>> aouncer: this is "nightly business report with bil riffette and sue herera. hugerecall. chrysler recalls nearly 5 million vehicles. the stock falls and it comes at the start of a busy holiday weekend on the road. a matter of trust. and n's alexa recorded shared a couple's conversation raising pricy concerns about the growing smart device market. airbnb unwelcome guests. an investiga report inside the world of illegal ort-term rentals and the tense battle with regutors. those stories and more tonight on "nightly business report" for eriday, may 25th. and do bid you a good friday evening, everybody, welcome. the timing could not be worse for fiat chrysler. ahead of a long weekend when

millions of americans are expected to hit the road, the automaker issued one of the largest recalls in american automotive history today. the company is warning t owners stop using their cruise control immediately because of a software defect in nearly 5 ion vehicles. that sent the stock lower in trading today. as phil lebeau reports right now, the recall also occurs just ea the industry kicks off its summer selling sson. >> it is one of the largest recalls ever, impacti some of the most popular models in the u.s., including thend jeep g cherokee and the ram 1500 pickup. they are part of a recallri co 4.8 million fiat chrysler vehicles 15 different models, covering the last five model years, with jeep, ram, dodge and chrysler brands all impacted. the issue, a defect with the cruise control. in rane circums, drivers may not be able toff turn the cruise controlynless the shift

the vehicle into neutral and eventuallyark it. while fiat chrysler knows of no accidents or incents with runaway cruise control, it is warning driotrs to use cruise control until the software can be updated. thatom warning c as millions prepare for a road trip over the holiday weekend. it also huge weekend for people to buy a new car or truck. whether the recall and headlines impact salar is too h to hell. under tceo, fiat chrysler has t mon doubled its u.s. sales in the last decade. jeep and ram have become hot brands with strong sales. but overall, ft chrysler's track record init reliabily and dependability studies has been lackluster. it's unclear how long it will takeiat chrysler to get the updated cruise control software to dealers and fix all of the recalled vehicles. butntil the defect is corrected, drivers are being told to steer clear of cruise

phil lebeau, chicago. as drivers hit the road this weekend, they'rels paying more for gas. a rise in crude oil prices and increased demand in gas loan has lifted the national average to near low $3 a gallon. according to aaa, that's up about 30%rom a year ago. wouldn't you know that oil pricesn wente other direction today. two influential oil ministers said some nations could ease production limits that were put in placet year. officials in saudi arabia and russia say that there is a need to compensate for decliningti prod in venezuela and the anticipated export disruption from iran. so the price of domestic crude settled lower by 4% today. on wall street, energy stocks followed oil prices lower. exxon and chevron were the two - worforming stocks on the dow today and geopolitical risks kept investors cautious ahead of the long weekend.

the dow jones industrial average fell 58 to 24,753. the nasdaq w up 9 and the s&p 500 dropped 6. for the week, all of the averag recorded gains. mike santoli takes a look at what might t happen stocks in the weeks ahead. >> stocks are heading into summer stuck right in the middle of their 2018 range. a swirl of opposing currents threatens tt keep the mar from making much progress as the weather heats up and the trading slows do. the s&p 500 has had an eventful first five months of the year, but theet movement has been slight. the index is up a bit less than 2% year to date and is almostal exactlyay between its late january peak and the february lows. just a bit mor than 5% away from each extreme. seasonal factorsuggest a choppy path into the summer with june being among the weaker months of the year. historical record of midterm election years also points t nervouback-and-forth trading in the coming months. this would fit with the interplay of fundamental factors that have been driving stocks so far this year.

corporaterofits are growing briskly and companies are buying back their shares ag tessively. ye threat of higher interest rates and questions over the durability omi eco growth are constant. while wall street has tuned o o muthe drama from washington, the jarring headlines on trade tensions, the russia collusion investigation and a contentious congressional campaign might only become more intense. none of this suggests stocks are doomed to ar of discontent. the market's winter setback andr springtime rec acted as a sort of stress test to make stocks less expensive and turn investor expectations more realisti but the forces that have held the market in check for months continue to indicate that stocks might be in for a staycation, at least f the start of summer. for "nightly business report," i'm mike santoli. to the economy now where orders for durable goods, those long-lasting items like computers and refrigerators, those orders fell last month. much of that decline stemmed from fewer contracts for boeing planes.

