>> announcer: this is nightly business report with bill griffeth and sue herera. october route, the dow falls mo than 80 oh points, the worst decline in eight months. and the selloff was steep and sharp. >> tonight your questions answered. what driving the selling? is this a brief stumble or something more? and what doe m itn for your money, your savings and your investments? u're watching nightly business for wednesday, october0th. and we do bid you good evening, everybody. investors with a memory know that october has ttditionally been kind to their portfolios in the past. well it's hapning again this october. and today was the worst so far. trades wasgly from the get-go. the opening bell dropped.tocks and the selling intensified as the day went.

the dow saw the biggest decline since february. the s&p 500 recorded its longe losing streak in two years with more than half of the 500 stocks ion he index now in corre territory. meaning that they are down 10% or more from their most recent highs. the cause, there are plenty fears will rising interest rates. concern over trade as theno chinese e slows down. inflation and increasing cost pressures, and thnology stocks, which once led the market higher, they've been leading the charge lower. in fact as adroup they ha the worst day in more than seven years today. by the close, the major indexes were all downe 3% or m with the dow plunging 831 points to 25598. the nasdaq was the hardest hity dropping 315. the s&p was down 94. and the selloff occurs just as the earningseason is about to arrive. . as bob pisani reports that could bring a new set of ris to the

market. >> it was a sea of red on wall street today, the dow plunging more tn 800 points. the worst one-day drop since february. rising rates continue to fuel fears in the stock market. but some believe investors will look past higher ratesf the corporate earnings picture remains strong. that starts on friday.se earnings on. right now the earnings picture, well let's say it's getting more complicated than it used to be. investors are dating the impact of pennsylvania large number ofia ves, higher rates, but higher raw material costs, weaker foreign currencies, tariffs and even potentially weaker demand from chin one thinor sure, investor focus is shifting away from the third and even the fourth quarter earnings and toward 2019 projections. what are the major issues toh wan first margin erosion. that's the most important. that's mainly driven by higher costs, wages and raw materials, amazon's ni$15 m wage hike won't effect third or fourth

quarter eriks bt has everyone scrambling to figure out the impact on other industries. the good news is many companies may be able to pas on the higher costs to the consumer by raising prices. and s revenues arll growing at a solid rate. that's very important, up almost 8% this year. rice 20% in 2017. but revenues are up 7, 8% that's goes eye a long way supporting margins. second tariffs. if you companies stated that they would take a direcit from tariffs. goldman sachs estimates that a 25tariff on all imports from china would shave off 6% of the s&p earnings next year, meaning xt year earnings would be flat compared to this year. finally, we can't ignore the issue of higher interest rates. what's it mean?an for the risk reward ratio still favors stocks. a investor coverin earnings says when the economy is strong

stock prices climb here higher than the fundamentals is suggest. that happened in 2000 and 2007. so let's bring in our guest for their take on today's big selloff. kevin is the senior portfolio manager at washington crossing advisers. jack is the chief investment adviser with crescent wealth joie de vivre appears testimony timothy less could is tech expert and a principle at investment advers. jack, i starting with you. you think -- the big question , is this just a blip or is it the start of something that may be a little bit more significan and you think it is perhaps the beginning of a correction. >> i do i think that underneath the surface, notwithstanding what bob talked about with tariffs and all th, is aeset in interest rates that will change the dynamic beten stocks and bonds. the fact is that over the last ten year thanks to central bank intervention, worldwide, r

interees have been held too low deliberately to try to get investors to take on risk. the good news is it worked. ant to getal banks the rates back to fair value. which means that the bond market that tugble to pull in of where with two arms. and that's going to put up a challenge to stocks. >> define fair value. what's fair value in the 10 ear, do you think. >> fair value in the 10-year in my boom is 4.5% which equates currently to nominal gdp. nonal gdp being real gdp at 2.2 plus inflation at 2. that gets kne 4.5. and before this whole experiment if you will with quantitative easing, the 10-year treasury historically tracked nominal gdp. >> kevin, you mai tain that u.s. market and the u.s. economy is strong, especially whe you compare it to economies and markets ovseas, correct? >> yeah, if you look at what happened today we're a littl bit laet late to the party. most of the world, think about

