>> announcer: this is "nightly business repor w new milestone. the dow touches 23,000 for the first time ever, just days ahead of the 30th anniversary of black monday. short term fix. senators reach a, get this, bipartisan deal to stabilize the health exchanges. and it has the support of that man, the president. security hole. if you use wi-fi, and most everybody does, there are ways to protect yourself from the latest security scare. those stories and more tonight on "nightly business report" for tuesday, october 17th. good evening, everyone, and welcome. it happened even if just for a brief moment. the most well-known stock index in the world broke 23,000 for

the first time ever. and it didn't take long for the dow to cross that milestone. in early august, the dow first closed above 22,000. and the index got a lift today from united health care which reported stronger than expected profit. mo on that in a moment. first let's give you the cheerful numbers. the dow jones industrial average gained 40 points. it ended just below 23,000. nasdaq fell ever so slightly. the s&p 500 rose and was up nearly two points. bob pisani takes a look at this major market milestone. >> reporter: another day, another big milestone for the dow. the index broke above the 23,000 mark on an intraday basis for the first time ever, just shy of a closing high above 23,000. so boeing and caterpillar and goldman sachs, home depot, those were the four companies most responsible for the majority of those gains since the dow hit 22,000. you might think we've been

seeing a lot of these dow 1,000 days for a year or so. we are. it's partly because it's an easier, shallower climb to get next plateau the higher we go. the dow has gone up 5,000 points in 18 months. it took the dow seven months to go from 18,000 to 19,000. less than two months to get from 20 to 21,000. this time around it's taken a little over two months to get from 22 to 23,000. so there's been three distinct phases of this broad 5,000-point rally. first was the earnings recovery. growth had been negative from 2015 and into 2016, the period we characterize as an earnings recession. then we turned positive in the second half of 2016 and earnings took off. and the stock market took off. second, after the election came the trump rally. that's the second part of this, with the belief that lower taxes and higher infrastructure

sp would boost earnings down the road. finally we're in the growth trade, the reflation trade, that's happening right now characterized by an expanding global economy, higher rates, a hopefully steeper yield curve and tax cuts. now that we've hit 23,000, what could stop us from get to go 24,000? number one, reversal of earnings, not likely now. a more aggressive federal reserve, that's possible. we could have global growth slowdown, possibly. and finally, failure to get tax cuts down. all four of those are potential roadblocks for the market. for "nightly business report," i'm bob pisani at the new york stock exchange. kate warren joins us now to talk more about what happened in the market today and what she sees ahead for stocks. he's principal investment strategist at edward jones. welcome, kate, nice to have you here. >> thank you, glad to be here. >> how do you view the market at

these lofty levels? the 23,000 is a big round number for a big index. but overall, does the market look fairly valued, overvalued? are you findin >> well, there's certainly pockets of opportunities. i think overall certainly facts are a little bit expensive. they're not as inexpensive as they used to be. i don't think that's something investors should be overall worried about, because when you look at history, what you see is stocks continue to rise, especially after they hit big milestones like a round number like the dow just did. they just tend to do it with more volatility. that's what we think investors need to prepare for. >> the last two years have been very good to equity investors. how should i set my expectations now for the next three to fiv >> well, if you look at the last five years, u.s. stocks have returned an average of about 14% per year. that's well above historical averages. usually after a period of above average returns, you should

expect slightly below average returns. so we're expecting 5 to 6% per year going forward. that's still better than bonds, than cash. but it's not as good as what we've had recently. and that's what we think investors need to prepare for. >> does the fed matter in your equation? that's speculation they will finally pull the trigger in december. the president says he will make a decision on whoever the fed chief will be or whether he will keep the current chief in place, in early november. do those events matter to you? >> we do think the federal reserve matters, and certainly the chair matters, although i think a little less right now than you might think. the reason is with the economy improving and with solid economic growth, i think whoever is fed chairman is likely to continue this slow, steady pace of short term interest rate increases. does that matter for investors? yes, in two ways.

