. this isbu "nightlness report" with sue herera and bilh grif the mighty dollar. the green back hits itsighest level of the year, and its steady rise could have implications for the stock market. miracle on 34th street. macy's reported earnings that were better than anyone expected and it raised its outlook that confidence andomtum can continue. permeum problems. those storiesnd much more on "nightly business report" for this wednesday, may 16th. good evening, everybody, and welcome. small cap stocks hit a big milestone. a record high making it the first of the majores ind to climb back to those all-time highs. investors shrugged off geopolitical concerns and rising bond yields and instead focused

on earnings and a solid repfrt macy's which we'll have more on momentarily. the dow jones industrial average gained 62 points to 24,768. the nasdaq added 46 and the s&p 500 was up 11. t as fse small caps, the russell 2000 index advanced 16 points to an all-time high. those small caps are being helped it by a strengthening dollar which did hit its highest level of the year today. that's not the only dollar-related thing that investors are paying attention to right now. bob pisani explains. >> reporter: a strong dollar can be a burden for the stock market, but it can also be a boon aswell. dollar strength is tough for u.s. companies expording abroad because t gds they sell become more expensive. u.s. companies that do businessr abroad are ht because the income they hur from foreign sales will decrease in value. some large companies do hedge their currency exposure, but not all do and not all will make the right bet.

there' other negatives. a stronger dollar is usually accompanied byhe h rates which sometimes makes u.s. investors with money abroad bring the money back to the united states. that often hurts emerging market stocks because they're very dependent on foreign investeents. we've sn markets in turkey, poland, brazil, south africa a other emerging market countries drop since the dollar began rising a month ago. tourism suffers because travel to the u.s. becomes more expensive. macy's cited growth and international tourism as a big factor of their earnings beat toda that business could tait going forward. there are some pluses with a stronger dollar. first, imports are that means more disposable income for u.s. consumers and u.s. companies that import rawl materials w have lower costs and higher profit margins. small cap comnies might get a boost. typically the small cap russell 2000 index does tend to outperform during periods of sustained dollar strength, largely because smaller companie are more insulated

from a stronger dollar than multi-nationals. if you're a tourist, it's much cheaper to travel abroad if you're an american.na y, the dollar is the major currency in the world and it can be helpful to the prestige in these united states bec a stronger dollareeps its demand as that reserveurrency high. a lot going on here. for "nightly business report," i'm bob pani at the new york stock exchange. for more now let's turn to brad mcmillan to talk about a stronger dollar and how it might impact your markets and investment he is with commonwealth financial invest am. good to s you. welcome back. >> glad to be here. thank you. >> put it intoct perse. bob pisani laid out some of it, but the stronger dollar is realle a rion of a stronger economy, right? >> i think that'sri exactly t. when you look at why the dollar is going up, it reflect faster growth. it reflects higher interest rates which, again, say the economy here is doing better.

so in that respect it's a sign of success and the good effects are very likely to outweigh the bad effects, at least here in the u.s. >> you make the point,yes,e hit a high for the year today for the dollar index, but if yob gok a few years, we're nowhere near more recent ghs. we've seen a declining dollar lately, so at this point do you see us going back to those more recent highs at this point? >> i don't see us goingback. the point you make, we need context is critical. yes,t we're a high for the year, but it's only may and we're still onl athe levels that were pretty typical last year. last year was a good year. th dollar didn't kill us then and i don't think it's going to kill us this year because s don' it rising to the highs of past years. >> so let's apply ito the equity markets because those of us at home may wonder if the dollar is stronger, and you did put it perspective for us, what might the impact be on equities, specifically

multi-nationals? >> it's going to be bit of a head d headwind for multi-nationals. they'ret that bob made, exactly correct. at the same time, if you look at where we were a year or two ago, we're still net better than we were. so the effect is not going to be that we're still ahead of where we were. the other thing is this ig somethhat companies have been kind of expecting and the hedging is very real and coavanies also the advantage of reducing their costs. so there's an offsetting tailwind as well as a headwind. nenet, probably n very much. >> dollar's going up. oil is also going up. that's counter intuitive. do you see that lasting any time soon? i mean, there are people who arn ta about $90 oil in the not too distant future. >> when you look at the oil i market think there are two things going on. first is we've seen demand increase, and that's continued. for all the talk about electricl ve, almost all vehicles are still oil and oil is still