otherwise, most businesses did report a modest improvement in equipment spending in april and again an overall ris in orders. the trump administration has aportedly reached a deal that willow the chinese telecom company, zte, to remain in business. as first reported by "the nehe york times,"hite house told congress that zte will pay a bigger fine, hire american compliance officers and shake un its manag team. in exchange, the commerce department will lift an orderch under what company had been cut off from american suppliers. it is veunclear, ho how firm the reporte deal is at this point. se ere, president trump said today that the summit with north korea is stillss le. less than 24 hours after he sent a lettero pyongyang cancelling next month's talks. the president said that the two countries are talking again and he seemed to like the conciliatory tone of a statement issued by north korea offering to meet any time. so what's next?

we have more from beijing tonight. >> reporter: north korea left the door ajar or rescheduling a summit. in a statement in the official kcna news agency, the north koreans describe president trump's decision as unexpected and said we are willing to sit face-to-face to resolve problems way.y time in any i spoke to one diplomat here who follows north korea who said that theanguage of the statement suggested that it came directly from kim jong-un. it used the words "upon authorization" which isode for kim. he said the two are like a husband and wife who just got into an argument and we're waiting to see who's going tohe make first move to kiss and makeup . there are few things, though, that don't bode well for the optimists. the north koreans said that solving the nuclear problem in a phased way would make the relations get better rather than making them get worse. this is not new, but it shows how north korea wants to approach the nuclear issue in at

-by-step process. that happens to be very different from what the trump administration wants, a front-loaded verifiable denuclearization with major promises of economic relief. this is where the two are far apart on how the process will work. on top of orat, korea said trump's decision has caused them to think over if they were truly right to have made efforts and opted for this newpa . that raises questions as to whether or not north korea will continue withts general outreach to the united states and south korea. there are also some interesting comments out of china. the foreign ministry reiterated today that the two sides shouldt continue witir dialogue, but the more interesting comments were in response to questionsbout president trump's implied accusation that china is behind north korea's re hostile attitude. to this, the ministry said we ha no secret intention. and the ministry also dismissedt the suggestiot china could use its relationship with north korea as levere in trade talks

with the united states, saying i would say you're overthinking it. it is time to take a look at some of today's upgrades and downgrades. paypal's rating was upgraded to buy from hold at stifel. the analyst cites its addition of new financial services and the global growing payments market. the price target is 99. the shares fell fractionally to $80.96. colgate-palmolive's rating waso raised buy from hold. the analyst cites the potential for g earnings growthen its strong focus on emerging markets. the price target is 2. the shares closed up 2% to s$63.75. till ahead, the area of retail where there is still a lot of growth and where our market monitor says might be a good place to invest.

as we have been reporting, data privacy laws went int effect in the european union today. it's considered the biggest change t data privacy in 20 years. the rules give eu citizens moret control oveir personal data. users will be able to know how their data is being used and users can also have their data erased. the financial exact on big tech companies will be minimal, although smaller ones could face more of a challenge with increased regulatory expenses. some american publishers are struggling with the new law. cites like "the l.a. times" and "chicago tribune" were taken down in europeanun ies. another privacy debate is brewing, you've probably heard abou this, ove amazon's smart speaker alexa which one couple says secretly recorded their

conversation and sent it to a asndom contact. aditi roy h the details. >> amazon's alexa devices are in 40 milomes across the couny. their jo to always be listening for voice prompts. but in what amazon is calling an unlikely chain ofevents, an amazon echo device inside a home of a rtland,oregon, couple accidentally recorded their private conversation and then sent the audio file to a phone contact. the story is unsettling to echo customers, like alyssa chu. >> that's not what i would intend it to be used for. >> i pretty surprised. that sounds like a lot of mistakes to happen. >> reporter: according to amazon, echo woke up due to a word in background conversation sounding like alexa. then the subsequent conversation was heard as a send message request at which point alexa said to whom. at which point the background conversation was interpreted as a name in the customer's contact list.

>> i think this will have ramifications for people's trust vel for alexa and other in-home devices. the creepy factor on this is huge. lr>> reporter: amazon isdy in a battle for market share in the home speaker category, a i soustry watchers say an incident like this could tip the sces. according to e-marketer amazon dominates two-irds of that market now, but the market research group projects that lead will drop by 6% in two s, yehile products including the google home will see a corresponding inease. >> thi is the consumer privacy fear that everyone was afraid of en alexa came into people's houses. >> reporter: on the other hand, other analypps say what haed to that oregon couple is so unlikely that it won't keep people from buying and using their alexa devices. >> i think it should be statistically about one inmi a ion concern. >> reporter: the company says it's working to make sure it h doesn'pen again. and despite her ntdisappointme over the incident, chu says she's not unplugging her echo any time soon.