i think the first is that investors know that the fed is moving slowly and steadily. that's actually good news for stocks, because they're not likely to be surprises. that could change, but we don't see that changing. the second thing is as interest rates rise it gets a little more expensive to borrow. over time that could be something that does become a problem. but right now we don't see that happening anytime soon. the third thing is, if inflation rises unexpectedly, that is a risk. >> right. >> then the fed might have to increase its rates more quickly. that would probably be one of the biggest risks we see right now. we also don't see signs of higher inflation. that's been a puzzle. no price increases, no rate increases that are unexpected right now. >> kate, thank you. we have to leave it there. thank you for joining us. ka warren with edward jones. ibm could potentially help lift the dow tomorrow as well, after reporting better than expected earnings and revenue late today, aided by the

company's shift to cloud and security services. that sent shares higher in initial after hours trading. despite ibm turning in its 22nd quarter of consecutive revenue declines. josh lipton now with more on ibm's re >> reporter: ibm's ceo ginni rometty has worked hard to emphasize new business lines. the company calls these markets strategic imperatives and it includes artificial intelligence, analytics, cybersecurity and the cloud. quarterly revenue from that division came in at $8.8 billion, a jump of 11%. ibm says that's important because as next generation business lines grow, they could offset the slowdown in ibm's traditional business lines. for "nightly business report," i'm josh lipton, san francisco. as we mentioned earlier in the program, united health care helped lift the market today after reporting better than expected results. its shares rose more than 5% and it was one of the three blue chip dow members to post

quarterly results. the others were johnson & johnson and n sachs. and the results were mixed. >> reporter: $2.5 million was more than expected. unh raised guidance through next year. its revenue up almost 9% to more than $50 billion. it might have been up even more but unh says withdrawing from the affordable care act markets took away $1.6 billion in sales. still, its insurance revenues are growing, as are revenues in its optum medical services group. >> the prescription drug prices are out of control. the drug prices have gone through the roof. >> reporter: president trump's latest comments on drug prices have the caution lights flashing for some drug makers. but johnson & johnson, whose biggest business is prescription drugs, wants you to remember the other side of that story. >> the overall cost of health

care is a topic we should be talking about. but drug prices represent only 14% of health care costs. what's lost in the discussion is the immense benefit they provide to patients. and they actually reduce or help resolution the other 86% of the costs that we're not talking about. >> reporter: j&j said prescription drug sales were up 15% in the third quarter to more than $9 billion. it posted top and bottom line beats and j&j is raising its 2017 earnings guidance for the third quarter in a row. goldman sachs also reported better than expected earnings although its fixed income, currency, and commodity trading sales dropped 26%. that drop, however, was not as bad as many analysts feared. some of its other businesses are faring better. equity returns remain up around 10% for the year. and goldman says its investing and lending business has doub >> and in a separate j&j story,

the company scored a legal convictedry victory, a court found a case against j&j should not have been tried in st. louis, following a supreme court ruling limiting out of state plaintiffs. it endangers other missouri verdicts against j&j as well as hundreds of actions filed against the company. two leading lawmakers have struck a short term deal to stabilize the affordable care act health care exchanges. the deal between republican senator lamar alexander and democrat senator patty murray comes days after president trump decided to halt payments to insurers to make insurance more affordable for low income. president trump has signaled support for the measure. >> lamar has working very, very

hard with the democratic -- his colleagues on the other side, and patty murray is one of them in particular. and they're coming up and they're fairly close to a short term solution. the solution will be for about a year or two years. that is a short term solution so that we don't have this very dangerous little period. >> john harwood is following the story from washington. john, i am a little perplexed. there's a lot that perplexing me about washington these days. >> reporter: me too. >> why would the president go along with restoring these subsidies that he described i believe as recently as yesterday as nothing short of payoffs to insurers? >> reporter: because they're subsidies that made a lot of people, including a lot of people that voted for donald trump, makes them able to afford their out of pocket costs under obamacare. it's part of what makes the system work. even if the president was making

those statements publicly, privately he was encouraging lamar alexander in a phone call over the weekend to proceed with those negotiations. so i think the president sometimes uses strong words as tactics in negotiations and i think that's the way to look at his statements then. the question now is whether other republicans, especially in the house, are going to go along with this and then be able to move on to tax reform or whether they're going to extend this argument about obamacare with no prospect of a better result than they've gotten so far. >> what does your gut tell you, john? it go from here, do you think? i have to think the fact that lamar alexander and patty murray came out with this deal, mitch mcconnell having plugged the plug on these negotiations in december, now they were able to go ahead and that the president came out and praised it today, that is a sign that this deal or something very

