>> announcer: this is "nightly business repor with tyler mathisen wit red-hot. the nasdaq had its biggest point gain in a year, fueled by tech stocks that had been the ultimate market winners this year. oil slick. exxon and chevron saw profits grow 50%. sounds good, but investors wanted more. market monitor. cvs wants to buy aetna. but should investors like you buy cvs health shares? we have an emphatic answer, tonight on "nightly business report" for friday, octo. good evening, everyone, and welcome. what a day for the nasdaq. the index was the clear standout, basking in the glow of

blowout earnings from amazon, alphabet, microsoft, and intel that we told you about last night. amazon and alphabet closed at all-time highs and above the $1,000 a share mark. the two dow components, microsoft and intel, were both up more than 6%. microsoft hit a new all-time high. and intel was the best performing stock today on the blue chip index. today alone, amazon added more than $61 billion to its market cap. alphabet's market cap now tops $700 billion, about twice the size of exxonmobil. microsoft's market cap pushed past 650 dlal billion, just onek after hitting $600 billion. intel shares hit a 17-year high. that along with apple saying it's seeing strong demand for its iphone x sent the nasdaq up more than 2%. and the fact that index easily outperforming the dow jones industrial average, which added

33 points, and the s&p, which gained 20 to hit a record. the nasdaq was the big winner for the week as well. the global benchmark for crude settled above $60 a barrel for the first in more than two years. prices were supported by speculation that the major oil producing countries will extend an output cut agreement through the end of next year. that sent brent crude higher along with domestic crude. the steady price rise in oil has been somewhat of a tailwind for the major oil producers. both exxonmobil and chevron beat earnings and revenue estimates. both say profit grew more than 50% in the most recent quarter. but the reaction was mixed, and jackie deangelis explain >> reporter: it's no secret that the energy sector has been beaten down. now some of the biggest energy companies in the world are signaling that the tide may be turning. and the change in due in large part to the steady climb in oil prices. for the world's largest publicly

traded oil company, exxonmobil, better performance in its exploration and production and also refining businesses also drove its solidly higher profit. >> all three business segments delivered solid results that competed dividends and investments for the fourth consecutive quarter. these were achieved as the company worked to safely bring our gulf coast manufacturing operations back online following the devastating attacks of hurricane harvey. >> reporter: hurricane harvey, which shut down a quarter of u.s. oil refining during the quarter, resulted in a 4 cent per share hit for exxon. but higher oil prices weren't enough to help cholp crehevron, reported a rise of 60%. but the company's decision to drop u.s. production hurt results which in turn offset the

rise in oil and natural gas prices. the company also said spending on large projects is being scaled back. and reducing spending was a theme that conoco phillips mentioned as well. li exxon, the company reported better than expected results for the third quarter but slashed its capital spending budget by 10% for the year. cautious optimistic is how analysts in the energy space were looking at these reports. crude prices are still the key to future profitability of these companies and it's tough to know which way they'll gone. on the one hand, persistent troubles in iraq and venezuela are all reason supply could be threatened. prices could move higher. >> i think crude oil prices will move higher, my objective is $60 a barrel. once it gets to 60, it will have trouble going higher than that. >> reporter: on the other hand, should opec not extend its production cut, a slide into the 40s wouldn't be surprising either. for "nightly business report," i'm jackie deangelis. merck was the worst

performing stock on the blue chip index today. that company said a cyberattack over the summer caused a temporary production shutdown worldwide and cut revenue by at least $135 million in the third quarter. the company also reported a loss of market share for many of its older drugs. but earnings came in ahead of estimates, helped by cancer immu y drugs. merck withdrew a cancer drug in europe. here is where things stand if you follow these items. according to thomson reuters, 74% of corporate earnings reports have come in above estimates. 9% were in line. 17% got the failing grade. they missed, and that's better than the long term average. at this point the growth rate of the tech sector earnings has

shot up more than 18%. not even hurricanes could keep this economy down. the gross domestic product, the broadest measure of economic activity, grew at an annual rate of 3% in the third quarter. that was better than estimates. this is the first time in fact in three years that the u.s. economy has seen back to back quarters of 3% growth. and this comes as the university of michigan's index of consumer confidence hits a 13-year high. a new report from the white house predicts that corporate tax cuts alone would produce reliable economic growth of between 3 and 5% a year in as little as three years. the report also estimates that reducing tax rates for business from 35 to 20% could boost the overall size of the u.s. economy by upwards of a trillion dollars over a decade. democrats debunked those claims. academic research is divided on the connection between tax rates and growth rates.

