>> announcer: this is nightly business report with sue herera and bill griffeth. stock market carnag the dow sheds 1,300 points in two days the trades was volatile and tushlant and leaving investor was questions. o c oftrol. why the president isn't holding back in criticism of the federal reserve. heat hemmer yan. as interest res rise this is as good as it gets for the american shale boom perps. centered around an industry loaded with debt. those stories and more tonight on nightlyusiness report for this thursday, october the 11th. and good evening, eryone. and welcome. there is only one way to describe todayug . and there is only one way to describe the past two days,

ally ugly. the selling was widespread. the volume heavy, the marketcoas gripped by fears of rapidly rising interest rates, g possibbal economic slowdown and high tech valuations. and accordingo one tallies in now the worst start to a fourth quarter since 2008. the dow jones industrial average shed 545 points. to. 250 the s&p dropped and nasdaq dropped. the bob pisani at the new yor stock exchange tells us what's behind the selling and what's gettinhit. >> wall street's streep selloff bled over today with the dow tumbling. ending down about 500. moving between gains and losses in choppy trading. but rates continue to be the main driver overall. the markets looked to the holdingil steady u 2:30 eastern time when there was a huge burst of selling aroundfs

et in the equity space and treasury bond etfs. out stocks into bonds rotation. way we see is the momentum drivenflushout of big cap names and also a couple of sector specifictories driving action today. for example, bank stocks have been weak early on because of a weaker read on consumer prices. they were driven lower by strong demand for treasury at the 30-year bond auction pushing down yields to session lows generally bad for banks. and energy lagged falling on a bigger build up than expected in crude oil inventories, an issue for the energy stocks. tomorrow will be a key d to watch with bank earnings kicking off with jpga m and big read on consumer sentiment. for nightly business report, bob pisani at the new york stock exchange. now with all of the selling we asked mike santelli to look for clues about when the downrd pressure mig ease up. here is what he found.

>> after a sharp a jarring market drop. investors searched the damage and searched for signs of stability. and the process is under way following the big tumble since february. the damage h been swift and pervasive and the downside momentum hasn't let u traders note the market is oversold which means the indexes are stretched far below theirre recent. along with the fact that the downmajority of stocks a 10 percent from the high in a short time this ultimately fits the stage for a bounce as a technical matter. but selloffs can feed as traders seek shelt frere a treacherous market action. one indication is the volatility index, a msure of how urgently they are buying option attention pl surging to the high 20s this week andte ele level. but while the low extremes reached in february that marke theorrection low. veteran traders like to see this volatility mretreat f peak

over the course of a trading session, often a sign the market is calming. investor sentiment has been cautious as well. typically a nasty decline spreads worry which can set the scene for eventual recovery. one clue to end the market might find footings is when the majority of stocks participate in relieales that pop up. while the skid in the market roll with a move to new multiyear yields ins. bond yie suggesting it became a violent rotation out of some of the best performing steak, industrial and consumer a stos fears of rising rates, a possible profit slowdown and unsettled global markets flared up. there is no reliable way to call an end to thegly episode. but one consolation might be the action is not based on evidence of ani wea economy. this is mostly a stock market event t tied valuations and investor risk appetites for now. which means the mket has to tell us when the painful adjustments might be nearing an

end. for nightusiness report, i'm mike santelli. and now to the fed which is at the center of the concern over interest rates. today the president said the central bank will likely continue to raise rates. esther george says a tightening labor marketould lead inflation to accelerate though she hadad the pace remainsma a er of discussion. separately a new report showed slowing ilation last month. index roser price less than expected. and the president has we have been reporting has been a vocal critic of the fed monetary policy. he called thefed's recent stance on interest rates too aggressive. but is it in li? steve liesman reports. >> reporter: the president of the united states not holding back in criticism of the federal reserve's interest rate hiking policies blaming the recent selloff directly on the central bank. >> i think theed is out of control. i think what they're do something wrong. i ink the fed is far too

stringent and making a mistake. andt's not right. and it's -- despite that we are doing very well. but it's not necessary in my opinion. and i think i knowbout i better than they do, believe me. >> so is the fed crazy?re be answering it's worth pointing out three of the four meers of the board of governors chair and two vice chairs were appointed by presndent trump. be that, it's worth looking at how the fed changed interest rate policy in the past year. largely in response to the president's own policies. last year the fed forecast 2% inflation for 2018. 2% growth and 4 peart 1% inemployment rate. the median looked for the fed to raise rates by.75 pinpoint to two%. inflation came on target but growth surge andoy unemplnt came in below the forecast. the economy did brert better than the fed expected.

