business report with sue herera and bill griffeth. taking a toll, rising interest rates continue to hit stocks. pu now new concern. could rising costs take a bite out of corporate profits? rudeawakening. mortgage rates rise to a level not seen in eight years. why it could spell trouble for the winter housing market. and gathering storm as hurricane michael bears down on florida, residents and retailers hunker down once again. all that and more on nightly business report for thistu day, october 9th. um-hum. good evening, everyone. and welcome. a choppy session for stocks today. the major indexes swung between gas and losses.

to wrap the day as investors once again grapple with how exactly higher interest ratesec might a stocks. but today wasn't just about interest rates. it's also about inflation and howg ris costs to hit corporate marc. today the dow jones industrial average fell 56 to 26430. the nasdaq rose 2 ant s&p 500 itwn four. >> but let's start the interest rates. yes, rising and expectations are that that will continue. as you know, that's a big shift for the stock market that has been enjoying historically low interest ratesor a very long time. but investors now need to know why rates are rising. so we asked steve liesman to explain. >> the questio wall street wants to know if they are going up for the right reason or wrong ones. that is are rates going up because of growth or justs because of inflation without without the graegt. >> jp morgan declaring in a

reern report rising u.s. yields with with are symptom of u.s. strength and not should not be feared. the trouble for stock investors is that until now they've been able to have the cake and eat it too. that is better growth and higher earnings while interest rates stayednusually low. in fact the treasury markets almost ignored the fed nnlzs in now.-rates pl it's not just fed policy. it's a generally strong consumer confidence process that we see at this point of time. the economy has looked strong for years. and especiallyince trump took presidency, and i think we're just in an excube rant time. people find the rate increases as normal given the economic conditions. >> the list of what's pushing up rates is long. there's better growth and lower unemployment. core inflation, excluding food and energy, is steadily above 2%. the fed is pushing up rates. sometime nexyear other central

banks may increase rates. there is tariffs. and gross growing tefz which means higher interest rates. the higher rates could crimpgr th hurting sectors like housing and autos but not expected to derail it. >> we will see the return to normal term premium, the extra yieldem peopled for holding long-term people. it's ad relatively g stein now. it means there is confidence the economy it o isba coming . >> one modest upside could be that higher rates help the fed slow to the economy to a managee.le growth if so the central bank could be done raising rates soober tha later. addsing another 1 percentage point from here. that's if rates are rising fort right reason, that is growth, and not the wrong o which is inflation. for nightly business report, steve liesman. >> and one industry paying close attention to interest rates is the auto sector. as rates move higher financing a car is becoming more expensive. that along with higher sticker

ices is translating into monthly payments that are close to recordeb levels. philu has more. >> reporter: it's the part of buying a car that nearly everyonedreds, determining how much you payer month. four out of five consumers finance new vehicle was an auto loan. as the federal reserveas gradually raised rates it's forced lend tors do the same with autoloans. as a result monthly payments and auto interest rates have steadily moved higher. five years ago buy ertz paid an ank of $457 a month on a loan with a rate under 4.5%. since then, the monthly payments and interest rates have steadily moved higher. today, the average new vehicle ayment is now well over $500 a month. and the average rate is close to 6%. those higher costs have not slowed down demand. mainly because consumer sentiment remains near a record

high. so millions are still looking to buy. in fact, sales this year are on pace to top 17 million vehicles. making this the bestst four-yea tch of auto sales the u.s. ha ever seen. and while you may see showrooms offering zero% deals, it's a hard harder to get one. add minimum says theres no terest rate on just 5% of all auto loans. the lowest level since 2005 if. if interest rates move higher there is a concern the monthly payments will riseo a point where auto buyers say it's too expensive. but so far dealers have yet to see that happen. phil lebeau nightly business report, chicago. and today the head of the dallas fed says he supports moving ahead gradualry and patiently with interest rates are rate increasing even though he says the inflationed pressuringiluild wng cabinet lynn says he cease dueling

forces will keep it from spiking sharply. >> i don't believe inflation runs away with us. particularly with the tariffs and input costsil you see it build. but i personally think the more struct forces are not going away. if anything they intensify and have someec muting e on inflation. >> and mr. kaplan also said he is starting to see companies try to rse price the first time in a long time to counterthe rising input costs. and the trade issue with china is a game changer for the global economy. so says the international monetary fund which is cutting its outlook for world economic growth to 3.7%. the organization says when the world's two top economies impose tariffs on each other everyone feels i the imf expects growth in the u.s. to slow toea 2.5% next growth in china could drop top 6.2%. did you know that 85% of the toys sold in the u.s. are made inin