>> probably still useit, just being more aware. >> reporter: the case does bring up privacy concerns. the group consumer watchdog is already calling on amazon to have a dedicated internal privacy watchdog at the company. for "nightly business report," i'm aditi roy, san francisco. a bit earlier this week we ran a story aboutamazon's alexa teaming up with the home builder lennar. they issued the following statement folwing the alexa privacy story. quote, as with all new techlogies, this is a process of continued refinement, including the coexistence of hings like security and privacy. that said, we have a lot of respect for amazon's technology security and privacy capabilities. homeowners can always remove their alexa-enabled device if they choose, end quote. folocker raced past earnings expectations and that is where we begin tonight's markets. fo strong demand for nike and adidas shoes helped the retailal chain beat estimates by

the most in at least two y ars. the compso benefited from its strategy to streamline its inventory. shares soared by 20% to 55.74, making footlocker the best performing stock by far in the s&p 500 today. but it was a different story for sporting goods retailer hibbett sports. theysissed both earni and revenue estimates in the most recent quarter. strong online sales were not enough to offset a decline in comparable store sales. as you might imagine, shares finished lower, the day down 15% to .$24. meanwhile a drop in same-store sales caused revenue to miss forecasts at clothing tailer buckle. net income did rise and those results beat street targets. shares, though, fell nearly2% today to $25.25. one of astrazeneca's cancer

drugs showed promising results company said the medication improved overall survival in lung cancer patients who were given that treatment. the drug is already approved in the u.s. to treat a certain type nonsmall cell lung cancer. shares of astrazeneca were up a fraction to $37.04. herballife's largest investor is reducing his position billionaire investor carl icahn is cutting his stake in theit nun and weight loss company simply because his investment has become too large. he added that heve still bel in the business and sees strong performance ahead. shares fell 9.5% to $48.70. a federal court lateast ght handed apple a legal victory against its rival, g. sams samsung has been ordered to pay apple $500 million in damages for illegally copying patented smartphone features. the two companies have bee involved in this patent lawsuit since 2011. shares of apple were up a tick to $188.58. samsung trades in south korea.

tonight's market monitor says he is finding opportunities in online retail stocks. he e online retail companies to account for 20% of all u.s. retail sales within five years. right now that figure sits just low ten10%. this is his first time as our market he is founder and ceo of amplify cts. we're going to talk about three companies here. you see 20% by the end of the year. what's going to be the catalyst for those gains, do you think? >> well, most of the catalyst for online retail stocks is really growth in salrk and share, but then overall growth in onli retail sales. right now online retail sales are growing 16% year over year, whereas department store sales are actually shrinking. so they're in at sweet s where they're carving out market share from brick and mortar, but also increasi their customer penetration rate. >> and you point out that it's not just amazon.

a lot of peoplehink of online shopping as simply they always go to amazon, but you picked three stocks that you think are very interesting niche plays. sy is your first pick. why do you like it? >> yeah, so this is an online platform for handmade and vintage goods. we think it's a very unique platformo get -- to buy things that really have an experience with them. they're not just something yn'd find a typical brick and mortar store. they're very unique. and this could be an interesting play for aerr or acquisition, whether it's a brick and mortar company trying get their toeet in online retail and buyingm a platfr somebody already in the retail spe trying to expand into this handmade and vintage item area. >> then there's company in a very competitive part of the online world inea food and delivery, you're talking about grubhub here. >> yeah, grubhub is definitely in competition with companies like uber eats, forexample. but they have some strategic advantages. one is this recent exclusive

deal they signed with yum bras to exclusively deliver kfc, pizza hut, tacobell,t cetera. they're becoming kind of the largest entity in the u.s., but it's a competitive space -- it's a competitive space fill and it will be interesting to see what happens in this marketplace, but we see it going higher over the course of th year. nn let's finish up with carvana. i was s with the amount of revenue growth this company has, up 127% year over year. that's obviously one of the reasons why you like it. >> that's right. it goes hand in hand with their carsales. so they sold over 18,000 cars, preowned cars last quarter. that was the growth of about 127% year over year. they're building this line atform to buy, inspect, finance preownedcars. that's becoming a growing area here in the u.s. they're national and we think they can continue to improve. their big challenge is they're

still not profitable yet, unlike the other twotocks that we spoke about. >> well, that's certainly a big growth area, that's for sure. christian, thanks for joining us. appreciate it very much. >> thanks, bill. >> christian magoon. to read more about his picks head to our website at nbr.co coming up, a months-long exclusive investigation into the emerging battle between illegal short-termentals and the law. here is what to watch next week on wednesday. the second estimate for first quarter gdp will be out. al the fed will publish its beige book. a look at the economic conditions across th country.

then on friday the all-important jobs report for the month of by will on tap first thing in the morning. that's what we'reor watching next week. an emerging turf battle is under way betweenities and upstart tech companies like airbnb, for example, that have en capitalizing on the wild west landscape of the share economy. valued at $31 billion, the company i crently worth more than most of its publicly traded rivals. but gigantic growth means some big growing pains as well. >>indeed. airbnb unwelcome guests. that's a cnbc investigati into that clash between illegal short-term rentals and restrictive regulations. airbnb says it has worked with cities around the world to craft reasonable regulations, but not in miami beach, where the fight has no end sight. morgan brennanpe has ourcial report for us tonight.