europe, china, emerging markets, are down on t year preponderate united states maintains some momentum however up until today. so today what we saw was vestors maybe finding value in other parts of the world that have gotten hit and maybe shifting out of the directiontes in that we'll see whether that lasts. investorst piece of is not to react to one day's trading but look at broader sets of data unfolding. and use that really to guide your judgment. we think the u.s. economy is arelevant remaining leadership economy well into 2019. >> tim, t thehnology stocks began the decline well before the rest of the market did.ip is that anting the slowdown in china orr is something else going on there. >>nk it's a combination of factors. certainly, the slowdnan in c and tariffs on chinese goods affect the tech secretary ner a way that may not affect other sectors. add to that they might have been the most overvalued when the

markresets sets as the other gentlemen talked about certainly the high heest plier have the most difficult days. >> jack, as i understand it you're not selling your positions. you're kind of holding pat in the market. that is the case where you watching for as trading develops tomorrow and through the rest of the week? >> sure, so, you know, i'm going to continuk to l for the rebalance between bond yields and stockvaluations. and yeah, i think our bottom line on equities is we see maybe a 10 percent downside. we enduredome of that today. because of that we are longer term investors in isn something we are necessarily going to sell out, try to get out in front of and get back in, especially with taxes and sorting and mehta gains. but would look for tin continued downdrafd draft as ooh opportunity for opportunity to buy for the holdi for 7 years.

i would be looking for news on thegs earnts front. the fact is urngs have been fantastic. i think that earning season generally allows investors to take a deep breath, get wits about them and see what's important. >> kevin, yesterday the president said he was unhappy with theace that the fed raies raising rw.es right do you think the fed will rethink their strategy if this market selloff continues? >> the fed always looks at income data. d if things got -- -- or incoming data and if things got feerlly worse, let's say eg investors to pull away in mass from the market or there is busisses -- business judgment confidence became impaired, that would factor into their judgment. but this is too little for too small of a period of time, the downturn in the market today to affect their judgment. and ultimately at 2.25% they are not especiallily tight in past cycles they were at 5.5%. last go parnd in 2005, 6 and 7

and higher tha b thatore that. they have a ways to do. and they are doing the right thing. tim, you say you have rotated to value tech, companies that don't nee to take on a lot of debt. give me an example of where eyyou've been putting mo work in the value space of technology. >> well, certainly one of the hardest hit sectors of technology the past few has been semi conductors. companies like intel with rock sell solid balance sheets, strong product cycles certainly they have had issue was production. but if you are a lgtime investors these are opportunities to buy things that have been unusually punish inke the m that was rewarding companies with light earnings and revenue growth and really hammering companies with strong balance sheets and swer growth cycles. higher interest rates will hurt the company fed by debt and help the compani with strong balance sheets. >> gentlen thank you. kevin and jack with crescent wealth adviser and timothy l.

sk rochlt with granite wealth lart in the program we discuss how to protect the portfolio and what money moves if any you should make. in the meantime, it may seem a distant memory but it was just raft week that the dow notched a record high for the 15th time this year. and since the of course the index has reversed course and prompted some to ask, h the market peaked? mike santelli looks at howet th maompares to the last time th market hit a top more than a decade ago. >> reporter: this weeks marks 11 years since the sto market peaked ahead of the great recession and global financial crisis which ultimately would send the market to a 50% loss. it was a time that resembled our own in a few broad features of the economy and market. unemployment was roe. oil prices on the rise. the fed had been raising interest rat a few years. and stocks were at record highs. these parallels have somein stors wondering whether it's time to brace for an on coming end to the economic expansion

and more difficult financial rket. for sure the kpk cycle seems to have entered a later phase now. but the differences between today and 2007 seem more relevant than the broad similarities. and suggest the outlook now is more encouraging. it's crucial to noterhat by octo 2007, the housing market was more than a year past the peak and piles of mortgage debt had already begun to sour. spreading losses throughout the global banki system. credit markets began snling a build up in stress months before stocks peaked. that's not what's happening now. houmds finances at that time were more precarious with consumer debt service obligations at a larger percentage of income. and while right now wamz is strugglingsho absorb a f multi-year high in bond yield this lar rlect a fir econ iecome in r,octobe 2007, treasury bond ylds were in a steep decline more months as investors viewed economic slowdowns. indicating perjury business the

purchase manage index and small business optimism peaked years earlier in 2007. whereas today these are all near cyhse h none of this means the markets orp the economy is entirely safe fr a nasty economic surprise for a rough attachied to stumble in global growth. all the same the comparisons to the situation 11 years ago is more reassuring thanlarming. for nightly business report, mike santelli. >> it's time to look at upgrades and downgrades. cdonald's was upgraded to buy from neutral at googen heim. the analyst site ut citing the s company's to dlnl and investments in franchise frachsdsing .the price target is $2 oh oh. the stock fell with the rest of the market closing at 168.37. discovery was upgrad to outperform from neutral over the suisse. the analyst yiets improved network rating and drks. the price targe is 40. the stock fell 1%roo 32.06

