>> this is "nightly business report." >> the dow falls nearly 275 points. investors run for cover and wonder if the rally is starting to crack. >> bucking the trend. unlike at most retailers, at walmart, sales are up. its major investments are paying off. so why is the stock trading >> risky business with inventory low and prices high, are home buyers turning to nontraditional mortgages to get their deals done? those stories and more tonight on "nightly business report" for thursday, august >> good evening and welle -- welcome.

wall street hasn't seen a down day like this for months. investors sold stocks and bought bonds. they also put money into gold, a so-called safe haven. let's get into the closing numbers for this thursday. the industrial average plunged 274 points to 21750. nasdaq tumbled 123. and the s&p 500 was off by 38. it wasn't just one reason for the sell washington uncertainty contributed, so did some weak earnings reports. and the losses intensified midday on news of a deadly terror attack in the heart of ba we watched the selloff today from the floor of the new york stock exchange. >> are the markets in trouble? well, not yet. but there's some cracks. we seen something in the last two weeks we haven't seen in some time. a selloff last week and another one this w starting to do so

they broke below a key level with almost half of all nyse stocks. what's causing this? several events have come together. first, there's leadership doubts about president donald trump starting to emerge. the markets drifted lower today on an erroneous rumor that the national head council gary cohn might resign. later bob corker told reporters that the president has yet to show the stability or competence, his words, necessary to be a successful leader. that's not good for stocks traders are still very focused on tax cuts and they want the white and second, the stock market is not cheap right now. leadership looks a little tired. amazon, for example, is 11% off its high. but it's still up 28% for the year. third, earnings may be topping. the s&p 500 is only expected to post earnings gains of 6% in the third quarter after double-digit gains in the first and second quarter. finally, the federal reserve,

which has been such a help for many years for stocks is now mostly perceived to be neutral. the risk is the feds may tighten too much and that would drop stocks for sure. the next two days will be an important test. all this year, people have been set to buy when the stock market falls. there hasn't been much of that. we had a huge run in the markets now, it may be a good time to get a pullback. what's a pullback? in today's context, 5% would be notable. we haven't had that in a long time. you have to go back to brexit in june of 2016. a 5% drop in the recent closing high of 2480 would bring us to 2356. that would be the levels we saw in may. seems like a long time ago, doesn' >> now to talk more about today's market selloff, the portfolio manager of alpine funds. welcome back, sarah. nice to have you here. bob pasani laid out some of the

various reasons that the market sold off. of those, one, do grow agree? and two, of those, which was the most important factor do you >> well, i think that you have a couple of things going on. and he elaborated on a lot of them. i think what the fed is going to do going forward is an important issue. i think the issue that has happened with the council of economic advisers and some of the people that were on some of those government councils, i think that has unnerved people a little bit with the agenda going forward. and for the u.s., it's really going to be about the economy and earnings and the fed. destabilizing factors, not to down play any of other parts, because what happened in barcels also very terrible, but the market is going to see underpinnings in the economic front that it can . >> we went a long tieng without a 100-point down day. we had one or two last week. we now have had a nearly 300-point down day this week. should investors just get ready

for more of these? and more vol tulty as we move into the fall and later part of? >> i think what's interesting is that we were all collectively looking for more volatility after the elections were over and the administrations started. we didn't get very much. i think the anticipation of some of the programs that may come has been part of what's driving the market. but earnings has been a very big part of that. so we outperformed in the second quarter what the expectations were in the beginning of t. we can see what happens with earnings in the third quarter. i think that's going to be important. and volatility, it should not be a surprise to come back. it's been surprising how quiet it has been for the last few months. >> today, we've been making new highs in the market on a pretty consistent basis. and the discussion has been, are we overvalued? are we fairly valued? how do you feel about that aspect of the market? and are you finding opportunities to? >> we're a dividend fund so we're always looking for dif debd opportunities. we think there are some place where is you've seen some --