>> reporter: it's 9:00 on a saturday night and we're riding ong with miami beach code compliance. on the lookout for illegal short-term rentals. >> and what are you looking for tonight? >> hopefully we can establish contact if it's occupied and determine whether it's a violation or not. >> reporter: code compliance officer has seen it all. large noisy late-night parties in residential neighborhoods, ommercial video shoots with scantily clad women in a ho vek ngvestigated, and unwitti tourists who say they unknowingly booked airbnb isn prohibited areas. >> tess is md up. er reporter: all captured on body cama videos recorded over e past twoyears. >> hello. >> reporter: some are so blatant as these house rules show what to do if someone asks. they're told to lie by saying they're a friend and certainly don't mention they rent this house. >> you're not allowed to rent this house for less than six months and one day.

>> erybody has toleave. >> this party needs to clear up. >> reporter: at a loudarty in millbrae, california, in the san francisco bay area, shots rang out. guests seen on surveillance cameras running downhe street. airbnb says it has zero tolerance for thisype of behavior and permanently banned the guests. airbnb says these incidents don't represent the overwhelming number of satisfied hosts and guests in 81,000ie cit and 191 countries. and it has successfully worked wi lawmake around the world. trback on the sts of miami beach, it's not long before we roll up on a group of vacationers. the building has telltale signs of an illegalrental. two of the units advertised on key b have lockboxes and pads. >> do you live there? >> we do. inghow long have you been l ther >> actually we just rented with airbnb. >> are you surprised to hear it's not lal here?

>> you would say when you hear thattory -- r >> reporter: to the mayor, the issue cut. >> they may work in some places but they don't work here. it's not the mom and pops we are seeing here. we're seeing commercializedor pred companies that are unying to commercialize our residential coies. >> predatory seems like a strong word. what do you mean by that? predatory. it's not about a mom and pop or grandmother wanting to i bring a college kid to make him chicken soup at night, it's peop takin very nice properties, buying them, and turning them into essentially a flophouse. >> reporter: gelber, a former prosecutor and former state lawmaker says airbnb and other home-sharing platforms must abide by the law. er he you spoken to airbnb or any of the oth companies that operate here? >> i've spoken to some of the representatives before i was elected. i'd like to send them message.

i'd like them to be corporately responsible. 'd like them to do the right thing. >> why do you think they haven't done that? >> look, these are not charities. these home-sharing platforms, ak they want to money. >> reporter: in an interview ata isrbnb's san fisco headquarters, chrlehane, the head of global policy, strongly defended thecompany's track record. >> i have yet to see a program being run by anyma r, any elected official in this time of onomic inequality generating $6100 for a typicalssiddle c family all without the expenditure of a single taxpayer dollar. that i what airbnb is about at its core, trying to use technology to create ecomic empowerment. >> should it be responsible for what is illegal activity on the platform >> i think what seems to be a common sense solution for miami beach, happy to do this if they want to sit down and have a constructi conversation, i you can take that 35% of the city that's a residential area, make that a exclusionary zone.

allow the activity to be able te take pn the 65% of the city that's explicitly zoned for this type of activity. >> in themeantime, you have illegal listings on your site. >> first of all, i think if you ly look at the underlying law in the city in miami beach,a right, beach allows for this activity to take place. $20,000 fines on someone making their home available a few times a year to actually help make ends meet? l it doesn't soue they want to make this work for as many possible. >> reporr: the american hotel lodging association tells us that instead of supporting common sense regulations, airbnf hased to deploy a massive campaign of dirtytactics, sdeptive messaging and personal attacks against anyone who raises a concern. for "nightly business report," i'll morgan >>brennan. hether it is airbnb or booking.com or homeaway, all of

these companies have had clashes to varying degrees with regulators in different cities. officials in many cities across the country, whether it's boston or lr angeles new york say there are issues. that said, morn found in her reporting, the company brought up most frequently is airbnb. before we go, one more look at the day on wall street.th dow fell 58 points today. the nasdaq was up 9. the s&ped by 6. for the week, all of the erages recorded gains. >> and that is "nightly business tonight.for i'm sue herera, thanks for joining us. >> i'm bill griffeth, have a wonderful long weekend. we'll see you monday for a special edition of nbr. have a good night.

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