the fed change the outloond forecast a full percentage point rate rise this year compared to 3/4 of a point or 25 basis points in the priorst fore is that crazy? after a huge tax cut a surge in raising it and price tariffs most economists say the fed is responding appropriately to the change in the economy. >> thee's a r hike in does in the forecast.ra thre hikes next year. my guess is the inflation numbers push the fed to four. but none of that is a disaster as long as companies generate profits. >> the danger is ifhe economy doesn't keep up momentum. in that case the forecast could be too grfrs but it could always dial back the plan if it the economy weakens that's not crazy that's monetary policy. >> joining us to help put it intospective. andresooarcia. andres to see you thanks

for joining us. >> thanks for having zblee the selloff essentially wiped out gains over the last three months in the stock market here in the u.s. so now what? what- put this n perspecti for us. >> so the first thing that i would mention i we're still what 5% from all all-time highs. let's take a teep breath. another thing important to keep in mind is we have had 23 corrections of 5% or more since march of 2009. this is not -- this is not -- is not an everyday event but is not totally abnormal. i' give you one more stat. if you go back 39 years ob o, ob average if you okay at e worst intrayear drop it's 13%. even if we see this correction turn to the 10% correction that is considered normal looking at the last four decades. that's important to keep in mind. i don't know wt's happening next. and i think that's important to keep in mind as well.

nobody does. so if it is out of year control try to basically not focused on the headlines and focus on the long-term. >> what is the best advise for vye viewers watching tonight? because interest rates have been edging up but aufltds it seems to be whathe market i focused on. if you have a long-term horizon what is the best strategy to keep it in perspective. >> yeah, i think that's the key. i'llne sayore thing about the interest rates as well. let's not forget that interest rates, long-term interest rates and short-term interest rates have been ricing a while. i long-termerest rates have been rising since last summer. last time i checked t s&p 500 has been up since then. the other headline i see is that trade wars create this. since i canada checked tradee wars hen ongoing this year. 10%the market is up and up when the trade war was rough. but going back to the question, what is under people's control is how much they save.

and do they invest in and do they have a plan for the long-term? that's under their control. the last thing underco their rol is how they react to short-term volatility. if you controlhose things in the long-term you'll be okay. technologyckly, stocks have been the darling of this market. the fang stocks have been getting a lot the attention in the last couple of years. and they're lady leading this market lower. what do you do with knows guys. >> i'm not commenting on short-term volatility a tech stocks. what i would say is that their volatility in general tends to be higher than the overall market. people forget that they were up 50, 60% and feel more down 15 or 20. higher risk, highe return that's the essence what you get when you invest inoc those . >> one of the sack roe sangt laws of wall street, the higher the risk highe? gai andres garcia with zoe financial thanks for joining us. it's time to look at

upgrades and downgrades. leer was upgraded to buy from neutral at goldman sachs. the analyst cites solid free cash flow and the potential to gain market share. the price target is $195. shares of leer rose nearly 2% to 137.54. the price target for shares of the new york "new york times" was increased to $32 at jp morgan. . the analyst there expects the upcoming elections to drive t paper's digital subscriptions. the firm maintains the ovweight rating opinion "the new york times" shares rose a fraction to 24.84. and jp morgan cut the target on abercrombie &ch. citing margin pressure as a result of tariffsnd wages. the rating underweight. finishes down more than 5% to 17.99. still ahead, tipping point? nmoney had b flowing into passive investments like etfs and mutual funds. but is that starting to shift?

a group of senators are not pleased with google. today they sent a letter to the company criticizing it for failing to disclose the data vulnerability that affected hundreds of thousands of google plus users. senator thune said he was disappointed that google's chief privacy officer testified before the comme committee a few weeks ago and failed to provide information on that breach. google disclosed the breach after it was reported byeehe "wall sjournal." and as we have been reporting, of course, the nasdaq as been sharp. the index is off more than 9%

from the most recent highs i august. and of course it is loaded with some very popular technology stocks, which begs the will this group that led the market higher now lead it lower? josh lipton looks at what may be next. >> reporter: high-fliers have been losing altitude. at's the story of big tech's recent performance in the stock et that has seen names like alphabet, amazon onix netfl fall sharply. many on wall street say the reason for the decline is simple. when there is a broad, sharp selloff investors tend to sell hat has been performing the best. that's especially true when the winners are some of the biggest, most liqui names in the market. but a major concern is whether there is a broader rotation happenin from sectors with significant growth potential to those that appear cheaper and more defensive. if that's the case, it would be bad newsor tech in the

