>> announcer: this is "nightly business report" with sue herera and bill gffeth. s it more likely the economy will grow in way calling for two interest rate increases over the course of next year. >> fed up. the central bank hikes interest rates and lowers the forecast for fewer increasesut that did not aleave investor angst. the stocks sink to a new low and so does the transportation index. pfizer and smith klein create theorld's largest seller of over-the-counter medicines. that story and more tonight on wednesday, december 19tev gooding, ink and welcome. bill griffeth is off tonight. it felt likel wreet revolt.

investor ds not react kindly to the federal reserve outloo interest rates. the central bank today raised rates as expected. it also signalled that it would likely not hike as manyimes next year as previously thought. but the market wanted more than got. volatility set in and stocks took a dive. the doungs industrial average droppeds 351 poi to 23323. a new low for the year. theq down 147 points or more than 2%.&p and the fiefd fell 39. we have two reports tonight, steve liesman is covering the fed decision from washington. but we begin with bob pisani at the new york stock exchange. >> stocks rallied ahead of federal reserve decision today but sold off in a notable way. once the announcement was made. the fed raised interest rates by a quartermu point prett anticipated by the market. but the fed trimmed t rate hike forecast from three to two. the market found it tough to

swallow. they were hoping for one if any next year and the fed ashierg everyone they we flexible but why was the selloff so damage a lot of it technical. the dow at a newow f the year below the march lows at the same time as the dow transported closed at aew low. this is a red flag for dow there areollowers. looking for one trend following another. when both hit a new lo it's a technical trend by some. today's federal reserve meeting had been called one of the mos controversial in recent memory. and as steve liesman reports it lived up to that description. >> reporter: at negative reaction in markets to the decision by theederal reserve raise interest rates and signal further rates ahead. it seemed like thearket wanted the fed to back off entirely from plans to raise rates next year. instead only a partial backing off at best. here i federal reserve chairman

jerome powell explaining the change fromorasting three rate hikes to now forecastingar two r-point hikes. >> many fomc participants expected that there would be a call for three more rate increases in 2019. we have broughtt down a bit and think it's more likely the economy grows calling for 2 increases over the course of the next year. >> we always emphasized thatpo r cy decisions are not on a pret course and will change if incomill data mater change the outlook. >> here is look at what the market wanted and what it got. the market wanted just one or no rate hikes fecast for next year. instead it got the two hikes down from the previously threest the market wanted flexibility on the plans to reduce the balance sheet by $600 billion next year. fed chairman jay powell we are going aheadith reducing the balance sheet. they seemed more concern about the kmoe. instead they said they are

monitoring financial developments but not acting on anything yet as far as the market concern. now there may have been a little bit more dovishness in the federal reserve chairman statement than maybe the market gave it credit for. here is him talking about the t ho data dictates the fed next year. oint forwardrom in we are going to be letting the data speak to us and inform the outlook and inform our -- our understanding o what would be appropriate policy. so there is a fairly high degree ofut uncertainty a both the pallett and ultimate destination of any further increases. >> reporter: maybe one of theis biggestpointments for the market was they wanted the phrase that further gradual increases are needed rechltd entirely from the statement. instead itot a watt watered down one where they some further increases will be needed. exerall they wanted a fed completely dovish year in the wake of the market selloff. instead it got one sticking to guns that there will be additionalrowth next year, low

unemployment, and that that will all require furth rate hikes. esr "nightly business report," i'm steve n in washington. >> joining us now to talk about the rate hike and what it means for the broader economy and markets is mark sandy. moody's analytic chief economist and a analyst at first financial. mark i start with you if i will. given what you nope about the economy and as you see the economy did the fed chief do the right thing? >> yeah, i think he nailed it. i think h scaled back great hike expectations for next year from three t two. that seems very consistent with the message the fed has been sending markets all along. i think markets had very high expectations, overly high expectations and were disappointed. but the reality is the economy is growing strongly. probably will continue to grow sfrongly enough next year that y unemnt continues to decline. i think the federal reserve has it right. >> brett, you know, i feel like

we've been talking about this fed meeting for some time now. and the market according to a lot of the analysts we talk to had factored in a rate hike here. so why the vehement reaction by the market today >>in. well, i think today is going to be a historic day. i think it's a day where the fed looked down at the market and they said, look, you're grown up, you need to stand on your own two feet and we're not there for you the market didn't know how to take it. it will be few weeks how the market reacts. >> what do you expect? >> i expect that these conditions are really oversold in my opinion. and i do believe that we'll get a little lift going into the end of the yr. >> mark, let me turn to you the global economy. that was mentioned by the fedie if our economy is growing strongly, t globa economy in many sectors is struggling.