last night we told you about some questions about morningstar's five-star rating system for mutual funds. if the stars alone can't guide are are you what can? tim, good to see you, welcome back. >> you too, thank you very much. >> the morningstar star system, a lot of people use that. if you choose not to use that system, or if you question it, what other data would you recommend that investors look at? >> here's the interesting thing. the morningstar star system, the fact that it is largely defunct is not new news. the sad thing that came out in the "wall street journal" front is that people had been relying on this, not only individual investors but financial advisers. the good news is morningstar itself can be used as an effective tool especially by individual investors. you just start by largely ignoring the star system.

>> the stars, though, were a very convenient hook, not only for individual investors to look up and glom onto, but as you point out, for financial advisers to sell. here's a five-star fund, i wouldn't put you in a one-star fund. i know you well enough to know, tim, you lean toward index funds, and you believe they are an advantageous bet, not so much because of performance, but because of the connection between performance and low cost and low turnover. >> there's no question, tyler. inside o report by "the wall street journal," there was a subplot that may not have come through. it was really proving that indeed active investment managers really ultimately end up struggling in the long term to beat their benchmarks. that's one of the reasons that the five-star funds eventually became two- or three-star funds. so yes, you are correct, my preference is for more passive asset class management funds,

index funds in some cases are going to be the most appropriate thing for many people. you can still do a good job of finding those using the portfolio tab on morningstar.com. you can look specifically at what exactly is held inside of that mutual fund. if you need a large cap fund or a small cap fund on that portfolio tab, you can use the tool effectively to determine what the asset class is. then suggested, we want to look for lower expense ratios. that's a good signs it's a more passively managed fund and will likely do better for investors in the longer term as a result. >> you also recommend portfoliovisualizer.com. >> portfoliovisualizer takes it a step further. it does a good job at helping you craft a whole portfolio. that's one of the problems i have with this report. the message is coming across that it's all about the funds, and it's not. that's how wall street has been

selling investments products for many, many years, saying it's all about the funds. it's really all about the asset allocation. over 90% of one's long term return has more to do with the asset allocation, that is, how you construct that portfolio, then exactly what is inside of it. so i would caution investors to keep their focus on first things first, start with the allocation, and then fill that portfolio with the lowest cost fund, which you may actually find on morningstar. you can annals put together on portfoliovisualize of her. >> tim, thanks so much, have a wonderful weekend. ahead, it could be the biggest deal of the year. cvs/aetna. our market monitor has a strong opinion about cvs shares. he'll share it.

catalonia's parliament voted overwhelmingly to declare independence from spain. but the story doesn't end there. later in the day, spain's prime minister dissolved the parliament of catalonia and called for a regional election in late december. it's the country's worst political crisis since the 1970s and puts spain in uncharted territory. it began with an independence referendum, defying a ruling that declared it illegal. spain's benchmark ibex 35 index fell after the vote. spanish bonds slid as well. here in the u.s., prosecutors are reportedly investigating foreign exchange trading as wells fargo. information from the bank has

been subpoenaed and bankers in the unit recently fired. the investigation is in the very early stages. wells fargo has been under increased scrutiny recently because of its fake accounts scandal. yesterday we told you about that cvs health being reportedly in talks to buy aetna, which would be the largest health insurance deal on record. tonight, bertha coombs outlines why each company might want to see the deal get done and what it could mean for you. >> reporter: most of us know cvs as the drugstore on the corner. it's more than that. the firm also negotiates drug prices and manages drug benefits for big insurers like aetna. now cvs wants to merge with its partner, believing to it they can offer better value to large employers and their workers. >> what's important in this industry is figuring out how we're going to influence people to get the right care, to not

