this is "nightly business report" with s herera and bill griffith. >> the dow loeading the market higher. >> president trump lands in brussels to meet withato allies and he brings a clear message. pay> up. o big or go home. why texas is now the best state for business. those stories and much more tonight on "nightly business report" for this tuesday july the 10th. i would bid you good evening, everyone, and welcome. the&p 500losed at its highest level since early february, b it was the dow that led the charge. the blue chip index advanced for four straight days. the small cap russell 2000 hit y

record mid before pulling back a bit. investors were focused on earnings hoping that pepsi's strong earnings report today would set the tone for the rest of the season. the dow jones industrial average rose 143 points to 24,919. the nasdaq was up thr and the s&p 500 added nine. bob pisani explains why this earnings season is critical for the market. >> the last earnings season was all about raising estimates thanks to corporate tax cuts and share buybacks and expanding global growth, but a lot has changed in the last three months this time around, investors really just want to see companies maintaining their earnings estimates and not cutting them. that's important. now thatay seem like bit of a downgrade in expectations, but it's not,en g the big gains we've seen in the earnings recently. second-quarter earnings, for example,ec are ed to grow 20% in the s&p 500 and that's about far off from the first quarter's 26% growth.

despite the trade war talk, the company feels comfortable with g the earnis guidance that they gave earlier in the year and that's a very bullish sign for stocks and one of the reasons the market has been moving up recently. the market has held up remarkably well, if you look at it. take monday, for instance, stocks surged in the absence of trade warheadline and the market's come to believe that cooler heads will prevail on global trade. they may bewrong, but that's what the market believes right now, but it goes beyond trade. the market is pricing in an awful lot of good news right now. so, for example, solid u.s. growth coupled withed m inflation has put the federal reserve in a very passive stance, and it should keep them fromy aggressiv raising interest rates beyond what it has already expected. second, growth over value is a big story in the market. traders believe that technology, the ultimate growth story will continue to outperrm. tech earnings are expected to grow 25% in the second quarter and that's a big deal and the

main reason the market's up so much. third, higher commodity costs and the stronger dollar, they've be minor worries, but they've not yet translated into really negative trading action. even pepsico today shrugged off the idea of a strong dollar when it repord earnings today, but corporate guidance could derail this rosy scenario, if we see earnings estimates for the third quarter drop about 30% growth and that could signal rockier times ahead. for the "nightly business report," the new york stock exchange. bloomberg, the trump administration is preparing a list of new tariffs on $200 billion worth of chinese goods. the stock index futures fell on one report and yields on the ten-year digital declined on the prospect of an ever-widening trade war. the trump administration imposed 25% duties on $34 billion of chinese imports.

china immedtely then retaliated. meantime, the president did arrive in belgium f today the nato summit and the start of his four-nation european it is a trip that wall street will be watching carefully and one that is expected to be tense and it started with harsh words being leveled by the president and by nato allies and eamon javers is in brussels for us tonight. >> president trump arrivedbrn sels tuesday to face an alliance of military allies poised for aonfrontation with the american president. even so, his meetings here are being overshadowed by speculation earlier in the week with beleaguered prime minister theresa may and his face to face-meeting with vladimir putin of russia. >> here in brussels,utrump's pe that the european allies don't spend enough on defense. >> mr. president, please remember about this tomorrow

when we meet at the nato summit. but above all, whenou meet president putin in helsinki, that it is always worth knowing who is your strategy friend and o is your strategy problem. >> as he left for his three-part european trip, trump suggested meetings with he the u.s. allies will be. >> i have nato. i have the uk which is in somewhat turmoil, and i have putin. frankly, putin may be the easiest of them all, who would think? who would think. >> many countries are not living up to 2014 commitment to spend 2% on the gdp onjust five countd to hit that goal now although u.s. officials now s they have commitments from others to crank up spending. >> he's right bauseuropeans are not spending enough in the 1990s and they need to catch up, but it's wrong because the message becomes so polarized and

a toxoxic that the leaders wou struggle to sel we need to spend more on defense, and that's not w going tok politically. so i think that's why it's important that he should have kept it private l andt the european leaders to do the hard work. >> they linke defense spending with european trade and the president arguing that the european allie aren't being fair to american taxpayers ensuring there will be plenty of drama this week in nato. in brussels, i'm eamon javers in "nightly business report". >> president trump nominated federal appeals cou judge judge kavanaugh to the supreme court. >> of a nau is a former clerk to retiriustice anthony kennedy. if confirmed he could shift the balae of the court to the right, and he could also shift business.ape for >> ahead of the fierce confirmation battle judge brett kavanaugh began meeng with key lawmakers on capitol hill today beginning with senate majority