close to this deal is going to become law. but there's no assurance of that whatsoever. and we've seen the republicans struggle with whether to govern or whether they want to s been making for a long time. this is their moment to govern. >> john harwood in washington tonight, thank you. a federal judge in hawaii issued an order blocking major parts of the president's newest travel ban, the court suggesting it violated immigration law. the decision effectively stops the administration's travel restrictions before they were scheduled to take effect tomorrow. the justice department plans to appeal that ruling. the latest round of nafta talks have ended in stalemate. canada and mexico have rejected what they view as hard line u.s. proposals to renegotiate the north american free trade deal. but the ministers from all three nations have agreed to extend talks into next year to work out some of the challenges. >> the parties have now put

forward substantially all proposals. new proposals have created challenges and ministers discuss the significant conceptual gaps among the parties. ministers have called upon all negotiators to explore creative ways to bridge these gaps. >> some sticking points include auto manufacturing and how long a new deal should last. congressman tom merino has withdrawn his name from consideration as america's drug czar. the president tweeted that representative merino is withdrawing his name. the decision comes after a joint report by "the washington post" and "60 minutes" that found that legislation sponsored by congressman merino hindered the drug enforcement administration in its fight against the opioid crisis. ahead, how much is too much when it comes to spending on or

what's hotter than netflix? now netflix is planning to spend big money on original content over the next year. the company says it will now spend between 7 and $8 billion on programming in 2018. that raises questions about rising content costs. michael olson is senior research analyst at piper jaffray and he joins us now. nobody quarlrels with netflix's ability to attract members, but people raised eyebrows when they

saw that $8 billion price tag on what the company plans to spend on content. is it too much? >> it's a huge number but it's necessary. in order for the company to continue to differentiate its content from other services that are out there and have a competitive offering that keeps subscribers interested and engaged, they'll need to continue to spend more on content. and more of that will be on original content over time. this year it's about 25% of their spend on original content. but over the next few years we expect that to trend closer to 50%. >> does subscriber growth have to match or outpace the cost that they're spending for content? >> absolutely. that's how we look at it, is that today subscriber growth is outpacing the growth of the content spend. and if you think about it, as long as that continues to happen, that puts netflix into good place for long term margin improvement. we expect that will continue to be the case. in fact over time we expect that subscriber growth will

increasingly outpace the cost of content growth. >> where is the stock today and where do you see it going? >> well, we think there's a huge opportunity for international. in particular, if you look today, about 50% of internet households in the u.s. have netflix subscriptions. if you look at international, it's actually less than 10%. there's a huge opportunity for international growth of netflix. we think over time that can drive significant profitability improvem . >> when i look at the chart we just put up, it's been a phenomenal performer on wall street. do you find anyone in the universe that is close to them in terms of competition in original content? or are they really pretty much a case in and of themselves? >> well, from a competit standpoint, it's fairly limited. if you think about the offerings that are out there today, the

closest are probably amazon prime video, which comes free with a prime subscription, and they're spending a significant amount of as well, in the multiple billions of dollars per year. the next closest would probably be hulu, they're spending for a subscription service as well as an advertising service. there are competitors, but no one has matched what netflix has done today. >> i'm going to go home and watch some netflix. michael, thanks a lot. morgan stanley's results top expectations. that's where we begin tonight's market focus. the financial services firm credited the growth to the wealth management business which offset a drop in its sales and fixed income trading business. morgan stanley's shares rose a fraction. harley-davidson reported declining sales and it expects the weakness in the industry to

continue. nonetheless shares rose slightly. railroad operator csx reported a rise in its profit thanks to coal and consumer goods shipment and freight rates. but it took a hit from service delays in the it works to overhaul the operations. shares rose 2.5% to $54.32. ww granger reported earnings that beat estimates, saying growth was caused by its digital marketing activities. shares jumpe $205.42. >> omni com's quarterly earnings said its advertising and specialty communications business increased while its public relations arm declined. shares were up better than 2% to $75.59. we told you yesterday about a wi-fi vulnerability that