have too many medical tests that drive up costs, to go to the right venue, which is the lowest cost venue. >> reporter: together, they would be a formidable rival to unitedhealth group which is beating the competition by packaging data services to help firms drive down health costs with all in one pharmacy benefits. and it has outpatient surgery groups that are cheaper than hospitals. cvs and aetna would have a lot of the same pieces and something more. >> one key asset that cvs has that no other company in the supply chain has is its retail pharmacy. that's a key point here. and an opportunity here to leverage those assets. and also clinics as well. >> reporter: on the consumer side, the deal would give cvs more muscle to fight off the threat of amazon entering into the pharmacy business by offering more value beyond just low prices. >> an integrated firm with aetna and cvs assets would be able to understand where people's

finances are, what their drug use is, and aetna has been making a huge push on the artificial intelligence and analytics piece. >> reporter: analysts say apart from some overlap on medicare and drug insurance plans, there don't appear to be many antitrust hurdles. but sources say cvs is proposing to say $66 billion forest in a, which would be a record for a health care merger. for "nightly business report," i'm bertha coombs. >> and cvs is one of our market monitor's picks this week. he's doug butler from rockwell trust, doug, welcome back. let's start with cvs. a down day for the stock today. but you like it, you liked it before tdeal, i take it you like it even more after. explain the thesis. >> we very much like the deal. and we think that management has had a fantastic week, even though that hasn't been reflected in the stock price. the stock is down about 10% this week. but management really made two

huge moves this week. the first one they did was they acquired the business of anthem from express scripts, which they had to do before they made a move on aetna. that really allows them to, you know, become the full service, the top to bottom, the vertically integrated health care provider with insurance, with pbm, and then with that retail pharmacy we heard about a moment ago. we think that really is a great move, and it helps amazon-proof them to some degree, to get not just focused on the retail and the pbm side of things. >> the next stock is alphabet. and earlier in the show, we detailed the fact that it has had a pretty stellar week. alphabet's market cap now tops $700 billion, twice the size of exxonmobil. you still like it, though, you don't think it's gotten too expensive? >> we don't.

this company still makes an extraordinary amount of money. and the shift from traditional advertising to digitizing, that shift is still ongoing. additionally, i think alphabet is one of the better ways to play the data explosion. we may think we're late in this game of data coming in from wherever. but really, we think that the data explosion that comes not just from people demanding information on the internet but really also from once machines start talking to each other and to everything around us, there is a coming data explosion, which is one of the reasons why we think alphabet is one of the best positioned names to play in the tech space. >> let's get to pick number three, which is at&t. you like this space, you like verizon, you like comcast as well. but you're recommending at&t. it has had a bit of a rough year, down 7%.

there are a lot of people who question the wisdom of the time warner acquisition. >> the time warner acquisition, you know, i think they're looking to get scale. i think throughout corporate america, you're hearing a lot about needing to get scale. and one of the things at&t does have, especially with this time warner deal, is it has increased its scale there. i think we really like time warner, in the fact that they are still adding tremendously to their broadband capacity and capabilities. and the video losses that are really the headline drivers lately are probably less important long term than the fact that they are still going to be the place that everybody turns to for getting information. >> so we like three stocks. alphabet and two others that are all made up of letters. cvs and at&t. doug butler, it's a theme, with rockland trust. >> indeed. thank you very much.

shares of jcpenney hit an all-time low today. that's where we begin tonight's market focus. the struggling retailer slashed its full year financial forecast, saying it had to heavily discount its apparel ahead of the holiday to goat rid of excess inventories. while the move temporarily lifted sales, the company said it will report a larger than expected loss in the third quar sh took a dive, falling nearly 15% to $3.12. the arthritis drug humera is helping its manufacturer to raise its shares more than 2.5% to $91.93. the paint maker exalta was reportedly approached by dutch rival axonovo but a potential

merger. reuters says the deal is being considered. shares jumped 17% to $33.15. colgate palmolive said increased advertising spending helped lift sales. those results were better than expected while earnings matched estimates. the consumer giant expects to get hit with higher charges from its restructuring program. shares off today at $70.40, off 1%. goodyear saw its shares hit after the company slashed its forecast for the third time this year. the nation's largest tire manufacturer cited weak demand and higher costs for oil and rubber. shares dropped more than 4% to $32.18. new york is implementing what will be one of the most i country.ve paid famy l the law applies to full-time and part-time private employees and it goes into effect january 1st. but the reaction from small business owners is mixed. kate rogers report

