>> announcer: this is nightly business report, with sueanerera bill griffeth. flying high, the bulls charge wall street as the dow and the s&p close at records. but which stocks are still worth owning at these levels. one o upwards march mortgage rates hit the highest levels in year scaring oh off home entires. in the market for a car, you can buy, lease and now there is another option. subscription. those sto aes more tonight on nightly business report for this thursday, september the 20th. good evening, everyone. and welcome. what a day on wall street. the dow closed at the highest level ever, the00th record finish since the 2016 election.

the s&p 500 also closed at an all-time high. the nasdar is e so close. and investors have been turning attention tohe strong economy and away for now anyway from trade concerns. so l t's get right the numbers for you. do dow jones industrial average rose 251 points to 26656. the nasdaq was up 78 and the s&p 500 added 22. bertha coombs has more on wall street's record day. >> reporter: it seems counterintuitive the dow and r p 500 hiords days before new u.s. tariffs on $200 billion in chinese goods go into ieffect. buestors are convinced officials in beijing and washington ultimately want and need to resolve the trade conflict despite the heated rhetoric. and that sent stocks higher. the dow was the last of the majorop averaging to its recent high this year. aday's sessions saw broad-based rally with new

records for the health care and consumer discretionary sectors. and investors moving back to recently beaten down tech shares. like facebook, apple, amazon and alphabet. large cap tech names leading the marketuc higher for of the year. tech also got a lift from microsoft, oneth ofive dow components hitting all-time highs. and the stock market highs didn't go unnotice at the white house. president trump tweeting congratulations usa underscoring who a number of traders believe, at the president sees the market as a basing of his economic policies. and the white house will likely back off from draken yan trade measures. so bertha mentioned one of the risks to the market being tariffs. but there are others as well. as steveliesman reports for the most part they're being ignored.

>> fears over a trade war rocking is to stocks yesterday. >> stocks under pressure. the trade war with china escalating. >> the market is clearly concerned about trade wars. and hetariffs. >> is over a trade war slam fox full coverage of that big move. up until now stock markets reacted negately to threa of higher tariffs. but since president trump slapped $200li b of new tariffs on china tuesday and china retaliated it's been a different story. >> the markets have been a good day stocks rallies broadly. stocks surging the dow hit agnew record. thearket sentiment changed perspective of the tariff story and it should have in the first place because tariffs amount to only about 0.4% of world gchd minuscule in the larger scheme of things. the market has been able to shrug it off. a tariffs aren' the bull market is looking past. the 10-year treury yield is convincing over 3% with most increase happening around the riff news prompting many

economists to raise the inflation forecast. along with higher rates with become higher probabilities of fed rate hikes. markets nowee a 100% chance of a quaoner opioint rate hike in september and another in december. the first 2019 record hike will come two months earcher in m i understand of june which ig near the headwinds. >> as along you have the good macroeconomic drive you have am ured 10-year rise. there is good news. >> and plenty of news investors nog ago thought was bad but have now decided is either outweighed by good new ors babe maybe not bad news at all. so where do stocks go next? to b ice joins us now with his outlook, the chief u.s. equity strategist over at citi good to see y again, welcome. >> nice to see you sue how are you. >> i'm good. and t market seems good. but you think perhaps investors

are a lite bit overly enthusiastic, too bullish about this market? w l we trend to measure this in a variety of ways.on is the panic euphoria model be, the sentiment indicator and back in euphoria and have been the last couple weeks. the last time we were here wasr before jan before the market took a little bit of a bath in and we are concerned about four items that, two of of which you mentned, trade and inflation, the fed reaction to it. butwothers, the mid-terms elections and earnings estimates for knicks year. a bit high not terribly but scaling b bit and those could could wobble the market. not huge in terms of brul pullback but we think the markets are a bit ahead of themselves. >> andhe s&p has already exceeded your estimated close for the s by the end of year you thought 2,800, 2850 we are well above that?