affects nearly every modern protected network. in other words, just about everyone. the security hole is called crack and there are things you can do right now to make sure that you are protected. . >> reporter: it's called crack. really a gang hole in the wi-fi system or the wpa2. a security expert, rusty carter. >> wpa2 is a protocol that wi-fi uses to auth and secure communications between the device and the router. >> reporter: it's usually secure. but he says with this flaw, an attacker within physical range could trick connected devices and steal information, even install malware. >> it could be their user name and password. it could be medical information they're sending via e-mail. all of your personal information passes through your networks today. >> reporter: and almost every device is vulnerable. from your phone to computer,

anything connected to wi-fi. >> the top targets would be hotel wi-fi, public wi-fi, hotspots in airports and coffee shops. >> reporter: the flaw was discovered by a security researcher and there's no evidence now that it's been exploited. the good news, major tech vendors are aware of crack and have or will soon have patches to fix it. microsoft tells us, quote, we delivered security updates on october 10th to protect our customers as soon as possible. apple will release its update to its operating system in coming weeks that will include a patch. but for now apple's beta operating systems do the trick. >> the android devices are much more vulnerable to the attack. according to the researcher who discovered the flaw, android devices are more at risk. google said they will patch devices in the coming weeks. the best step you can take is to

always keep your systems up to date. make sure you install new updates right away. as always, try not to conduct personal business on public wi-fi. for "nightly business report," i'm andrea day. coming up, off the field drama. nfl owners and players seek common ground on a divisive issue, one that's hitting here is a look at what to watch tomorrow. american express will report earnings. the fed will release its beige book survey on u.s. economic conditions. china's president will make a speech opening the party congress. that's what to watch wednesday. one wall street firm is warning that lower ratings for

nfl games will hurt cbs's earnings. credit suisse cut third quarter estimates for the company citing a 17% decline in ratings during the first several weeks of the football season. the call comes as nfl owners and players meet to discuss the anthem controversy and some other issues. eric chemi is outside the meeting for us in new york tonight. eric, what happens speci? >> reporter: so, sue, this is their annual fall meetings. they meet every year. this year it's not normal because there are a lot of issues affecting the league. like you said, anthem protests are hurting ratings. ticket sales, merchandise sales. they've got to get business back on track. players and owners are coming together to figure out are they going to let the anthem protests derail what should be a football se, not a political agenda? that's the main focus today. >> did they make progress today, number one, and number two, how

are the ratings declines affecting companies, sponsors, broadcasters, >> reporter: so in terms of specific progress, they didn't actually say there's a new rule that says players have to stand. but what happened is players and owners met and they came to some let's call it an agreement that we want to work together on social issues, equality issues, and move forward. they're going to keep having those discussions. they said there was a watershed moment to bring players and owners together. but as far as the businesses go, like you said, cbs and fox really rely on nfl ratings because of their broadcast business. turning that around will be a different story. a lot of people have already said i don't want to watch as long as players are kneeling. that's a bigger question, they didn't have an answer for that today. >> what else can we expect as the meeting continues? >> reporter: it's a two-day meeting. they met today, they'll meet again tomorrow. they'll work through a lot of these issues. part of it is the anthem, part

of it is regular league business, regular no-fly li bus. roger goodell, the commissioner, is negotiating a five-year extension on his contract, so obviously he wants a lot of this drama to go away so he can get back on track with his personal career. >> eric, thank you so much, eric chemi in new york. >> reporter: you got it. the 400 richest people in america, and they're richer than ever. the member net worth to make the forbes 400 list is now a record $2 billion. i'm not there. topping the list for the 24th consecutive year is bill gates, worth $89 billion. jeff bezos, number two, net worth of $81.5 billion. rounding out the top three is warren buffett who prior to last year had held the second spot for 15 straight years. the biggest gainer, facebook's mark zuckerberg ranked fourth. president trump saw his fortune fall by $600 million to about $3 billion. likely due to a tough new york real estate market. he came in at number 248 on the

list. and before we go, here is a look at how the stock market finished the day, a day that saw the dow briefly break the 23,000 mark. nasdaq fell fractionally. and the s&p 500 was up nearly two. that will do it for "nightly business repor tonight. i'm sue herera. thanks for joining us. >> and thanks from me as well. i'm tyler mathisen. have a great evening, everybody. we will see yo

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