>> announcer: this isssnightly busieport" with bill griffeth >> magical earnings. lows past expectations as more people flock to its theme parks. but what about the next leg ofg th? surprising twist. open houses are suddenly will it be an early spring for housing? raising the stakes. the big battle for pickups that's generating big profits fo detroit's big three. those stories and much more tonight on "nightly business report" for tuesday, fe and we do bid you a good evening, everybody, and welcome. well, the entertainment powerhouse has done it again. late this afternoon disney nported much better t expected quarterly earnings thanks in part to the increased popularity its theme parks, which are already the most

world.d in the it also reported higher broadcast revenue, which helped to ofet a decline at its movie studio. here are the numbers from disney. they earned $1.84, 29 cents above estimates. revenue came in at more than $15 billion. that sent shares of the dow component initially highern urs trading, although there was a bit of a comeback. julia orstin has more on disney's quarter. disney beating expectations on both the top and bottom line with growth driven by the domestic pa guest spending, higher ticket prices, an increase in food and higher than average hotel room rates. as for what will drive the next leg of growth, the company is betting on itsew direct-to-consumer business. ce bob iger is saying this is the company's top priority and they continue to invt in exceptional content and innovative technology to drive r success in this space.

investment in that direct-to-consumer business weighing on disney's costs in the quarter. for "nightly business repor" i'm julia boorstin in los angeles. robert luna joins us now to talk more about those disney numbers. he is the ceo and chief investment officer at surevest. welcome, nice to have you here. >> hi, sue. >> what about this latest initiative, the direct-to-consumer. they're up against other zubs l successful names, like netflix which has created a lot of its own iontent. >> oly disney plus is scheduled to launch in q4. with this latest merger with fox, they're also going to have a controlling stake in hulu. so i'm really interested to see what the balance is going to be between future investments in sney plus and also what's going to happen with hulu. but i think the conte that disney has, the proprietary characters that they have, this bl a household brand that i think they'll be to monetize that very well.

like we're seeing in the yepark s and years of investments ng are ve been ma tting the tape in earnings. i think you'll see that 18 t months now in the streaming service. the "star wars" franchise they have, some of the marvel movies, comic book characters and things, that's supposed to be a powerhouse as well, but we were just saying how that had to be offset by some of the revenue increase they saw in broadcast. >> yeah,wa it they had tough comps. there wasn't a "star wars" film in this q that they had to compare to last year. but if you look out into the next quarter, in june they have "toy story 4" coming out which is expected to be a blockbuster. in july they have "lion king." so i think they'll start hitting on at cylinders with t again. when you've got parks and resorts, you have the studios an the media networks, this is really a different company from the traditional media pauseey e able to take those movies and shows and monetize those acrosshe board. there's not another company out that that's able to do that.

>> and that's why you have a possible upside in the stock? >> absolutely. when you look at where the stock isg, tradt's trading at a discount on its five-year average about 15 times earnings. so we're using a discounted cash flow model which should get us to $130 a share on the stock. i think it's trading about $113.5 after hours. >> they're having t extend bob iger's contract when they were doing this deal with 21st century fox. is stillink his heart in it at this point? >> i think so. ten you listen to him on these earnings reports is something he's extremely passionate about. with all that's going on with the fox integration, i'm glad as a shareholder for our clients that he's sticking around. it's going to be interestingwh we start talking about the transition of who that person is going to be once iger steps away. >> robert luna, thanks for joining us. elsewhere, electronic arts also released its results lated the video game maker lowered its

revenue outlook, citing lackluster sales of i battlefield 5 title and also increased competition from online gam likefortnite. overall earnings and revenue fell short of expectations in its most recent quarter and that sent the stock sharply lower in initial after-hours trading this evenin m we are than halfway through earnings season, and as you know, the focus ts time around is on 2019 guidance. real because there's a concern that the earnings growth that we' been seeing may not last. bob pisani explains. >> it's been a growing chorus of concern over slowing global growth. more than 40% of earnings in the s&p 500 occur outside of the united states, so when you get a big namultonal company like caterpillar or nvidia mentioning slowdown in the global economy, that's a major issue, particularly for industrial and technology fisos. he battleground is between those who believe earnings in 2019 willtay lower but still positive and those who believe that an earnings recession ishe around corner. now, an earnings recession would