we still have brexit to go in the uk. and italy has its own financial issues. the fed seems to be looking at that andactoring it in. is that appropriate? >> yeah, i thinkso. i mean i think the key thing overseas dead ahead is brexit. there is a march 29th, 2019 deadline. and i to thinkre is going to be a lot of uncertainty, market tumult approacng theeadline. i suspect the british aren't nailing it down until the last minute. if you think out the next year and when the hikes will occur, probably won't be at the march meeting that -- when they normallyld hike rates. i think global conditions matter. brexit matters having said that, you know the u.s. economy is very relativelyt insulated fro rest of the world. and we can grow strongly even if the restf the world isn up to par. i would expect that in 2019. there is a lot of fiscal stimulus scoll ng, increases in government spending. we're in a vtuous cycle.

low unemployment. growt and higher spending. i think next year will be strong wo hikes. at least >> but we also start to see the impact of the trade war with china specifically was mentioned and we'll get to this later by fedex as onef thessues they've been dealing with. is that a danger for in economy? >>yeah, absolutely. i mean, i'm making the assumption that president trump doesn't escalate the trade war that he figures out a way to co to a face saving agreement and the trade war fades away. but if that's n the case. if he escalates the war positively the fed will not be able to raise rates next byear nt i'll give you the final word here. what do you do in in market if au are longer term investor? if you feel we are oversoldyo d anticipate a bounce in this market? would you be buying at the levels? >> i i would. i would -- i would certainly take a look at some of the equity markets. i really feel there is some

interest-sensitive areas within the economy that were just completely oversold. we're seeing some of the mortgage reits just trading at valuations that i think that we would take a look at them. >> all right. on that note, gentleman,u.hank mark zandy with moody analytic and brett ewing with first franklin financial services. bob pisani mentioned theta transpon index, driven lower today, in large part because of fedex which i mentioned. we told you about that last night. the company slashed the 2019 outlook citing international slowdown and the ceo fred smith on the company's earnings call said the weakness was largely due to politics. >> most of the issues that we're dealing with today are by bad political choices. i mean, making a bad decision about a new tax, creing a tremendously difficult situation with -- with brexit, the

immigration crisis in germany, the mercantilism and state-owned enterprise initiatives in chinaa thffs the united states put in uni laterally. >> fedex shares finished down 12% to 162.51. and that alsoaud the dow jones transport index to fall more than 3% to $90147 pushing intoear market. the age old dow theory suggest that is when this index isn't l doing w it could foreshadow a drop in the broader market. joining us to talk about what might lie ahead on that front is matt melay. well back matt nice to see you again. >> good to see you, sue, happyli y. >> you too. do you adhere to t dowtheory? does it por tend new lows in the markets. >> i think it w eventually. the market is getting washed out on a near-term basis maybe not

the major capitulation we have seen at major bottoms but we should get a bounce here. i do worry abo this. the federal express blamed political issues but they must think that there they will last longer because they did initiate a fairly decent size cost cutting program. also looking at the transportation index it's not just the federal express and ups or some of the other airlines. we also see weakness in the railroad stocks. and of course they are important.on they move bil of dollars of goods around the country. and those stocks have been moving down a well. it tells me we are seeing a slowdown which is what we usually see when the fed engages in a tightening program. and you knowt doesn't mean we go into recession but we should see lower lowst some point next year. >> it's interesting, is it not, if the economy is doing well, we have unemployment that is expected to still tick to the downside, comnies say that their sales are robust, the things that ship those thing that they make like the

railroads are going down. and oil prices are lower. >> right. and that kind ofha -- kind of tells you that you know going forward even though consumer confidence i good, and that the -- you know as you mentioned that employment seems to be quite goodome of the things are telling you that this is going to roll over as we move into nextyear. again it doesn't necessarily mean we move to recession. t what the stock market was pricing in that perfection back in septembere not getting that anymore. and not like we no longer havel the glorowth going on, now it looks like we have weakis in the u.s. as well. >> you say to raise cash if we get a bounce in the market with, would you stay in cash? or does the bond market as interest rates go up look more attractive? >> i think the b way to -- i mean, yes, raise a little bit of cash. that's always great because when -- if they throw the bab out with the bath water it creates great opportunities. but also y want to look at stocks paying a good dividend