quarters ahead. >> right now you have a lot of other cross winds skarpg investors that this may l while long as people get comfortable with what goes on in tariffs with, inflation and rates. >> still there are tech bulls on wall street. the team at cfra researc remains bullish on the tech sector. next year they estimate earnings growth of 11% and revenue growth ofet 9%, bothr nan the broad are market. for nightly business report. josh lipton, san francisco. >> with all of that selling on wall street and money flowing out o passive investments like etfs and mutual funds is this setting the stage for the comeback of active investing? amanda agati is the investment strategist at pnc financial and so is here share thoughts with us. >> thank you for having me. >> you make the points in t notes i read here you are seeing that. and it's been going on for a little bit now. >> well, yes, absolutely.

we bieve very strongly that a comeback or a resurgence in active management is already occurring. it's not just precipitated by the last couple ofays of spike in volatility in the markets. tually the back drop for active management has been evolving and improvi basically over the course of 2018. yes, we think it's already underway and likely to pick up steam. >> but you know why people were rushing to the passive investments, the exchange traded funds, the index funds,re the cheaper. the fees are cheaperer. it's more expensive to invest with an actively managed fund. what's the argument for t actively managed fund? >> well, i think really we believe strongly tha the mix of active and passive that we employ in portfolios should evolve as the cycle ee involves. so the rush towards passiveas investing really been borne out of the cycle that we have been in, really since the

financial crisis, where it's been very long, low, sluggish growth. and with this as a back w drop have seen high correlation among stock. large swaths of m theket moving together. volatility near record lows if not at recor lows over extended periods of time. and then with the highly accommodativet my policy stance out of the fed it's made for a back dp of easy access to cheap capital for companies. so it hasn't create add back drop to easily distinguish between winnersnd losersrom a stock picking perspective. we think all of the trendsre reversing course. >> are you telling your clients to have a mix of both active and passive? >> yes, absolutely. so we believe strongly that depending on the cyclend also depending on the asset class mix, the mix of activ and passive can be different in every client's portfolio. we are not fully recommending

100% pass nef portfolss. just we wouldn't recommend 100% active exposure aswell. there really is very much a mix. >> all right on that note, amanda agati thank you.an is with pnc financial. >> thank you. soaring demand helps dealt aire fly high and that's where weegin the market focused. higher ine said the ticket prices and sales for premium seats nearlyt off the rise in jet fuel costs. they kept a tight lid on other costs as well, leading to an earnings beat. when it comes to rising ratesde a thinks it stands to benefit. >> the demand we are looking at in 8% growth in q 4 in tine growth. demand is continuing strong. at delta we paidn d the vast majority of debt. we got the investment grade rating back. bt level is arguably lowest in history. and stien theon liability as interest rates climbs it

causes the liability to come down we will be a net beneficiary on the balance sheet from a rise in rates. >> delta shares took off up more than 3% today to $51.48. in t meantime lockheed marti f-35 jets have been grounded. fuel tubes are beingxamined ter the joint strike fighter jets crashed last month in south carolina. the f-35 had is the most expensive in the u.s. military. the inspection of the 320 jets currently in operation is expected to be com in two days. lockheed shares were down 3% to 326.26. >>pal is teeming up with wal-mart to provide financial services a products to their shared customers. the program will mark the first time paypal's mobile app users will be able to take cash out of their pay balance accounts in a brick andhl mortar vi paypal shares rose a fraction to 75 peart 90. shares of wal-mart were down 2%.

rh the retailer known as restore ace hardware pns to buy back up $700 milinon of shares. statement the ceo says he believes the sfok is undervalued and the repurchase reflects confidence in the business. shares of rh climbed 10% to 118.62. wahl greens boots alliance became the first down component to report earnings. while thepa c doesn't face headwinds fromhina o interest rates it's trying to overcome clalgs. bertha coombs looks at wahl green's mixed quarter. >> the earnings results topped analysts expectatiespite disappointing revenue driven in partpy stronn prescript growth. they say the share of the u.s. prescription market is now about 22% thanks in part to the closing of the deal to buy than 1,900 right aid stores earlier this year. but the firm's chief financial