leader mitch mcconnell. kavanaugh served on the u.s. court of appeals for the d.c. ci auit which hea high volume of cases on government regulation. on that topic his record is clear. >> he is generally suspect of the administrative state and one, i think, he wants to restraint and force congress to be more explicit in the laws that it writes. >> he voted to limit obama-era regulationsding epa rules on greenhouse gasses and hazardous air pollution. fccing regulations on internet traffic and he found the consumer financial protection bureau and now the bcst unconstitutional and his rulings have been s narrow inpe. >> when you look at the cftb case in which he ruled that the cftb as structured was ti unconstial. he didn't go out and strike down the entire cftb. he fixed it in a narrow way, giving the president the power to fire the director.>> at the white house podium judge kavanaugh said if

confirmed he'd keep an openveind on case. >> my judicial philosophy is a raightforward. dge must be independent and must interpret the law, not make the law. >> kavanaugh's critics have seized on his political roles working for ken starr during the whitewater investi ttion andhe bush white house. a california judge who resigned amid a sexual assault investigation. here's democrat chuck schumer. >> no investigation of a president. is it any wonder that president trumpm hose kavanaugh fe list of 25? when we know he's obsessed with investigation? >> democrats stalled kavanaugh's previous appointment for three years. two republican senators who remain key today, lisa murkowski and susan collins supported his 2006 confirmationhich passed 57-36. president trump expressing lawmakers t work quickly. >> this incredibly qualified

nominee deserves a swift confirmation and robust bipartisan support. >> caller::. >> the confirmation of neil gorsuch took two months. for "nightly business report i'm kaylahe tau in washington. as they gear up for the latest battle, a new gallupy commissioned wells fargo found that the political climate in washington is the biggest u threat to th. stock market. nearly half of those surveyed said they are very worried about that. eric davidson is chiefff investmenter at wells fargo private bank. he joins us to tal those findings. >> i'm curious about the findings here, eric. typically, people want gridlock and they want partisanship in washington because it gets them out of the way of business and allowing them to do their business. so what, specifically, sense people are worried about in washington right now as it pertains to the stock market.

>> yes. the political worries are the top worry, and you're right. often times the gridlock is seep as a posi but the level of acrimony and the level oee partisanship to be digging at investors no matter if they're on the right or on the left. that is the top worry the days on investors as they look out into the future. >>rade has also one the market has been worried about, but it didnk quite as high as i thought it would be, and you make the point that the timing of this particular survey may have influend that. >> we did the survey in may and now that the first shots of the trade war have been firedt probably would inch up and that is tied into the whole political realm, as well. >> but again, is the concern - w usually peopld be worried if this is going to affect the economy in some way. it's going to hurt will hurt profitability and so forth. so again, i'm stymied in trying to make the correlation between their concerns about what's

happening in a washington the impact it will have on profitability in the united states. >> well, the interting thing for investors, while there are certainly these worries out there, there are t so manyngs that are going well for investors and consumers overall, and i think that seems to buoy the confidence as we see in this survey of investors. high, but t -- it's not near the all-time highs and it's sort of weighin these good tailwinds that are out there with these challenges that they do see in front of them. i would say in general investors are happy, but they're worried for the future. >> how much of it has to do with the way thea acrimonious situation in washington isut playing it's a little bit more public this time around than it has been. >> there have always been tensions and as bill pointed out, there's always bee t talk of gridlock and washington and wall street interaction, but it seems as though it just seems to be much more public and perhaps much more persistent

than it has been in the past. >> i think y're right. the acrimony levels have goneanp the partisanship and it's not the widest it's eve been and there have been points in history where it's been wider and it's pretty p wide withple on the left and people on the right not finding a lot of common ground. that makes people have an invement standpoint be anxious for what's to come. >> interesting eric davidson with wells fargo private bank. >>anks for your insights tonight. hank you. it is time to take a look at some of today's upgrades and downgrades. dow component walgreen's was downgraded from in line to outperform. the analyst cites a number of headlines and the potenal for muted profit growth. the price target is 67. the shares fell a fraction to 6320. >> chipotle's rating wasad down to underperform from neutral over at mizuho.e ack of clear innovation in