but not just a good dividend. look attocks or companies that have a history of increasing their dividend every singlar and if you don't need the money right away it's better. you cannv getved in the dividend reinvestment program. and you can pick up good shares at lower price was no mm sion. so i think that's a good way to kind of get paid waiting for the things to turn around. >> on that note, matt thanks. >> thank you. well investors got a new batch of economic data today. let's start out with existing home sales which unexpected rose in november according tona the onal association of realtimers sales of previously ned homesere up 1.9 peppers from the prior month. but compared to last year, sales are down 7% which is the largest year over year drop since may of 2011. the median sales price in november was 4% higher than a year ago to about $257,000. a rate that outpaces wage growth. and the current account deficit widened to a 10-year

high in the third quarter. exports fell, imports continued to rise. the report measuring the nation's trade and financial flows with other countries, showed a 50% decline in company bringing foreign earnings back to the u.s. time to look at upgrade and downgrade. american express was grow downgraded to neutral from boy at bank of america merrill lynch. the analyst says macroeconomic uncertainty will result in weaker sentiment for the stock. the priets target is $115. the shares fell 2% to $98.. 77. under armour downgraded to underweight from neutral at atlantic equities. the analyst citing slower growth. the price target is $14 sharth fell mor 3.5% best buy was upgraded to neutral from sell at moffitt nathanson. the analyst cite as strong hoday season and the stock a

valuation after recently klinec. the price52 target is shares fell with the broader market to finish at $50.96. >> still ahea a tie jup that could create a health care powerhouse. johnson johnson lost its motion to reverse a jury verdict that awarded billions of dollars to women who ovarian cancer on asbestos in the company's baby powder. e legal decision comes days after reuters reported that&j new for decade that the cancer cause attention asbestos was in the baby powder.

j&j calls the claims false. pushing shares lower. pfizer has long been droig trying to zoid what to do with the consumer health business. today the got a surprising answer. two of the world's big drug company team up to create a an over-the-counter powerhousemi ting the market for every day drug storyitems. there was a mixed reaction. pfizer was lower and glaks o was higher. fran holland with the details. >> makers of advil and kped rein creating a merger creating the biggest consumer health company in the world. they announced the deal on wednesday. they generate ane com $2.7 billion in revenue a year. >> we announce a deal strengthens to you two businesses and creores value shareholders. >> this will sell somee of best known brands.

glaks o will own 68%. pfizer the the they say this merger will make the company the industry leader with7% of the overall global market. >> the new consumer business is going to have suchignificant scale we will be number one in pain relief, number oir in reory, number one in vitamins,inerals and supplements, leader in over-the-counter skin health and top one or two player in 10 1 o thbigds markets in the world, including by the way, the u.s. >> the ceo of glaks o smith klein, ema whamsly emphasized the b uked drug maker to fund and focus on drug research. >> it allows us to strengthen on theumber one priority of pharma pipeline by theta incremen cash flows over the next few years there by creating two focused uk-based global

companies, one a pharma and vaccine company based on the sciencef immunology again the et iks andie two technol and the global leader in consumer health care. >> the deal is expected to bete comp in the second half of 2019. the companies are expected to spin off the joint venture in three years. more "nightly business report" frank who will zbloond higher prices help general mills that's where we begin the market folks focus opinion the packaged food company helped improve profitens and offset freight costs. they are working to get rid of older food bras but not specifying which. the stock rose 5%. winnebago reported better than expted earningsn the recent quarter. citing higher sales in the north american recreational business. they raised the quarterly dividend sending the stock 13% higher to 22.67.