energy for one is an area that's had some problems but i think there's good opportunities ther we look for bp in that space. and defense stocks, even though they've had a good run also look like they're going to have some earnings growth. so there are places you can definitely look there will be earnings and dividends. we think that's where you need to be looking. >> energy and defense are two areas you like. what about fixed income? a lot of individual investors have their money stied up in fixed income products. >> there's always been a question of when people are going to move out of fixed income and into stocks. i think what you've been seeing recently is the other way, people have been moving back into fixed income. even though rates are still low, i think that's a little bit of a safety trade. i think that's the tough part. i think that's why people are goin for dividend stocks because they can't get yield in the fixed income markets. it's got to be a combination approach. >> on that note, sara, thank you so much. >> as the retail industry struggles, the world's largest

store, walmart, saw sales rise and beat both profit and revenue estimates for the quarter. that's not an easy thing to do in this environment. but like home depot earlier this week, the results were not enough, good as they were, not enough for investors. they were disappointed by the adjusted earnings and the outl we have more on walmart's quarter. >> it's steady as she goes for the world's largest retailer. walmart putting up a solid quarter across the board, in the most recent quarter, profits were capped because of big investments to improve e-commerce and increase wages and lower prices for shoppers. however, the investments seem to be working. their improvement of the way the stores look, the assortments in the food area, the quality, the service, the friendliness, i tell you something, dramatically different than a year ago.

and that was better than the walmart has reported a string of sales gains, marking 12 straight quarters of g u.s. store traffic also continues to improve. and analysts think profit mar n margins may try to grow again soon. >> in a world where amazon seems to be taking over, if you can have a player like walmart not only accelerate sales but also increase margins, this will be a pretty good story. >> still a much smaller part of the business, walmart's u.s. online sales grew 60% from last year, just slightly below last quarter's growth. walmart says the sales strength in the quarter was broad-based, but it did call out grocery, noting the best performance in since food is more than half of the discounter's sales, most analysts agree, it's the most important category for growth. and a big focus for walmart. the discounter's online grocery with parking lot pickup has been well received and will be in more than 1,000 stores by year-end. an important opportunity, especially as competitors add stores.

and amazon buys whole foods. the leading economic index, a broad measure of how well the economy is performing climbed july. it also signaled potentially faster growth in the second half of the year. according to the conference t there was an outlier as well. home sales were weak. the lack of supply has helped push home prices higher. mortgage rates continue to slide. ongoing economic uncertainty kept a lid on bond yields, which mortgage rates tend to track. according to freddie mac, the rate on the 30-year fix loan averaged just 3.89%. that's right around its low for . >> the end of the summer slowdown in the housing market has been made worse by higher home prices and less for sale.

that has led some to turn to riskier deals to get deals done. >> reporter: so much of the command is from younger buyers, who are already struggling to get into homeownership. that's why more and more are using low down payment loans. >> house prices have risen about 40% cumulatively since 2012. and at the same time, there are a lot of people now with jobs with wages increasing and they see housing as an appreciating ass asset. and so getting a low down payment loan is one of the ways to get into one of these appreciating houses. >n the past 1 months, 1.5 million borrowers bought their homes with down paymentsless than 10n- they now account for 40% of purchase lending. while fha had been the low down payment loan of choice for you

borrowers, fannie mae and freddie a c also have 3% down options and are gaining option share. >> loans withless equity have higher risk of default because there's less skin in the g >> reporter: borrowers are more likely to default on a loan if they have less equity in the along with low down payment loans, adjustable rate loans are also back in favor, up 13% compared to a year ago. that is likely because they are cheaper than fixed rat while both of these loans are riskier, the good news is today's borrowers have much better credit scores than those during the last housing boom and are thus less likely to have trouble making monthly payments, no matter where home prices so what do these risky mortgages mean for the housing market overall? we're with the professor of real estate of whorton's school of

business. good to see you. you know more about this stuff than anybody else i ne. 1.5 million loans in the last year with low down payments below 10%. i heard diana mention 3% down loans. should we be worried about this? are we repeating history? >> we're not repeating history. we're not in bubble territory. should we be worried? no. but should we watch this trend? absolutely. it bears watching. this is real demand forces out there. it's not irrational expectations that's driving prices high but if we have a rate spike, if we have a recession, prices will fall. >> how do you feel about the economy in that sense? because the federal reserve just yesterday said there wasn't basically enough enflags in there. and it's maybe putting off its interest rate hike. but there are those who say we are going to eventually head into a recession. how do you feel about it and how might that affect housing?