the near-term. the price target is $330, the stock fell 2% to 424.81. meanwhile, ebay's rating was from hold to buy. thenalyst there cited headwinds to changes to sales tax laws as a sult of the recent supreme court ruling. the price n target $40. the stock fell 2%70 today to wynn resorts were upgraded to buy from hold. the analyscalled the mac concerns related to trade and the world cup soccer tournament rdiverting highlers away from gaming tables. he says it's overblown. the price target, $2 and the stock rose by 3% to 165.38. >> still ahead, buybacks are at aa recordnd that could be good news f investors. ♪ ♪

>> the number of job openings is no longer at a record, but it's still pretty close. according to the labor department 6.6 million positions filled and to be that's consistent with the tight job market. the so-called quick rate inay rose to a 17-year high and that usually indicates that americans are t confidentt they can leave their current position for better opportunities. more than third of small businesses cannot fill open jobs. that matches a record according to t lest report from the national federation of independent business. the survey found that 29% of mom and pop owners cited workers as their single most important business problem. speaking of which, the transportation security administration is looking to add thousands of workers to its ranks and it turns out recruiting is becoming trickier

in t ls tightabor market. >> kate rogers reports tonight from newark airport. ♪ ♪ >> the tsa is training its next generation of talent. >> the agency tasked with keeping the nation's sky safe is looking to increase its ranks with mock, screeni image interpretation and an explosive demonstration. >> at a federal law enforcement training center ino, glync georgia. >> making sure you work on time and your uniform up to par. >> treat everyone with respect. >> the agency is currently anhiring for tho of positions that range from security officers to k-9 handlers at a airportoss the country. entry level salaries depending vary on role and location.

with the uptick in the u.s. economy and increases in wages packages.sation i think just like most employers we have steeper c wpetition. work hard to sell the benefits of federal employment to try to attract folks who are a very importantf mission securing america's traveling public. >> new hires like valoria garcia attend t tsa academy and haveit an aional 60 hours or more of instructi with the coach on site at the local airport. accuracy is key and trainees are instructed on using x-ray machines to follow protocol and working with passengers. >> i think people think we're taught to not really care. can you please hurry up? it's not like that. learn how to treat passengers with a lot of care and respect, and try to connect with them. >> for garcia, like many officers, the threat of another september 10th attack is a great motivator to get things right on

the job. >> being able to work at the tsa, i feel like i'm ging back. i'm doing something to avoid that ever happening again. >> for "nightly business report qwest ",'m kate rogers in newark, new jersey. pepsi gets a lift from its snacks and that's where we begin tonight's market focus. frong demand cheetos and lay's potato chips offset clines in soft drinks and that led to an earnings beat. pepsi said it putdd more dollars behind its beverage business helping to slow a year-long drop in sales. >> overall the company said it's pleased with the results. our revenue in neps came in quite strongly andshe invest seemed pleased with that. if you look at where we are, the interninional bses in total are performing very well. developing in emerging markets up 6%. operating profit internationally up 12. shares rose nearly 5 force 112.89. the merger between keurig and dr pepper is complete.

the newly formed company which is now one of the largest beverage providers in the u.s. began trading on the new york stock exthange today. previously announced deal gives the company greater scale and a stronger portfolio. shares of keurig, dr pepper rose 11% to 22.19. and nordstrom laid out its five-year financial forecast through 2022. it expects earnings to rise as much as 6% on average on an annualized basispa and the c reaffirmed its sales outlook for 2018 and that's below street estimates, but some analysts ndestioned how nordstrom would continue to growhe shares fell 2% to 5209. >> chipmaker analog devices is teaming up with chinese tech company baidu, and the company will share resources by new autonomous driving system. >> the shares rose than 9% to 54

while it was down a fraction to 261.25. boeing said that strong demand with its737 jets helped deliveries for the first half of this year rise bye man 7% and that was more than double the deliveries who rival airbus during the same timeframe. boeing rose 1.5% today to 347.16.al and thestreet journal says the european union may hit google with a multibillion-dollar fine. officials believe that the tech giantal ill views the dominance of its android operating system. shares of google parental fabbet were off a fraction to 1167.14. companies are repurchasing stock at a record pace. according to a recent report from trim tabs, public companies announced more than $435ecillion in thed quarter and apple announced the big of the buyback at $100 billion. j.p. morgan and citigroup announced buybacks with the