it makes sense that industry executives are concerned about the current tariff tiff including the ceo of monta attel. >> we are watching the situation veryhelosely. and could be an impact on the industry. this is outside of our control but the role is to design an t organizatit is flexible and adaptive and can respond to market changts and negative headwinds. >> and he added that ttel i looking at different manufacturing options as a way to deal with the impact of trade tensions. and investors will be listening for compensates about china, trade, inflation and interest rates when companies report earnings and issue outlooks for the rest of the year. sterday as we reported, industrial company ppg saidt s demand from china is turning into a big problem as is significantises in raw materials costs. the stock dropped 10% today. continuing a late slide that we told you about yesterday. well the effects of the trade tensions are starting to be felt gleblly as well. not just in the u.s.

britain's biggest car maker today reported a nearly 50% drop in sales in china saying that import duties and a trade war with the u.s. has hurtd dand. and so jaguar, land rover said it's going to clo a uk-based plant for two weeks to ali b supply witter with fluctuating demand. and proctor and gamble said it received word from the u.s. government that it is now exempt from the 25% tariff on impart exported stiehl. pen g said the steel is used for the raz blades making up a majority of grooming business. the decision is a rief for the coany says pen g said it was unable to find high quali steel f raisers in the u.s. >> should investors expect to hear more about china and rising costs as earnings season gets under way np joining susug kare kava is senior market strategist. thanks for joining tonight. >> thank you for having me. >> the chinese economy is

down tp prices going up in part because of tariffs. what impact does that have on earnings? what are we hearing from companies nexweek. >> where definitely going to be listening to see what they say about china. but right now we still expectlu overall 20% growth, a little bit less than the second quarter but right now it looks like earnings growth is going to be aut 20% year over year. >> what about specific industries. we talked about ppg -- pen g and pp and g yesterday.ut talking a the fact that their input costs go up and they can have a material effect. will we see sector specific comments from companies? >> yes, i think we will. especially in the auto motor ekte and agricultural products any of the companies that import china appear we are seeing them talk about that

with earnings calls and companies will talk about the uncertainty. and uncertainty is never a good thing for earnings. but despite that, that's -- with all the worries around we are still seeing 20% growth year over year because the u.s. economy continues to do well. >> but the comparing to land year is going to be difficult because we had a pretty good year at the end of last year as the questions for investors is do they stay with the companies or do you think they suf the tariff tiff continuing much longer. >> well, i think that a-ot it depends on the company. some of the companies are moree agnd flexible. and they can change the way they manufacture their products or sell theirproducts. but i think that a lot of it is we've been talking about this for so long. a lot of it is already baked in. injury that we are already anticipating a lot of the bad news. so there is a potential upside for a lot of the companies that have been bracing for let worst could be a good situation.

>> what about the economy overall? i think we just talked about the fact that global growth may be cut because of some of the tariffs. but the u.s. economy has been chewing right along. do you anticipate thatin cong into the new year? >> i do. and i don't think the tax cuts are just a sugar high. because we are now seeing companies be more productive and the prouvgt cpanies are being rewarded with better stock prices. and thact proity is working its way through the system. and that's making the workers re productive. increase wages. sustainedood for economic growth. i see good things for the u.s. economy coming up. i see that 2019 is looking to shake hap shape up to a good economic yee. >> karenaugh with invoicia investme thanks for joining us. >> thank you. > and time to look at some of today's upgrades and downgrades. wal-mart was upgraded to buy om hold at the deutsche bank. the analyst cites the growing

online grocery business and investment in ecommerce. the prying price target is $13. the shares ineup 2% it to 97.08. also at deutschia bags kroger was ground graded to sell from hold. kroger responds the ecommerce program .price target is $24. kroger shares were off nearly 5% today to $27.92. mylan was downgraded to equal wght from overweight at morgan stanley. the analyst there cited recent trends in the competitive generic drug market. price shares of mylan ended the day down nearly 2% sl, sr. $34.6 is 37 whil pool downgraded to neutral from overbating weight at j morgan. the home price appreciation may result in softer repair an reedle commands. price target $is 122. the whil pl shares fell maren 5% today to 106.3ti ahead, why investing