>>box was added to the focus list at jp morgan with the for st sees the potential 30 to 50% outperformance in the stock. price tart is now $35 and shares rose a fracture nun? the otherwise down day to $292.7837 kimberly clark, color ox and church and dwight all downgraded to sell from hold at deutsche bank today. the analyst the cited near term challenges like currency and emergeening market volatility and the firm also noted long-term headwinds like creased competition andretail pressures. as a result the shares of the three consumer products were lower today. coming up, monstrous michael one of the most pouchl storms on record slams into the florida panandle. clothesing businesses, me disrupting comrce and the local economy.

as expected, hurrica michael made landfall this afternoon in the florida pan handle. and this storm is punishing and fast moving. while it's w too early to say what the total cost will be. wells fargo said it could hit tens of billions of dollars. courtney reagan is in panama, city, florida for us tight. >> reporter: hurricane michael made landfall as a pryerful cate 4 storm with wind speed of 155-mile-per-hou just two miles per hour shy of the category 5. making this the s strongestrm to ever hit the florida pan

elndle. >> very well prepared, massive amounts of food and -- and we have first responders all over. the electrical companies are staged and ready to go in immediately after the storm. >> power has been knocked out for at least 144,000 people as the storm continues through georgia and a badly battered carolinas just recovering from hurricane florence. businesses from local restaurant to b retailers like wal-mart and lowes remain closed goian on more 24 hours now. home depot also closed a drk center in georgia for the safety of employees. >> treat this like a tornado. get to the interior halway or room preferably without windows, get lo in the bakt bath cub pull the maefrts other i have at battery powered radio andti sit t. >> tourism is the big business in the pan handle. up0% year to date ahead of the storm mere in panama city beach. while an easy off season major

beach erosion could hurt the industry for months to come. the energy sector i dodging disaster as most major oil assets are west ofhe storm. including refineries in ssissippi. but destruction in georgia is a concern. only about 12% of the cotton crop was harvested. hast peanut crop and the pay can't havre has just begun. georgia's thickest crop is the largest two thirds of the state spared by the storm. it's too ear to get accurate estimates of total kpk loss from the stm. t that too could be one for the record books. for nightly business report, i'm courtney reagan in panama city beach,florida. >> a key gauge of inflation round rebounded in september. the procer the price index, the measure of the prices businesses receive for goods and services increased 2%. the first rise is since june and driven by increase in transportation prices. well certainly rising prices

and inflation were some of the topics under discussion at the international monetary fund anual meeting today we reported yesterday, the organization cut its outloo for global economic growth and highlighted a few critical risks market. jeff cutmore is at the annual gaggering in bali, indonesia. >> reporter: the imf and world bank may be holding in one of the most beautiful and picturesque tourist resorts in the world. gebut the mes on the global economy is a little more cloudy. the growth report, they suggested that growth this year may slow from 3.9% to 3.7% and also talked about rising risks to the financial system. this, the result of the trade war between china and the united states, rising oil prices and of course the press t we ha seen on emerging market currencies. it is near term the risk of

inflation that isaung some reassessment of the outlook. >> inflation at some point might surprise to the upside in particular to the u.s. at we have seen so far is a very gradual decline in the unemployment rate to levels that are as low a we haven't seen since the 1960s. d of course inflationary pressures might be building at some point. that might lead to a tightening of monetary policy at se point in the future. >> one of the other stated key goals here at this ent is to .ut on a united front over the trade dispu the imf, the world bank, the wto and the oecd all coming out and saying,need a deescalation of the trade dispute. ande need to wind back the introduction of tariffs

increasing the likelihood of inflation and would ultimately lead to that lower growth that fohas been cast. this is jeff cutmore for the nightly business report in bali. the justice department approves a merger. a megamerger at that. that's where we begin the market focuses. anti-trust regulators gave the greenlight to the $69 billion merger of aetna and cvs. the planned sale of medicare drug plan resolved a trust concerns. the squiks is the most significant? the health care industr in the past decade. aetna shares were off just a sick to 203.41. cvs fell to 78.92. tobacco jienlt altria may buy a ske in a canadian marijuana producer. the globe and male says they ar considering a minority investment in altria with the possibility of a majority stake down the road.