very much in demand. second of all, we've seen significantupply disruptions. we've seen venezuela go pretty much off line.we e seen iran, there's an issue there as we know. so there are factors driving markets up. s at te time, u.s. production is continuing to increase. so i think we're probably going to be a a higher plateau, but i don't see prices continuing to forever. and, in fact, they're probably getting close to their peak. >> all right. so wit everything that you have laid out for us, brad, wheyo woul deploy capital in the equity market? >> i think the u.s. markets are continuing to stay in an up trend. we saw a bit of a pull back on some concerns about economic weakness, but that's actually stting to reverse. we've seen markets start to go back up. i think small cap continues to a healthy place. small caps benefitted more from the tax a than multi-nationals. they're more exposed to the positive effects of u.s. growth

and, in fact, they're less exposed to the negative effects of the dollar. thei input costs can go down so i think that makes sense. but within those i think consumer discretionary makes a lot of sense because they're going to be ae to buy things. imports are going to become cheaper. people are going to be able to spend more and financials withw ington continuing to deregulate have a tailwind. >> on that note, thanks so much. >> thank you. as we mentioned, macy's reported better than expected earnings. it also raised its outlook for the year. the strong quarterly results helped lift that stock today. it was up more than 10% making it the best performing stock in &p 500 today. and as courtney ragan reports now, it may be a sign that the s department stourn around is on >> reporter: tre have bee many headlines about the death wf department stores, but today macy's results s it's alive and well. the retailer outperformed expectations across the board

leading it t raise its forecast for the full year for the first time in seven years. it's also the second straight quarter that macy's c sales grew after three years of decline. macy's says sales strength came from a number of factors, including updated stores, online improvements, new healthy u.s. consumer and the strongest spending from tourists in four years. it also helped that after a strong holiday seasonmacy's started the quarter with less merchandise to clear out at clearance prices, which means the retailer sold more merchandise in the first at higher prices. >> they're going to have a great second, third, fourth quarter of this year because they're just doing a much better job than they have been doing. hat to bute a lot of their new advertising methods hat are more narrow cast than broadcast and much better inventory controls. >> reporter: home depot said colder weather hurt sales.

jeff ginette said weather didn't matter and most cegories were stronger throughout the quarter, especially shoes and homes. it's only one quarter into a new year, but so far macy's is springing to life. for "nightly business report," i'm courtney ragawa but i a different story for cisco which reported esults that were pretty much as expected but a tepid profit forecast disappointed investors. cisco earned 66 cents a share, one penny better than estimates. revenuesose more than 4% to more than $12 billion but the company's outlook sent shares initially lower in after hours trading. josh lip ton has more on cisco's results. >> cisco became aic s valley titan by selling hardware, switches and routers that direc internet traffic now transitioning offering more software and services to its customers. piper javaherifjaffrey's jeff f

it's one of the leading dicators for future growth as cisco now attaches more software to its products. he notes that inline guidance for a stock that went up might ave disappointed some investors. i'm josh lip ton, san francisco. and fellow dow component johnson & johnson is revamping the iconic baby products line. some are over 100 years old.in they're h the move will reverse years of declining sales. is morning's announcement was made ahead of the annual analyst's day. meg tirrell has the story. >> reporter: whe new mom meg conrad shops for products for her 3-month-old daughter, she always check >> i try to avoid products that have sulfates, parabins and artificial fragrances. >> reporter: she uses an organic brand. at you won't find in her bathro

bathroom, johnson's baby. th has attributed to a 20% decline since 2011. our rhaps because of success we became a bit complacent and did not want o mess with s.succ and so, frankly, we failed to see evolving needs from millennial consumers, millennial >> reporter: they're revamping the brand which began three years ago. >> what we learned is they were looking for fewer, simpler ingredients, more naturally derived ingredients in their products. we knew we had to completely make a change i brand. >> reporter: the new johnson baby line hit shelves in august. it contains half as many ingredients, removes dyes and sulfates and comes with packaging designed to be more convenient and easier to recycle. ey say the reboot shoulde imprrofit margins because of simplification of the supply chain. >> we're convinced that will get

johnson back to growth. >> reporter: this comes after a slew of complaints about the talc powder. in addition to continuing to sell its product that include talc and corn starch. theays the company disputes claims in the lawsuit. >> we are absolutely certain that science shows that our talcum product is safe and we will defend our brand and w defend our product, but we're always innovating. we're always trying to evolve and upgrade so we'reoong at a new version of baby powder that has got a cbination of cotton powder, which consumers are very excited about, and that will be added to our lineup. >> reporter: will i enough to win over young moms like meg conrad? she said she's not opposed to giving an old brand a new try. oi if one of the older brands said they were g clean i would consider that. >> reporter: for "nightly business report, i'm meg tirrell in new brunswick, new jersey. it is time to take a look at some of today's upgrades and