are you raising estimates or looking for aorrection of some kind. >> well, bill i couldn't tell you if i was raising the target before i did anyway. but, no, our sense here is that you know it's breaking news i know that. i don't want to get in trouble th the s.e.c. but the bigger issue though is if you were to look at 2% to 3% type inflation rates where we are at rht now,ypically the market rates if we go back to 1960 and look at that market ate 18 times earnings get to 2840 it's a simple way to define we are o where we are in the markets already. earnings growth is going to slow by ther fourth quarnto the first quarter of next year not all the wonderful news from the tax cut against in 2019. and generally speaking, the economy is fine. i don't have an issue with that. but more about where markets a pricing, fair amount of good news is priced in already. >>right. >> a it seems like it's ignoring concerns. >> you mentioned the four triggers that we need to watch midterm elections, inflation in the fed, trade and earnings

estimates thaare too high. so where should investors put their money to perhaps hide or hedge against anyf those four occurrences. >> so, hiding is tough in a market that goes down. diversifiation is the best way. but if you were worried about volatility in markets and most but if you think it could occur, the health care and pharmaceuticaling biotech dott . they are not reacting to what jay powell says as a fed hearing or congressional hearing but ather focused on product pipelines, you know new approvals from the fda on a new >> okay. >> getting through you know those type of things. so i would look at that in the growthcomponent. we are a little concerned how far tech has run. we'd look at financials and looking at energy which are not real favorites in the markets. >> right. >> they are going up typical financials go better. >> on that note thanks so much. to be ice is wh citi later in the program a strategy session

on picking -- stockicking with the market at these all-time highs bill. in the meantimeg exist home sales remain steady in august followingour straight monthly declines, according to a new report this morning from the national association of . realto and while demand for housing remains high, there is a nti headwind h the market that's both affecting buyers and sellers. diana olick has more. >> there are finally more of these compared to last year. august saw the first annual increase in the supply of homes for sale in over three years. but that good news is tempered with a tough new reality. mortgage rates are rising again, knocking at the door of 5% on the 30-year fixed. while that may not seem historically high to older generations it's the first time most millennial home buyers have seen it. the real tors chief economist lauren yoon says not osy d that price younger buyers out but keeps current home owners i

plac >> 14% of realtors are indicating that when they are speaking with clients that clients do not want to list properties because they like the current low mortgage rates. >> and that's exas baiting thea ady critical supply shortage, especially on the low end of the market where housing is most in demand. that was clear in the august figures, sales down 12% for homes priced under $100,000. but up 12% for those priced over io mi there are far more million dollar homes available than cheap homes. >> we have a good economic back drop, jobs are being created very high net worth for people who have exposure tong hou equity as well as the stock market for the upper end market is moving. >> higher there rates could cool the today's inflated home prices. in california, the priceyest market in nation sales dropped dramatically and the g pricens are finally shrinking. for nightly business report, diana olick. >> the stock market market

getting a smakeovere recognizable names including facebook twitter and google are beingreclassified. mike santelli looks at tomorrow's big sector shake-up. >> wamz's most widely followed barmg is about to undergo a major reshuffle. one that will placeeading stocks in different packages under newda labels st and poor creating a new sector called s communicationservices enlarging the s&p 500 current teleco cluster now categoried as consumer technology or discretionary will join at&t and verizon in the you new secretary facebo google parent are. alphabet will move from tech to the communications grouping wh cable and traditional media blue chip such as comcast and walt disney from consumerer discretionary. the rational is to collect all varieties media and communications industry together given similar subskriepgss and

advertising. eevamp reduces cosmetically what has become a fairly extme tech weight in s&p 500 tech is now 26% of the value of the s&p, the highest t since late 90s tech bubble. after the changes take effect after the market close, the tech rating will fall to 20% or so. communications will amount to about 11% compared to 2% for telecom now. and consumer discretionary slips to 10% from 13%. investors in the overall s&p 500 or in a diversifiedarge stock portfolio should see no real impact from the changes. owners of sector exchange traded funds will see substantial changes. there is a communications services etf trading in advance of the formal shift and dominated by alphabet and facebook. which together make up more than value.its the s&p tech sector etf meantime will become enormously dependent on apple, comprising about a fifth of the f consumer discretionary will be

driveren more by amazon which will remain the largest member of a smaller sector. and finally, investors who relied on telecom sector index funds for the generous dividend yields will need to look elsewhere. on the surface it seems the shifts will balance out the s&p 500 with a more rational classifications scheme. but there is no ride hiding the outsized influence oft we think of as tech stocks which will now effectively dominat three of the 11 industry groups. for nightly business report, i'm mike > santelli. >>time to look flou at some of the upgrades and downgrades we begi with caterpillar groupad from outpaerm to neutral. the demand growth any say will continue into the next year. price target at $191. the stock rose 2% today to 156 even. ralph lauren was upgraded to neutral from underweight pat piper jaffrey. the anast says earnings estimates are likely to go higher for that company. price t now shh 125.