in dividend stocks is getting a little bit trickier. optimism among u.s. small business owners remains near historic levels despite edging lower lastmond. the survey from the national frags of indinendent bs showed optimism dipped in capitalpending and gmt. that's a bit of a reers versele. the top issue remainsf lack skilled labor. seerpsdded a restructuring expert to the board days before the struggle retailer face as more than $100 million debt payment. the appointment comes as sears chairman andontrolling shareholder edward lampert urges the boortd to approve a plan to try and avoid

bankruptcy. >> dr hortonli issued pnary quarterly results and they were not pretty. the home builder saidales f the period came in below expectations. and it's forecasting sal and orders to disappoint for the year as well. the company will report its full results nexty month. to shares of dr horton fell 3% and the sector is now in a t. bear mar the home builder etf is down more than 20% from earlier this year thanks to rising rates. >> is inkts speaking of which the average rate on the fixed mortgage crossed 5% threshold for the first time in eight years. and for those looking to buy their first home it's entirely possible in may be the highest rate they have ever seen. so t question is, will this send a chill through the winter housing market? diana ol ibic looks at it tonight. back in the early' 80s when esother slibt was in the white house mortgage r were three times what they are now. nd people still butt and sold

homes. but today's biers, especially millennial buyers have short memories and high home prices m hae of them on the margins. >> there is always a fewye , a serge percentage that are on the edge of being able to qualify. and when ratesoe up as much as they have then that can push them out of being able to qualify for a home. bus of the debt to income guidelines associated with loan qualifications. so, yeah, it does take a >>ll. eporter: the last time the average rate on the 30-weier year fixeds crossed 5% was eight years ago and only briefly. it hasn't been sustained over 5t at l decade. a year ago it was just below 4% and two years ago hit a low of 3.5. what does that mean to borrowers? for example on a $300,000 loan yo pay about $200 more per month than you would have a year ago. but it's not just the payment. it's qualifying for the loan. and also feeling good about buying at that ratum

cos and investors have felt very good for a while now. but nobel prize winning economist robert schiller says that's not always good. >> the economy seems to be coasting upward. but in kind of complacency this confidence is volatile. >> the only good new for the winter buyers is that higher rates could mean seller finally realize t sky is n the limit and cut the red hot home prices we're still seeing today. for nightly business report, diana olick in washington. and to read more about the impact of mortgage rates at 5%, you can head to the website at nbr.com. and i activistestor takes a stake in starbucks where we begin the market focus tonight. bill ackman of per shallin squaul capital revealed a 900 million position in the coffee chain. sayi stock could double over the next three years. and he added the reiler is one of the best positioned if minimum wages rise. starbucks ss it looks forward

to a productive dialogue with mr. ackman. starbucks show to 57.7137 and tank other talk is heating up at papa joans. they are there are reports the fund management is considering a bid for the pizzae chain but ts no guarantee that a deal according to the "wall street journal." papa johns has been exploring a sale whie it tries to recover h the messy battle w founder and former kmarm and ceo. john schnatter. shares of papa johns jumped nearly9% to 54 pft.990. american airlis says fuel costs are rising and that it lofts $55re million inue last month due to hurricane florence. the fuel costs concerned investors who sent the shares down more than 6% to 33 process.55. >> exxonmobil is committing $1 million over the next two years to promote a tax c onbon emissions by corporations. according to the "wall street journal, this type of donation

is rare among the oil majors. exxon see a carbon tax as an alternative to patchwork regulations out there right now. exxonmobil shares rose a fraction to 86. today. and shares of snap hit an all-time low after a wall street analyst warned the company in his words is running out of money. according to move et nathanson, the social media platform may be forced to raise capital as early as the middlef next year. and the analyst is predicting a slowdown in userrong. snap shares finished down more than 6% today to $7ye even. and bloomberg is reporting that a malicious implant was discovered a couple months ago on a server owned by telecom companysupermicrocomputer following the bloomberg business article of last week saying the chinese manufacturers secreted inserted spy chips on mother boarding supermicrodenies the

claims in bot articles now. nonetheless many shares of supermicroplunged to $12.46. many i testors look dividend stocks for income and somef the top paying dividend stocks in the s&p 500 so far this year are names like krint link, l brand, kim co, realty and others. buts interest rates rise, should the uds dividend strategy change? jend herren is the head of investment strategy at ubs wealth management research joining us ton. jeremy, i guess that is the ntestion. you o look for dividend stocks, but are there different typesf dividend stocks that inway rising rate environment might be a better bet than others? >> certainly. if interest rates are rising because the economy is expanding and growth is picki up, that means that company he is a earnings should be rising and t should be abl fund the dividend. the problem for dividend investors is that when interest rates rise that means that bonds create more medication for dividend s yieldingcks.

