s. economy? >> this has been going on so long, it's hard to say when it crosses the line and becomes a crisis that is unavoidable. however, we are getting closer to that point withou.

one significant possibility is that p if we do in fact use military force, that would be unpredictab uncertain in the scope and intensity. it would subject american troops s population to attack from the north. that could have a huge rattling e secd thing is if we decide to sanction china with targeted tariffs on them as a way of pressing them to help on north korea, they could hit back. in particular at the agricultural sector and aircraft industry. >> thanks very much. lumber liquid ators moves back to the black. after facing more than two years of financial struggles temperaturing from a product scandal, the flooring retailer said it returned to profitability. sales also cleared street targets thanks in part to a wider product assortment and improved marketing. the results were well received. the shares took off and rose

nearly 36% to 33.59. under armour slashed its full year sales outlook after reporting revenue that narrowly street estimates. they also reported a smaller than expected loss and said it would cut 2% of its workforce as it works to restructure its business. shares fell more than 8% to $18.oo. lower xhimt sales caused revenue to fall and miss at xerox. that sent shares higher and archer daniels midland said weakness in its processing division led them to two. profit came in ahead of estimates and the company noted that its aggressively managing costs and capital. shares finished up more than 2.5% to $43.30. u.s. government reportedly close to finalizing a deal with

boeing to buy two of its aircraft for the next air force one jet fleet. earlier this year, president trump criticized the high cost of building a new air force one and according to a report by the news site defense one, the air force will receive a pair of jet liners at a discount. boeing shares were off 1% at 239.44. blood testing start up ferrino has reached a settlement with walgreens. they said they'll dismiss the suit with no finding or implication of liability. last year, walgreens sued them alleging the start up reached its contract. they were higher, ending at 81.13. zblnc snap will no longer be eligible to join the s&p 500 due to a new rule. the index proprietor said it

won't accompanies that issue multiple classes of shares to list because of loading inequalities between shareholder classes. under snap's current structure, it doesn't offer any voting rights. the new decision does not impact existing s&p components that do currently have those several shared classes. snap shares down 4% to 13.10 and sprint reported its first profit cited cost cuts and an increase in subscribers. revenue loss webeat expectation an annoe had discussions with come in the near future. shares topped 11% to 8.87. coming up, america is a wash in egg. and that's no yolk. right jane wells? >> yeah, which came first? the chicken or the egg. record low egg prices have producers scrambling for profits. up next, we have the dirt.

bird flu drove up egg prices a few years ago, but now, there's an oversimply. this year's price, the lowest since 2006. there is one exception. cage free eggs are much more expensive, but as jane wells . >> eight producers and consumers are playing a game of chicken over prices. >> last year was a bad year for us. we lost a lot of moneys awash i. there's a glut two years after pric with avian flu killeded tens of millions o

birds. >> we had farmers put too many chickens back in and now, we've got an oversimply. >> it's really bad for producers like chris nickels who runs a cage free operation in california. these eggs cost 1 to $2 more per dozen and people aren't buying them. >> we've had to re you know, we should get a certain price and we're having to discount it below my production cost. just to get out the door. >> he has about three quarters year, he'll reduce this number 30% until demand bounce back and despite profits to convert to cage free, he says some are starting to change their minds and that's no yolk. >> if that happens, i believe that all the rest of the buyers will follow suit. unless they truly believe that

the free is the futur simply and demand equation, after the avian flu outbreak, many food manufacturers changed their recipes to use fewer eggs and at the same time, because of improved genetics, hens are more productive than ever. i'm jane wells in california. >> love her. >> brave woman. >> brave woman. it joining us. >> thanks from me as well. have a great evening, everybody and we'll see you back here tomorrow

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