stock gained more than 1in the rally at 136.17. general electric's pce target was cut to $10 over at jp morgan. the analyst expects weaker results for the power business. the rating remains eiundet. the stock fell 3% to $12.46. sketchers was downgraded to market perform from outperform at could youen. the analyst slights growing vrpt levels and the price target is 28. the stock fell 5%o 26.58. still ahead why one business owner says don't toy with tariffs. it has been a tough year for the toy makers as many lost a major partner when toys "r" us filed for bankruptcy and closed

its doors. acing at industry is another blow, rising costs from tariffs. elon mo dwr is in northtown, pennsylvania for us. >> it's sticky, stretchy and it's smack in mhedle of america's trade war with china aaron invented a new kind of silly putty two decades ago with the same squishy feel b never dries out and comes in fun colors. ras company, aaron's putty world employs 85 people and does millions of dollars in sales y ear. but now the putty in peril asoo chinese g drive up the prices. >> it's been a 1, 2, 3 punch this year. >> first came the steel and aluminum raising the cost of the metal tins the putty comes in by six figure this year. then the tariff and silicone, the main ingredient in putty. prices shot upouble digits now the latest round of tariffs hit

the pigment nas give the putty the distinctive look. >> if a global market that prices the same everywhere it's not a price where it's cheap ner china and more expensive in the united states. but by throwing up that barrier, it going todd restriction and constraint tthe ability of that global supply to move around. the price goes up. >> reporter: the company is feeling the squeeze even though allaterials are sourced right here in america. aron has been stock piling supplies in case prices go up even more. and workers say they proudly stand behind their putty. >> i don't think it' like us i still would buy it. it's still good putty. >> reporter: but president trump is threatening tafrpsn all chinese imports. the nation estimates a 25% tax on everything would cost 68,000 jobs and $3 blion in lost wages. the crazy aaron's, theariffs mean profit mortgages and delayed investment.

christmas is the busiest time of year and he hopes to make up for the higher costs. mt he is locked into price commitments witor retailers for next holiday season and he is not sure how he keepshe promising. >> i'm hopeful we will keep a find to way seif and price fishesies i don't want to reduce the amount of in the kaern because kids deserve more. >> more nightly business reporty peania. prochts stall at author industries where we begin the market focus, the rv maker reported weaker than expected earnings and dline in revenue as it scaled back production and worked to rede inventory levels. the the company cited higher material costs.l shares f nearly 13%91 today to 53 under armour said it's going to cut 3% of the global workforce as part a of restructuring. that translates into about 400 jobs. the athletic apparelaker now expects the overhaul to cost more than initially thought.

but at the same time,though, it's raising the lower end of thein 2018 ea outlook. under armour shares rose 5% today to $18.5 o 15. comcastbattle between and 21st century fox over tv broadcasterer sky comes to an end this week with a final bidding war. british regulators will hold a nrare auction putting end to nearly two years of offers and counteroffers for that europen company. comcast shares rose 1% to 37.81. 21st centu fell a tick to 24.47, rae minder comcast is the parent company to cnbc producing this program after the bell micron quelled fear of the slowdown in the chip market. they said stronger demands for theroducts in several categories resulted in earnings and sales beating expectations. micron shares were volatile in after hours trading ending thee regularon up 2% to 46.06.

with all the market at records, stock picking becomes a little harder you would think. but it doesn't have to be. joining us tonight for a strategy session is han smith, chief investment offers at halferford trust. thanks for joining us. >> good evening. good to be with you. >> last week ray dahl owe said he thought we were in the late innings of the economic cycle you think we are halfway through, e, why. >> i think he said the seventh inning. that isn'tate we might have extra innings. the bull markets almost always end i anticipation of a recession. and it's highly likely we have a recession on the horizon over the next couple of years. and in fact, thisl w end up we believe being the longest post war o world war ii economic expansion and the longest bull market. >> what do you say to thoseho we interview and they say you know, this market manyf the

stocks and components of it are overvalued. wu don't agreeh that, obviously. >> no with, we think the market is fairly valued selling at about 17 times nt year's earnings. historically the market sells at about 16 times earnings. so it's certainly not cheap but we don't think it's overvalued. and ifact, this year we have had such tremendous earnings growth, the market is cheaper today despite being up 10% than it was at the start of the year. >> be that as it may, though, you are pounding the table here tonight with high quality stocks. ing with high qualities. in fact three dow coneants. johnson & johnson. jp morgan and dow dupont whyos three. >> first of all i think investors should own stocks to hoon for theterm which means the good times and bad times. that's the keyuc toss as being a long-term shareholder.