ee you lie lilly raised the quarrly dividend and issued a stronger than expected profit forecast nex year. the drug maker cites demand for new medicines and the existing drug diabetes franchised are franchise. the stock rose 2% to 109.11. allerganill pull breast implants from the european market following a mandatory request from regulators. the implants have been linked to lymphoma in some wen. ey say potential liabilities are a concern. shares were lower by nearly7% to 136.56. japan's biggest ever initiau ic offering made its debut. flopped. softbank shares started trading in tokyo today. investors watched closely in part of the softban reach into silicon valley and around the world. our reporter is in tokyo tonight. >> reporter: concerns about saturation in the domestic

market and softening global exposure to huawei dampened the mood for the big debut at the tokyotock exchange. this is japan's biggest ipo with more than 23 billion raised it was up there with the biggest ipo, alibaba back in 2014. 90%e of th0 million shares allotted is he set aside for retail investors. first time mom and pop buyers lookg to invest in the and ion like soviet bank the indication washe uptick was strong initially. but they were hit with negative headlines in the lead up to the ipo. earlier this month a software glitch left 140 million subscribers without access to data and voice. and there was the cfo of huawei detained in canada. the japanese kim out saying they woul no longer use chinese telecoequipment and encouraged

private companies in japan to do the same. softbank is the elbow mobile carrier using huawei equipment. we did hear this afternoon they invested about h0% inwei equipment. they are now looking to switch over the 4 g equipment. and speaking to suppliers not just in europe but u.s. as well. putting the cost of that as a few hunillion yen. that's going to be a big concern for investors moving forward well. now one of the things that has made this ipo attractive is the big dividend payout. 85%. a 5% yield forsohareholders. ftbank executives said the t are confidey can deliver on that. but given just how matureethe malready is and given the performance of the stock at least in the initial day there certainly will be concerns about tawhether they can stand are sustain that. for "nightly business report" in

tokyo. >> coming up elon musk's tunnel vision. >> elon musk says this tunnel is the key to helping defeat soul stroying traffic. the light says green which means it's timeor to go a ride through the first boring company tunnel. s princesscks moved lower after the senate passed legislation that overhalls the criminal justice system. the bill allows somrs pri to win early release to halfway houses or home confinement but the idea that sentencould be reduced for certain inmeats sent the shares of two prison praeters geogroup and core civic lower. facebook finds itself at the center ofet another privacy

controversy. "the new york times" reports that the social media company let firms like netflix and spotify read member's private messages. in all the data sharingem arrats benefitted more than 150 companies, including amazon, yahoo! and microsoft. in a blog post facebook denied it allowed the actions without user consent. but the stock fell 7% in trading today.> elon musk is at it again. he set his sights on revolutionizing the auto appear spaces. industr ow he is targeting traffic congestion. musk just completed his first high-speed tunnel outside los angeles. phil lebeau takes us for a ride in y thorne, california. >> zipping along at pe 49-mile-hour this is elon musk's vision of how we could be mo ung through ander cities in the future. so we are rarely stuck in traffic jams. >>raffic has gone from like --

hust like seventh left of hell to the eig level of hell. it's terrible. so this is -- this is i think finally -- finally there is something -- something that i think can solve the [ bleep ] traffic problem. >> musk envision as network of elevators raising or lower electric cars into high-speed tunnels runs under cities. >> this is the entrancehi to th -speed loop tunnel. this is a miss nodolf model x. they were gifting demonstration rides. look at the alignment wheels attached to the two front wheels on the model x running on track walls into the tunnel keeping it on course. dploibl tracking wheels would add two or $300 t o the cost a car, according to musk. but they would not changeow the cars handle on surface roads. still in a country where cities and states struggle to pay for roads and bridges do governments want to invest time and money to dig high-speed tunnels?

chicago wants musk's boring company to build high-speed transit loops between the downtown and o'hare airport but they have yet to break ground. despite t doubts musk believes the promise of high-speed tunnels easing congestions will convince governments they need to go undergrouting are grou. >> the system is designed to do over 150 miles an hour through the tunnel. and i mean wouldn't it be incredible i you could travel around l.a., new york, d.c., chicago, paris, london, anywhere at $era 150 miles an hour. >> a new way to speed ahead and beat the traffic. fill lebeau, nightly business report. hawthorne, california. >> and to read more about the high-speed tunne h you cand to our website, nbr.com. and finally tonight, the best countries for doing business. forbes is out with its 13th annual look at the places most hospitable to capital business. pping the list the secretary

straight year, the united kingdom. they credit the open trade and global economy. sweden moved up to secon place. forbes cites innovation and calls it a leading tech setup hubs. rounding out the top three is hong kong. we go another look at the day on roll street. the dowed 351 points to a low for the year. the nasdaq down 147. the s&p 500 fell 39. and that will do it for "nightly business report" tonight. i'm sue herera. thanks for joining us. have a greatsevening. we'lyou tomorrow.

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