>> well, recessions will happen. there's no sign of it happening now. a large industry spike, there's no sigt either. the problem is with a.r.m.s, there's a much greater vulnerability to an interest rate spike. that's the combination to be aware of. pervasive low down mortgages could be a problem, but right now, that's the marginal buyer. it's not overall. it bears watching going forward. >> in the housing crisis, a couple of things happen. number one, some of the buyers -- the lenders didn't really check them out. they didn't look at whether they had the incomes they said they had. there was liear loans and so on and so forth. the appraisers were putting outlandish numbers. yeah, the house is worth that.

have those two things been corr but that doesn't mean we've stopped any future bubble you can get price increases and further rise loan values and further debt income. we're not in that territory. prices reflect fundamentals. they reflect current low interest rates and high rents and jobs. >> how would you characterize the market at this p? diana has pointed out in her reporting earlier in the year, some are calling it the tigh do you agree with that? are you seeing any loosening in that? or any relief in that? or not? >> yes, it absolutely 1 titus market. it's from low in

some loosening going forward is huge increase in multifamily building. and that's going to put a lid on rent growth to some extent. that will open up the mrkt, make renting more affordable, easier to save for a down so we should find some easing of high rents, which then will hopefully feed into lower >> one of the best with the university of pennsylvania's wharton school. >> thank you. still ahead tonight, the uncertain future of nuclear power. >> coming up, natural gas doing what a nuclear disas couldn't do. that story on "night

why multiple sclerosis treatments have increased since 1974. the government wants to determine whether the drug comp >> epi pen milen has agreed to pay more than $460 million to settle charges that the company overcharged the government for the injection allergy medication. the agreement ends the investigation, which found that milan avoided paying state medicaid programs higher rebates by recategorizing the brand medicine as generic. they raised epi pen prices by about 400% between the years 2010 and 2016. express scripts is instituting a new opioid

management program, but is drawing criticism from the american medical association. the program limits the strength and amount of the drugs prescribed for first-time users. the goal is to help prevent the overuse and then abuse of the medicine. but according to the associated press, doctors say treatment plans should be left to physicians a expre express scripts competitor caremark has a similar program. the gap said its stronger than expected results are the result of the company's .nvestments in products and gap also says same-store sales climbed higher, largely thanks to strength in its old navy brand. shares initially rose in the extended session and also ended the regular day up fractionally to 22.68. after the bell, stores reported profits and sales that beat analyst expectations. the retailer said it expects same store sales for the current quarter to rise 1% to 2%. shares initially took off in

after-hours. they ended the regular session down nearly 2% to 53.33. and the chinese e commerce company ali baba saw sales rise as more customers made purchases online. the company says its technology is driving significant growth across its business. shares were up to 163.92. morgan stanley moved molia health care from underweight to overweight. the bank's bullish sentiment is attributed to the company's restructuring plan that morgan stanley says will lead to moli in this a's growth. the shares rose almost 5% on this negative day to $59.51. madison square garden posted a wider than expected loss as the entertainment and sports company faced higher costs and lower sales at several of its ve. revenue, though, ahead of expect. shares down more than 4% to 208.15.