stress test and nike with the $15 billion buyback rounds out the top five and joining me to discuss this is the chief investment strategist at johnny montgomery scott, welcome back. >> do youo expect this continue and what are the contributing factors that led to pretty much record results and i do expect it to continue and if you look at the recent past in the last five or six years the ime corporate buyback has averaged $120 billion in and quarter except the number's getting close $200 billion which would be a r bord goingk at least 15, almost 20 years at this point. given the level of corporate profitability, we know corporate profits are running very last quarter and 23, 24% year over year and this quarter is expected to be up 20% and barring earnings surprises to the upside and that compounds the cash thatre companies generating today, not to mention the fact that as a

of the tax reform act companies are repatriating tens of millions, if not millions of dollars and as a consequence that wil fuel further buybacks as we go forward. >> you know what the say about buybacks, mark. it's not the best use of capital. thathould be building factories or innovating or creating jobs in some way. this is financial engeering that artificially inflates stock prices. they're buying at a high level h right now wit markets as they are. what do you say to them? is this a good thing or not f investors? >> bill, i frankly have sympathy with that view. i think companies do use this as a reason to not be necessarily creative enoug relative to the other things they can do to depl shareholder capital and if they're measured on the metric of profitability, they can pad management's profits as opposed to shareholders in other ways through as you said a smart, strategic acquisition or capitalre expenditures which increasing and increasing at a

relatively high rate and i expect that to continue if you would contemporaneously sndre buybacksinvestors do need to be discriminate with regard to the companies using capital proply and thosehat don't seem to be particularly creative with it and they're retiring share prices at elevated veluations. >>, very quickly, mark. some of the reasons these buybacks arece taking p is because they're safer than doing deals or, you know, investing in otwer areas? >>, i think, sue, it's the easiest one and it probably result r in the quickesurn on investment because you can retire shares and immediately see accretion to your profitability over that which will take days, months or even years in the case of an acquisition to turn out. >> mark, thank you so much, mark. >> coming up, why texas is a lone economic star. i'm scottcohn, what a difference the price of oil kes.

we're in a state that was a competitor for sure, but now is america's top state for business. on "nightlyming up business report." >> tesla has plans to build act y in shanghai. the electric carmaker's planct ex to produce 500,000 vehicles a year some time in the next decade. they reveal that teg sla'seo elon musk is in agreement. shanghai is tesla's second biest market after the united states. >> cnbc is out with the annual raing of the top states for business. all 50 states were ranked for competitiveness.

outwas thi utah was third and it faced underfunding for its schools. washington sta came in at number two thanks to the solid workforce, but high costs were , negatiut the top state for business is texas, helped by rising energy p tces andhe job growth that goes right with that. scott cohn is in the lone star state for us tonight ♪ >> year after year, from the hill country to the gulf coast, no s has more of what it takes to compete than texas, america's top infrastructure. >> this is the energyit c of the world. >> ready access to capital and a culture of innovation, but this year texas has something else. >> a prop rightour here. >> yan see it at the mulberry cafe in midland, one of the fastest growing cities in america. >> j startinguary 1, the city became on fire. >> texas crude up some f60%m a year ago, helping make texas

america's top economy wit more than 350,000 new jobs in the st year. >> texas is the number one state in the united states f any migration from other states. people are voting with their feet. people are comingatp to the of texas more than any other state and there's people and companies. >> but, texas does poorly in education. no state has a larger percentage of people without health insurance. crime is u d and theocratic nominee for governor warns about the message that's senty message by a state ban on es sanctuary polior immigrants and the proposal to egulate transgender use for bathrooms. >> i call it the job killing bill. >> this cou stop being -- >> there are other issues and the potential trade war or an endo nafta could have a huge impact on texas's import and export business and there are concerns the state could face a et deficit when the legislature reconvenes next year. for now texas isnjoying the best of times as america's top

business. for "nightly business report" i'm scott cohn in asfredericksburg, t >> to see the complete list for the top state for business and to findre out wour state ranks head to our website nbr.co one last look at the day on wall street. the dow up 143 points and the nasdaq and the s&p up a fractio as wday. >> that will do it for us tonight. i'm sue herera. thanks for joining us. i'm bill griffith. have ag. good even we'll see you tomorrow. ♪ ♪

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