downgrades. dow component 3m was downgraded from hold to buy at jeffreys. they think t stock's valuation will decline in the latter part of the economic cycl the pri target is $220. the stock fell 1% to 221. shares of micron were gen an outperform rating by rbc capital markets in new coverage. the analyst says it gives the a unique way to get exposure. the price target is $80. the stock rose more than 4% to $56.50. urban outfitters was upgraded from neutral to sell at mkm partners. the analyst cites improving fundamentals. they predict a rebound in sales d margins. shares rose 3% to $42.32 meanwhile, trip advisor's rating was lowered to sl from neutral at guggenheim. the analyst cites increased competition and trip advisor's

own decision cut back on its ad spending. price target at that stock rose a fraction today to $48.71. sll ahead, teachers march for more payap as cash strped states try to balance their budget. just dsfter the supreme court lifted a ban on sports betting, a number of deals are in the works. patty power bet fair located in dublin, ireland, is reportedly talks to merge its u.s. business with fanduel, a daily fantasy sports company. separately churchill downs is entering the market in three states the kentucky derby owner signed an agreement with s.b. tech which is a sports betting technology company that offers

betsrs in new , pennsylvania and mississippi. the deal sent shares of churchill downs nearly 3% higher. and ford is confirming late today when productio of its best selling f-150 pickup truck will resume. the deerborn michigan plant will be up and running this friday. it will resume in kansas city on monday. as you probably member, production of its most profitable vehicle was halted last week because of a fire at one of its supplier's plants. the international energy agency has a warning for the oil market. that organization says rising prices could curb and as a result lessen demand for crude. at the same time, the group warned of a price spike due to a potential supply shortage from both iran and venezuela. domestic crude rose today to settle above $71 a barrel. and as prices rise shale drillers have been ramping up production, and now one part of the state of texas is swimm g

inoil, but is it too much of a good thing? brian sullivan is in houston, xas, for us tonight. >> reporter: the oil bust o a few years ago has turned back into an oil boom. average daily oil production in america now stands at 10.7 million barrels per day. that's an all-me record and re than double the pace of just a decade ago. much of that boom has come from one spot, west texas, in the so-called peean basin, perhaps the single hottest oil play in the world. there's concern that it could co down fast because there's so much oil coming out of the ground that pipe lines, trucks and tins are full and for companies without pipe lines, they may have to sell their oil at a discou to get it transported to market. >> the growth has been so much it's outpaced the growth in pipeline capacity out of the so in order to get it moved out of the basin you have to be willing to take a discount and so that will be remedied, but in the short term it's caused this

differential, as we call it, to go up. again, we anticipated that issue. we have a lot of long haul capacity out straight to the gulf coast andhe then rest we locked in b ois differential as we call it at wti prices. >> the fceo occidental petroleum is confident that next year new pipelines will be built, but it may be finding enough qualified the issue instead. >> i think that there's -- there's still a significant amount ofndil in the gr i think what's going to be a governor on then construction the permean will be a take away sporadically, but the pipes will be built. the bigger governor on pace, p activityduction will be the availability of competent crews. so i think that's where the next bottleneck will be for all of us. >> reporter: despite those concerns though, many investors remain optimistic occidental up 12% and devin,

23%. exxon mobil and chevron have both outperformed the index. convincing others may be more difficult especially for an i s industry that suffered through two drops. we asked if the industr is doomed to make the same mistakes again or if it has timely gotten smarter? >> companies have gotten their act together. the balance sheets are in better shape, the return is in better , shentality is in better shape. supply and demand looks good. >> with $70 barrel oil, many people are looking at oi but as gasoline and the cost of business are on the rise, investors are keeping a close eye on what happens here in texas. for nightly business report, i'm brian sullivan, houston, texas. office depot gives an upbeat outlook and that's where we begin tonight's market focus. the office supplies company says its turn around is taking hold. it expts salesn 2018 to be nearly 5%igher than last year.

office depot sees operating income increase as much as 5% between 2019 and 2020. shares rose to $2.46. southwest airlines is raiseng its div 28% to 16 cents a share. the airline said it plans to launch a $2 billion share buy back program. that's helped lift shares by 2.5% to $53.01. zuetta which makes medicine for pets says it's buying abaxis for ju under $2billion. they said the deal makes sense because it expects the veterinary diagnostics market to experience stronsh growth. es were off a fraction to $82.85. shares of abaxis jumped o16% $83.84. packaging company p internationaer said today it will not make a hostile for ireland based capital smurfa they said they underbid the