the shares finished down a fraction to 62.91. myriad genetics has b to conduct testing for pfizer treatment of triple negative breast cancer which has fewer treatment options than other types of cancer. myriad specializes in testing hereditary cancers. on an otherwise big down dn myriad popped 4% to 44 peart 86. industrial component maker fastestenle facedigher costs in the recent quarter. and as a result the company's gross margins suffered and thel stock fespite reporting slightly better earnings per thes were down 7% to 51 share. pft 67. cybersecurity firm imperva is being taken private by a private equity form tor $2 become. unthat deal they wi be given 45 days to solicit other acquisition offers. p the sharped 28% to $5

a.11.an another warning late today construction firm fluor said revenue are for the quarter i missing wall street estimates. they will release final third quarter results onber 1st. shares initially fell in after hours tonight also finishing the regular session down 4% to 56.22. coming up, how you can prect your proefrlt o portfolio after a steep selloff like today's. hi evening, president trump was asked about the stock market selloff and pointed fingers at that time o at the federal reserve. >> actlly it's a correction that we have been waiting for

for a long time. but i really disagree with what the fed is doing. >> the president has been critical of the federal reserve hacently, saying the central bank is moving too aggressively in raising interest rates. als t lateay a judge granted chemical maker monsant a new trial following a landmark verdict. the company wasng challen ruling order going to pay $289 million to a man dying of ccer which he says he got from using roundup weed killer. month santo now owned by germany's bayer corporation denied roundup was responsible for the cancer and now there will be a new trianv tors are not putting as much money into some of the t world's m popular investment products according to morning star, netws inf into paefs investments like mutual funds and exchange traded funds a down more than 45% through the first three cold warsf this

year compared to last year. one market watcher says the data makes it feel that investors are in the early stagesf positioning themselves for a potentialdown turn. okay. so after a day like today many investors no doubt wonder what should they doh money now? nancy tangler gets to answer that question. chief investment officer at heartland financial. nancy good to see you. >> you too, bill, thank you. >> irgs part of the answer comes from what you think the in will do. you think we are heading for a bear market. >> i still think we have a year to 18 months dependingas on what we know today. but, yeah it's a prudent time to start takin r somek out of the portfolio. >> so what have you been doing for your clients? how do you decide -- and how do you determine whato take out of a particular portfolio? -- the ue, i think one first place to start to trim the growth -- the more growthier

holdings. names of companies that -- that are t pding at highce to earnings multiples. do not pay a dividend a for exampl replace them with value stocks. that are -- these are companies th pay dividends and are growing the dividends out of free cashlo and so that would be companies like chevron, jp morgan, johnson & johnson. even apple is a company that's attractively valued even at these levels. >> but it sounds like you wouldn't like some of the technology stocks that ha been high fliers have high priced earnings ratios and don't pay ae di, right. >> that's correct, yes. >> so then what are the value companies? i mean you were talking about an infrastructure fund you've been looking at since the beginning of the year. what is that about. >> the other thing you want to dos take some of the correlation to the stock market out of the portfolio. a good global incoming currency fund, pretty low correlation to anything that goes on in u.s. stks, infrastructure ten

to -- to act a little differently than the stockma et -- and particularly if you think that the democrats will take control of the house might get a great infrastructure bill out of ngress. knows are ways to protect the portfolio against the volatility. butls i would be letting cash accumulate as you sell the winners. and really look for companiea franchisers in the industry that can grow free cash flow and ---en a the top line can be companies like home depot and mcdonald's, growing the divides, 22 andy 15% a annua respectively. those are companies providing protection in a declining markei . and have the opportunity to appreciate. >> and i see you say maybe global bond fund. would you go into the -- to the short end of the -- of the bond market like the 2-year or the 3-year? >> well, so -- son the u.s. i would absolutely do that. globally, these funds havant ability to troll the globe looking for t best currency,

bond return. they make that disionor you. but, yes, sue if you are buying bonds in the u.s. you want to be shorter than the 50er at this point in the cycle. >> very good. thanes, always good to see you thank you. >> thank you. here is another loo at the day on wall street. big selloff, the dow jones industrial average dn 831 points. the nasdaq down 315. s the was down 94. let's see what tomorrow brings. >> indeed. >> that does it for us tonight. i'm sue herera thanks for joining us. >> i'm bill griffeth. have a great evening. we'll see you tomorrow.

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