officer admitted the profit margins we down year over year due to lower reimbursement. pharmacy benefit managers andav ensurersbeen driefgt harder bargains on brand name drug prices.to the drug overall retail sales were down from a year ago in part because they purposely z deemph cigarette sales shifting focus. quote we think we have done a good job in terms of shifting the e. sis to become a healthy, beauty, wellness expert. cocoo told us. to that end wah greens expands its relationship about o with lab corp. bringing more blood testing to 6 stores. it's a strategic partnership. though electrically the cvs aetna merger poised to ramp up competition in drug store clinics with integrated offering. coming , is there trouble

in the permean. >> i'm brian sullivan. the shale oil boom. midland it texas. the higher rates and lowha pric been great for the industry. but coming up, why many are concerned if rates keep rising all the debt the industry is based on will come back to haunt it. we note it's your favorit segment here is what to watch for tomorrow. earnings from jp morganci group and wells fargo are due. attention will be paid t growth and interest margins. with the central bank rates and inflation in focus, investors what a number of fed officials have to say about

the economy tomorrow as well. and we'll get a fresh read on consumer sentiment which has been a driving force behind spending. wand that'st we watch for on friday. the postal service is oposing the biggest stamp price hike in history. to help shore up the finances. under the proposal qb the kwoft of a forever stamp would rise from 50 cents to 55 cents. the request from the usps board of gover must be proved by the postal regulatory commission. well, starting in january, social security recipients will see the biggest r paye in 7 years. beneficiaries will receive a cost of living adjusent of 2.8% for 2019. for theia average ssecurity recipient that works out to an increase of $39 a month. e annual adjustment is based on changes in the so-called consumer price index. it affects roughlyne in five americans, including disabled veterans and federal reitees. oil prices slumped to more than two-week lows as global

stock markets fell and the government reported a bigger than expected build in crude inventories. the price of domestic crude ttled just above $70 a barrel. that crop in oil pricesth cuppe rising rates is putting pressure on the country's shale producer. located in the permean basin in texas. and that's where we find brian sullivan tonight. >> reporter: here in west texas, long time erps in the oil and gas busin ts tell you industry built on three things, rock, people, and money. the permean basin of texas, the richest oil area in america has plenty of the first but always needs more of the other two. and that's why some peo beginning to question if the great american shale oil boom has reached a peak. so-called gd rock is plentiful here. it's estimated there are tens of billions of barrels of oil just waiting to be sucked from the o ground. but that you need the oil

and gas workers to do the job. something that isy increasin hard to come by in a city 500 miles west of houston with one of the hottest real estate markets in the industry. >> getting people to come here, particularly if you need them to move here a is a difficult challenge. real estate particularly -- particularly trouble sm in that housing is very railroadpe ive. more expense of than houston or dhas or someplace like th y. fonger families trying to come here and start up that's a lot to ask. locals have told us some houses sell in less than 24 hours. some workers live in hotels where rates are e popping. a hotel like this can run $400 per night but the biggest concern on wall street is not people it's dead.s mood estimates that some $200 billion of oil and gas company debt matur in twoers years. we asked the head of research at

simmons piperaftery by the impact of rising rates on the industry. >> of course they matter. actually the collective balance sheet of the upstream sector with regard to emp and oil services is are in better shape than for a long time. companiesre living with a closer i guess proximity of cash flow. and there's been true capital allocationreform. so effectively, i think that was a germane argument two or three years agoinhen they were l outside of cash flow. but today coupled with responsible balance sheets and living within closer proximity of cash flow, i don't think it's nearlyrms ag as it could have been. >> a few years ago many oil and gas companies had almost noree cash flow. now they're smarter and cleaned up balance sheetses low int rates and higher oil prices have been a great combination for the industry. r but ifes move higher and oil prices fall due to slowing dmee, the booming shale oil industry

and the boom town of midland, xas, could find itself between a good rock and a hard for nightly business report, brian you feelen, midland, texas. and before we go another look at the day on wall street. another selloff. the dow down 545 points. the nasdaq was 92. the s&pn 57. don't forget we have the bank earnings starting tomorrow. >> exactly. >> should be very interesting day again. we we will see what friday holds. ope you join us for that tomorrow night. in the meantime that does it tonight. i'm sue herera thank foroining us. i'm bill gtoffeth. see yorrow.

>> this is "bbc worl america." funding of this presentation is made possible by the freeman foundation, and kovler foundation, pursuing lutions for america's neglected needs. >> how do we shape our tomorrow it stath a vision. we see its ideal form in our mind, and then we begin to chisel. we strip away everything that stands in the way to reveal new possibilities.

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