be two or more consecutive quarters of negative earnings growth. that's a big issue. it's not avi t question. the last time we saw two straight quarters of declining earnings was in 2015 and 2016. the s&p was close to down 0.7%. that was the only downfrom 2009 to 2017. right now estimates for first-quarter earnings are down to a measly 0.4%. that's a big decline. we were expecting 8% growth for the first quarter of the start of october and revenue estimates are holding up but they're down a little bit too. sohis begs the question, revenues are still holding up relatively well but earnings growth is heading towards zero. that's kind of odd. this implies that profit margins are under pressure, mostly because of higher wag and higher raw material costs. we saw that today frome a sim company, one that makes arm &

hammer, baking soda, oxy clean and water pick devices. they cited transportation and raw material costs due to u.s. . tariff they started raising prices on their goods but it hasn't been enough to offset some of the margin pressure. for" "nightly business repor i'm bob pisani at the new york stock exchange. and on wall street today, stocks climbedo a two-month high with the s&pos pting its fifth straight gain on these upbesu corporate s. the dow added another 172 points today to 25,411. the nasq climbed by 54, the s&p added about 13 ints. despite this recent market climb, it's still not clear owhere markets next. mike santoli takes it from there. >> five weeks into t2019 and years since the last major bear market ended, the state of the market is confused, or at least more confused than one might expect given the strong rally of more than 15% in the major stoco

indexer the past six weeks. this upturn came after one of the quickest 20% dro in years over the prior three months. the decline was all about a fear that a m recessionht be near and federal reserve on the verge of going too far with interest rate increases. the recovery looks like the rapid shift back toward the idea that the u.s. economic expansion is intact and the fed now emphasizing patience in considering further hikes. so which is it? on the one hands measure of consumer and business confidence have weakened. the housing market has stalled and corporate profit growth rates are being reduced toward zero for the first quarter. on the other, job growth has remained far stronger than expected. the government shutdown didn't seem to do lasting damage to consumers. and companies are still expected to expand earnings over the course of 2019. these mixed signals with a mature enomic cycle that nonethelessas weathered a couple of fleeting growth scares since it gall rolling. optimists are viewing the market

false s similar to recession alarms of 2011, 2015 and even all the way back to 1998, when stocks tumbled, growth moderated, but the fed turned toward easier policy to reassure investors. but how much upside cans sto see from here with unemployment still down near 4% before the fed again looks to resume rate hikes? is a trade deal with china already assumed by investors now? and could the economy andet ma handle a more aggressive fed? just a few of the questions fogging the outlook for wall street after its strong start to 2019. for "nightly business report," i'm mike santoli. the expansion of the services sector slowed in nuary. this amid uncertainty around the partial government shutdown. according to a survey from the institute for supply management a drop in new orders crimped growth but historically there is a lull rheht after holiday season. the bulk of economic activity comes from thevi serces sector. look at somtake a

of today's upgrades and downgrades. bank of americari m lynch added merck to the u.s. one list today. theednalyst c the potential for big returns from that company's cancer drugs. merck is the firm's number one pharma pick, as a matter of fact. shares rose a fractiono today $77.15. box was initiated with a buy rating in new coveraget goldman sachs. the analyst calls it one of the bestositioned vendors in cloud content management. the price target now $31. shares closed at $23.45. that was up nearly 9% in today's trade.oo ng holdings was upgraded to buy from hold over at deutsche bank. the analyst cites acceleration in a k hotel booking metric this year. the price target is $2,370. today's shares crept closer to that target, aing about 2% to close at $1,902 and change. kraft heinz was downgraded from hol to buy at deutsche

bank. the analyst cites competition from private label brands. the price target is $52. kraft hieneinz finish up about cents. democrats and republicans do have some common ground when it comes to health care. they a wan lower drug prices. the state of the pharmaceutical business when we.