what you see when there rates rise tupically y see a higher dividend yield than stocks in the market lag the overall market. but where you really see difference is in the dividend growth stocks versus higher dividending stocks. so our view is that looking forward,he long end of the bond yield curve is probably already moved seen the bulk of its increase and that short-term rates will increase with thfe ral increasesing interest rates. but dividend growth stocks should provide balance at in the portfolio. benefit from increaning dividend provide a hedge against future inflation because the companies are able to raise dichds. >> you know, the list we showed of the top ten didend paying companies, the yielded at the high end is above 10% right n. t you see the 8%s, the%s. is there a level above which you won't go because it may present more risk than necessary? a people may be tempted to go to

the higher risk higher yoelding stocks because of higher interest rates, right. >> but the issueith that i that the stocks with the highest dividend yield also have the n highesative sensitive to rising rates. when you see when interest rates yohe see high he would yielding stocks underimportantly the market by the greatest amount because any bested from the mow interest rate environment. >> what's the sweet spot for yields if c you say that broadly speaking here, right. >> broadly speaking we look for stocks that consistently grow the dividend and have a dividend yield anywhere from 2% to 3%. thesacrifice some of current yield because you will make it up in the companies compounding thero dividendh over multiple years. >> all right. on that note, jeremynk tou very much. jeremy and herren with ubs wealth management. ng and coming up, prepaor another hurricane. >> i'm courtney raying 199panama

city florida where residents are stocking up before hurricane michael. i'll take inventory coming up on nightly business report. hear look a what to watch for for. the producer urs price index will be released annual with the focus on interest rates it could move both the bondck and the s market. investors will also be paying close attention to commentsrom number of federal reserve officials. and hurricane michael is on trackalo make lan in the florida pan handle. that's what to watch for on wednesday. >> always love that segment and

as hallmark michael approaches the florida coast. ering producer are sh operations in the gulf of mexico affecting both oil and natural gas production. according to one estimate about 40% of gulfoast dal oil production has been taken off line. exxon mobil kmerch and anadarco have operators that have evacuated rigs tip. both d cngtde and natural gas prices settled highers in the futures markets today. >> ashat storm makes its way to land, retailers down there prepare for the worst. and they're working hard to get splis to where they need to be. courtney raying isn't in panama city, florida, for us. >> reporter: retailers are ours beforeitical hurricane michael hits the pan handle flooding logistics to get truck loads of supplies stores. this storm expected to produce high winds, 12-foot storm surge and a foot of rain. supplies like replywood,

generate he is, gas can was tarps, chain saws, batteries and more are critical. even as mandatory evacuation ders went into effect, many residents are staying through the storms. lining up for supplies starting this morning. >> i need a new saw blade and batteries within making an extension the order for generate. >> i'm shopping for zoned sand to putn front of the door. >> we have no jerner. >> home depot deployed 200 shipments. >> we called atlanta, atlanta sent us three truck loads we went through 200 jesed. >>owes sent out 200 trucks full of supplies to thest 50 ies in mushing michael's paths. nol auto the trucks have gotten to t stores yet. for now the drivers should be able to be on the roads and deliver the >> each storm is different. every storm that's coming in is different. we have limed time as far as this storm goes. so we are going to keep the

bridges open alongs possible. >> jack and mackenzie bennett spent hundreds of deplars ing. they have to stay because jack works in law enforcement. >> stocking up for the storm preparing we got a bunch of replywoodo board up the house. >> mushing michael is intensifying catching residents off guard and beh in planning. retailers too are closing earlier than anticipated. t is home depot will close 8:00 p.m. tonight tonight and not reopen until 8:00 a.m. thursday morning. nearby lowes closed at 1:30 this afternoon. >> i've been through about three or four. buts it this is the most powerful one we are in drkt contact with. >> many critical supplies are available but residents are running out of time. for nightly business report in panama city, florida. zbloots finally tonight, the iconic retailer fao schwartz is returning to new york city. the compag sayint's plans to open in manhattan rockefeller center next month, more than three years after it closed the

longtimeifth avenue location. back in august we reported that such a move was in the and also fao sh where is the says it plans to grow the international market including canada, china and europe. and can'twa . before we go a look at the day on wall stree e tried to say. the dow fell 56 points nasdaqse 2 and s&p 500 town four. got me kung tied. >> i can't wait for t tall nut cracker guarding the front door. >> that does it for us tonight i'm sue sue herera. >> i'm bill griff gh. haveat evening. see you tomorrow 3 .

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