and you can't get higher quality companies than these jp morgan is the best run bank inhe world. it's -- it has a fortress like balance sheet, returning capital toeh shders, increasing the dividend in october 43%. j. and j. is the best manaled care company there is. with an enviable trackecord of increasing dividends consecutively over 50 years. and dow dupont is a unique advantage ofo tak a company that's going to be splitting into three compone companies this year. and the track record of spinof a is very, very good record indeed. and so we are -- we expect to own all s thrnoffs, dupont, which will be the specialty chemical, dow which will be the material company and cortiva, which will be the agricultural sciences company, all investmena grade, paying dividends.

we like all three. >> very good. by the way i'm an old l.a. dodgers fan and we tend to leave the stadiumer a the seventh inning that's why i was calling that late innings.ha e smith with havreford trust thanks for joining joining us. >> good to be with yo the number of americans applying for unemployment benefits fell to a fresh9-year low. in part though because of hurricane florence. applications in south carolina dropped by an unusually large number as governmentffices closed and the power went out. hed today many home owners are sorting through damage and the flooding, figuring out what insurance will cover andhat it willot. seema mody i in kingston, north carolina. >> reporter: 60 miles inland from the coast and a the neuss riefr is rising in king ton, carolina. flooding gas stations, local businesses and wreaking havoc and home owners. that's because many of them do not i have floodurance since

they're not in a designated flood zone. only 335,000 home owners in north and south carolina have flood insurance. which means the mority of sidents will have to pay for repairs out of pocket. >> after the flood it's a little too late but i hope this is al wakeup c to people that everybody needs flood insurance. >> north carolina's department of insurance has set up camps across the state for residents to meet with insurance companies to begin filing claims. and answer questions for those who may have no insurance at all. >> i'm not insured. that's why i'm out here talking with fema. that's -- you know, i heard about this right here, so i came t here to see what helpky get. >> how much damage do you think you havet me. >> oh, well, a few thousand. that's all i can say. >> uninsured residents have two options. apply for a grant through fema which will likely get you a do

couple thousanars or seek out a federal loan. but there is no guarantee you'll get it. for home oers with a mortgage, fanny mae say they will eligible to stop making payments for up to 12 months without incurring late fees o delinquent process that buys some time for. but forthers the financial toll has just begun. kingston, north carolina. coming up, need a car. wellon if you want to buy or lease, we have another option. wells fargo is cutting jobs. up to 26,000 over t next three years. that's five to 10% of the workforce as part of its turn around plan. >> these looking to get a new car typically take out a loan or

sign up for a lease. utt now there is another option. it's called subscriptions. phil leau tells us how they work and why they are more popular. melsa andre les her porsche. as an event plannerpending months on the road she wanted to avoid paying for the car when she wasn't driving. the solutionly a mon subscription. >> it makes sense to be able to move for a chunk of time and not worry about giving my car back or finding a home for it. >> auto s hscriptions are ae change for an industry where millions typically pay for cars through auto loans or lease deals. that usually means a monthly payment for several years. now, auto makers from gm to bmw are testing if auto subscriptions can generate more

business o byering customers the flexibility to rent a vehicle for a shorter period of time. feature volvo drives ome in commercials. >> it's a beauty of get agnew phone. >> fair offers month-to-month subscrip oons for thousands used cars and trucks. >> americans are already at a ple where we understand that we pay for what we want to use. and this idea that the car is a service and that it doesn't have to require this big burden of debt. >> that's one reason why melissa andre is h happy to haveer porsche but not the loan that goes with paying for it over five or six years. >> it's as easy as getting a cell phone, except you get a car. >> fair has more than 18,000 subscribers. th many of them making money driving their cars for ride share companies. everyone puts down two-month deposit but after that they can change vehicles as often as they want and e the subscriptions when they want. a new way to pay for getting a set of wheels.

phil lebeau, nightly business report, chicago. forbes magazine is out with most nual list of the valuable franchises in the nfl. by the way, the lying itself is l the most earning sports league in thehe world. in in the top spot the dallas cowboys. theirst team to reach that valuation. new england patriots at 4.8 billion. the new york giants round out the top three. and that' nightly business report. i'm sue hera thanks for joining us. >> i'm bill griffeth. have a great evening. we'll see you again tomorrow.

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