company. international h paper agreed to meet with the executives to sweeten the bid either with more cash or more stock, whatever combination they want. shares rose 2% at $55.03. gamestop shareholder tiger manager is urging the comny to adopt a turn around plan. they would like to see the company buy back stock, hold off on making acquisitions and instead vest some businesses. tiger said it wishes to remain a passive shareholder and it will sell shares if ad turn aro is not successful. shares roads to 1355. after t bell tonight jack in the box reported a surprise in declinen same store sales. the fast food chain said earnings and revenue came up short. as you might remember, shares finished up 1% to 91.37. >> thousands of teachers in

north carolina walked off their jobs today to rally in the state pitol for higher wages and better funding for education. it is just the latest in a wave of protests happening across t nation, and it comes as states try to balance theirbudget. scott cohn is in raleigh for us tonight. >> reporter: for all its s,mpetitive st north carolina falls short on education. high school test scores among the lowest in the nation. spending per pupil ranked 41st. >> if they funded per pupil what they funded for prisoners, then our prisons wouldn't be so over crowded. >> teacher pay is ranked 39th. >> teachers are leaving north carolina state because of the lack of pay and support from our legislators. >> reporter: the one day walkout on the first day of the legislative session is the latest in the nationwide ovement, including arizona, colorado, kentucky, oklahoma and west virginia with the promise

of more to come. >> this is going to continue th fugh spring, throughl and all the way to the ballot box on november the 6th. >> reporter: no matter what the outcome, theac protests in state leave lawmakers with a balancing act. invariably more money from the schools com at the expense of mething else. already states that have given in to teacher demands have had to make tough choices. >> in oklahomy actually put together a revenue raising packagehat includes cigarette tax increases, motor fuel tax increases. arizona they're combining growth in revenues they hadn't yet budgeted with a fund increasens and tr of funds from other places. >> reporter: in north carolina they've proposed ahe h pay raise than the one already in the budget, but republicans in control of the legislature say that would come at the expense of tax cuts. >> we're not going to raise taxes. we think we raise taxes that's going to slow down the economy.

>> reporr: teachers hearsay it's about more than their pay. >> i'm using textbooks that e 30 yearsold. i have one 30-person class. >> officialsre trying to solve a complicated equation, f "nightly business report," i'm scott cohn in raleigh, northna caro and coming up, a career choice that could really take off. >> reporter: i'm phil lebeau in phoenix, ar looking for a hot job with a hefty sciencing bonus? how about becoming a pilot? we'll explain why pilots are in demand when "nightly business re rt" returns. so what is one of the

hottest jobs that companies are stng to fill? that would be pilots. in fact, a looming shortage of people qualified to sit in the cockpit isereating a h opportunity for those looking fly for an airline. phil lebeau, as you saw, is in phoenix for us tonight. >> reporter: 23-year-old amanda larson is sitting in the proverbial catbird's seat, which happens to be in a cockpit. she's been flying for more than four years and is currently being recruited by three regional airlines. >> i know it's competitive, that theyeed to off the best in order to get the pilots because we'll just go somewhere else with a little better pay and flying the same thing. >> reporter: amanda's in demand because of a looming pilot shortageartially because so many will soon hit the mandatory retirement age of 6rlwhile their es continue adding flights, so airlines around the world will need an estimated 637,000 new pilots over the next 20 years.

>> the demand for pilots is not only a problem in the u.s., it is worldwide, and it's easy to see why. the number of people around the world who are flying commercially has soared to more than 3 billion annually, so universities that train pilots increasingly find themselves educating students from over seas. most notably, china. >> the major airlines will contract with companies like ourselves, send their cadets to the united states to train from anywhere from 12 to 15 months, and once that requirement i fulfilled, they will return to china and begin flying within one year of that time. >> in recent months some foreign airlines have cut the schedule due to pilots. that hasn't been a problem f yhe fake carriers. great lakes recen suspended operation claiming a shortage of pilots, a situation analy ws fe will see again. >> what we're going to see is air service that might hav

viable ten years ago won't be viable for now. >> for now pilot recits like amanda larson are landing the jobs that she wants with the perks mentioned. >> phil lebeau, "nightly business report," phoenix, arizona. > the dow gained 32, nasdaq 6, s&p 501 and russell 2000 reached an all time high. i'm sue herera. thanks for joining us. >> i'm bill griffeth. thanks for joining u see you tomorrow.

>> this is "bbc world news america." >> funding of this presentation is made possible by the freeman foundation, kovler foundatn, pursuing solutions for america's neglected needs, and purepoint financl. >> how do we shape our tomorw? it starts with a vision. we see its ideal form in our mind, and then we begin to chisel. we strip away everything that stands in the way to reveal new possibilities. at purepoint financial, we have designed our modern approach to bankinar