>> reporter: at brooklyn-based uncommon goods, workers bringing home a new child or facing challenges in caring for a sick loved one don't have to make tough decisions about choosing work over family. the company has a paid leave policy in place, guaranteeing primary caregivers eight weeks off. the ceo says it's not only good for workers, it's good for business. >> providing our workers with an opportunity to balance their personal needs and work requirements is something that we think is in our business interests as well. >> reporter: on january 1st, other small businesses in new york state will be offering similar policies as the state implements what's being hailed as one of the most progressive paid leave laws in the nation. the program, phased in over time, allows up to 12 weeks of paid time off for a new child, including adoptive or foster

children, as well as ill family members. with a lack of movement on the federal level, five states, including new york, have passed legislation of their own. critics say the law places an unfair burden on small businesses in new york state who are exempt from the federal family and medical lea which guarantees unpaid time off to employees at businesses with 50 or more workers. >> it is the most expensive and expansive such program in the united states. administratively it's going to be very challenging for them. especially for small companies, if it's a key person or very important member of the staff, they're required to permit them take this leave. >> reporter: and while many on main street are focusing on higher priority items in washington like health care and tax reform, experts say paid leave policies should be on the radar. >> it's actually very complex with a lot of nuances. there's a lot of monitoring, a lot of reporting going on. there's a lot of different regulations within each state and jurisdiction. so i think it's something that they do need to be aware of and

could be very complex to comply with. >> reporter: while he acknowledges those challenges, especially for smaller companies, he maintains the benefits outweigh any cons, especially in the long term. >> parents being with their children is actually a good investment. it's been proven to help with child development. so i think it's actually a positive in terms of long term investment. >> new yor among those states leading the charge to bring about more flexibility for american workers. for "nightly business report," . coming up, the great inheritance. you might not believe the amount of money that will soon be passed down to t.

the world has a new richest person. amazon founder jeff bezos saw his wealth rise to $91 billion thanks to that runup in shares of amazon that we told you about earlier in the program. but it was a tight race. shares of microsoft also soaring today, increasing the wealth of bill gates but not by enough to keep him number one. he is about $3 billion short, probably the only time he's been short of cash. bezos briefly passed gates, as you may recall, back in july. are getting richer.ld's they're also getting older. all of their money will eventually be transferred to the next generation. and the sum is in the trillions. robert frank has >> reporter: it may be the biggest inheritance ever. the world's billionaires are about to pass down trillions of dollars to their kids. and the cascade of wealth could transform rich dynasties and

charities around the world. according to a new report from ubs and pwc, the world's bill on airs added $1 trillion to their wealth last year, helped by rising stock market, stronger commodity prices, and surging values for everything from real estate to high tech companies. more than 1,500 billionaires in the world now have combined wealth of $6 trillion, greater than the gdps of japan or germany. a lot of that is about to be passed down to the next generation. the report estimates that $2.4 trillion will be passed down by billionaires over the next two decades, creating a collective inheritance of unprecedented size. about two-thirds of that will go to billionaire children and their families and about a third to charity. >> we believe this is the largest wealth transfer from billionaires either to the rising generations as well as causes and cultural institutions that they care most passionately about, whether it be private

museums or philanthropic causes, we're seeing a great wealth transfer for things peopy passi. >> reporter: the passdown will be especially large in the u.s. and europe, where nearly half of today's billionaires are over 70 years old. the question now will be what those lucky heirs and heiresses and their charities do with all that new money. for "nightly business report," i'm robert frank. finally tonight, we told you earlier this week that paul newman's watch was up for auction. tonight we can tell you it sold for nearly $18 million, setting a new record for a wrist watch sold apartment auction, according to the new york auction house phillips. the timepiece was given to newman by his wife, actress joanne woodward. newman is said to have worn it daily between 1969 and 1984. the watch came to the auction house by way of james cox, who dated newman's daughter nell, and according to "forbes,"

remains a close friend. newman gave it to cox when cox said he didn't have a watch. the winning bidder has not been identified. >> such a great story. >> really wonderful. it was inscribed "drive carefully" by joanne woodward because he was such a race car driver. >> great story. that does it for us tonight. i'm sue herera. thanks for joining us. >> i'm tyler mathisen. have a great weekend. drive carefully. we

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