and the activist investor, bill actman unveiled his plan to double the stock price of adp over the next five years. the billionaire recently disclosed his hedge fund has taken an 8% square in adp and is pushing for changes at the company. proposed plan includes layoffs, cost cuts, technology investments, adp said uh-uh. we disagree with the strategy. shares of adp down more than 5%, finishing the day at 104.68. a number of nuclear power plants in the u.s. have made a decision to shut down and more expected to do so. one of those plants is three mile island. and it's at the center of a new debate over nuclear energy. we report tonight from middletown, pennsylvania. >> reporter: cheap natural gas may do what the worst nuclear power accident in u.s. history couldn't -- shut down three mile island. safety concerns aside, cheap

natural gas has made it so plants like this one are no longer five nuclear facilities have closed in the u.s. since 2013. three mile island is one of the handful that's expected to close in proponents for the shutdown say these plants are dangerous a but this community feels differ >> i lived here in 1979 when the meltdown occurred. i never felt safer living here >> joe dominguez recall what is he terms long-term value. >> yeah, we are at a point where natural gas prices are relatively low, but as you pointed out, history tells us that we've got to be careful about that. because natural gas prices could go up very rapidly. >> reporter: the difference between profitability and not is about $2 in natural gas problems. at $3, this plant loses money, but at $5, it doesn't. if this plant continues to lose mone

impacting workers like christine who works here with her hu >> from a personal perspective, my husband also works here. so it's a big impact on us. we just had our second daughter so we have to decide what we're going to do if tmi does shut down. >> three mile island employs over 650 people. >> 675 full-time jobs, family-sustaining jobs, good-paying jobs. total $60 million payroll per year. in addition, they pay $1 million in tax revenue. the school district, the township and the county. every year including this year, starting next month, 1,000 union labor jobs come in and work on the site. >> it could take more than two years to shut down a plant like this one. and once it's shut down b, it cannot be reopened. it's a permanent decision to shift away from nuclear . but still, the state, even the federal government, could step

in and change this plant. >> the administration came out with the department of energy to do a study on the flaws in the market design. and the department of energy recognizes these flaws. and so that's what we hope the trump administration, the new commission at the federal energy regulatory commission, new commissioners will be . >> market design means cleaner energy sources. nuclear have come a long way to whether in favor of nuclear energy or not, it does add to the grid, another option to balance energy usage. . coming up, granmy pods. a new, and some might call odd way to care for america's rapidly aging populati.

>> they're small, they're unusual and they're helping aging americans age in place, more or less. granny pods in oakland, california. >> we have living room, dining room. large windows for light. >> 67-year-old jane baldwin is on the move, making a big chan >> how's your health? >> my health is perfect now that i've gotten my second hip replaced >> reporter: baldwin raised a family in wyoming, but now his son is raising her own family in oakland, california. she wants to be close to help. but not too close. >> that wouldn't work long term living with my son under the same roof. >> instead, she built a tiny 400-square foot house in her son's backyard, nicknamed a

granny pod. the census bureau predicts 1 in 5 americans will be over the age of 65 by 2030 and most will need some sort of assisted care. there isn't enough assisted living to meet demand. >> you figure out where everything is going to go? >> not at all. >> architects have discovered a new niche business, granny bods. $250,000, which is still cheap for bay area housings and seniors are often buying them to plan ahead. >> the adult son are liing in the unit. so when they're tired of maintaining their home and the large property that they're not using or climbing up the stairs, they'll move in there. and at that point, he might be married and have kids and move into t >> many laws admit granny pods, .ut many cases they have to be

and if it's only temporary, it may not be for everyone. >> if people can age in place or at home, it's much healthier, but it can be very expensive. they can cost anywhere from $100,000 to $250,000. so you've got to weigh longevity in there with it >> carolyn says it might not be right for a parent with dementia they may also increase your property taxes. and then there are neighbors. >> i h. >> her structure is under 500 square feet so loaning laws did not require neighbor approva >> i look forward to living smaller. i just think all of us, but myself in particular have too much stuff in our lives. >> for nightly business report, jane wells, oakland, calif >> finally tonight, fortune magazine is out with its 40 under 40 list. it ranks the most influential young leaders in business and

government. topping the list is the president of france, manuel macron. mark zuckerberg is number two. the ceo and co-founders of air bnb, lyft co-founder. and that will do it for us tonight. >> i'm heading back to my have a great evening. we'll see .

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