merck's ceo says he plans to testify during a senate hearing that's been called to talk aboud risig prescription prices. late yesterday the chairman and the ranking member of the senate finance committee invited executives from seven pharmaceutical companies to that hearing, including the ceos of bristol-myers squibb, j & j and pfizer. that hearing is scheduled for later this month. senator bernie sanders is asking why a drug that was once free through an fda program now costs $375,000. in a letter to catalyst pharmaceuticals, the senator called the pricing, quote, corporat greed. asked the company to sdplexpla the decision for a price the drug in question treats a real neuromuscular disease. catalyst is a small cap stoat as a market cap of about $200 million. the company says it is working

on a response to the senator's letter. in the meantime, during tonight's state of the union address, president trump is expected to talk about lowering health care costs and sky-high prescription drug prices. last year he called that one of hisreatest priorities. care meekins is health policy analyst at raymond james and he joins us from d.c. tonight. chris, thanks for joining us tonight. >> ksth bill. >> this have proposed taking back the rebates that pharmacy m benefitagers receive from drug makers to try to reduce hasts costs. a step in the right direction? >> the goal is to lower list prices which tend to be driven up by the pharmacy benefit managers and proportion of profits they make, that's moving in the right direction. one of the pblems with their plans is that, yes, it will lower list cost but at the expense of making drugs cheaper for those that use drugs the most, they're going to increase premiums on everyone else in

medicare part d. the question is are you willing for everyone to pay a little mo so that those who need the drugs the most are having to pay little bitless. >> overall, what is it about our system versus systems in other parts of the globe, that make drug prices so high and so difficul to reduce in terms of price? >> i think one of the problems is politicians belie america really should be the innovation hub for pharmaceuticalsn the world. d no one wants to get in the way of developing that next therapeutic that c cure that unknown disease or cure that disease we don'tave a cure for next. so one of the decisions that was made by the politic believe in a free market system generally speaking in the u.s., and so areli they w to increase government regulations at the risk in their minding of potentially limiting future innovation. so while other nations in the orld are able to set caps and prices, the u.s. really bears the biggest price for all of the innovation that's don throughout the world. >> okay. you're saying that politicians believe that.

you're the guy that analyzes all of this. do you believe that? do you believe we would not b as close to solving cancer or parkinson's or alzheimer's if there was a cap on drug prices in this country? >> no, i don't -- well, i think a cap is questionable. i think that we can take steps to ler drug prices in the country without putting in danger the innovation that our armaceutical industry is now in the world. that? how do we do what's that step? >> part of it is we need to have a conversation aboutg ensur that other nations are paying their fair share of this. for example, the put forward a regulation as part of medicare part b drugs to tie them to european prices. maybe that's a step in e right direction. some politicians are proposing that you maybe allow for medicare to negotiate drug prices to try to drive down costs. some believe that you're able to lower list prices through really targeting the pharmacy

benefit managers that it will drive down costs for at the pharmacy. so there's a lot of little steps that people are proposing to take, each of which may help move in the rigdirection. there's not a silver bullet to solve this for americans. >> justs there isn't for the cure for cancer and other diseases as well. chris meekins,again, thanks for joining us tonight. >> thanks. estee lauder getting a makeover. quadrupled du to its skinare products. theyish y issued an upbeat outl for six months r e 11% to $152.02. viacom reported better-than-expect eed earnings. revenue fell short of estimates because of a decline in advertising sales. viacom plans to enter a production deal with netflix through it's nickelodeon kids division. shares rose 3% to $30.33.

> a unit of johnson & johnson is reportedly close to settling lawsuits over defective hip implants. long-running litigation includes more than 10,000 cases, but it's not clear how many lawsuits would be covered by the reement. j & j has said that it acted responsibly and ap development, marketing of the devices. on the day the shares were unchanged at $132.88. bp had better-than-expected profits, driven in part boy a big increase in the energy giant's oil andas output. it is the latest in a string of major oil companies to post a rong performance for 2018. shares rose 3.5% today to $42.82. morereure on allergan to accept rate the chairman and ceo positions. appaloosa asked the drug maker's board to separate the two roles.

independent share would help all eler allergen lift its share price. they were down a fraction to $138.01. quarterly profits at archer daniels midland fell because of the trade dispute with a. amd's revenues also fell e shor ectations but the company is optimistic that a u.s./china trade deal could raise its exports t significantly laters year. shares were down about 6% today to $41.85. tyson foods has reportedly held talks to buy foster farms for roughly $2 billion, but c nbc says thewo companies so far have disagreed over a price. talks, therefore, could fall apart at any rate. right nowal a poteneal still is at least several weeks away. tyson shares were down 9 cents to $61.69. finally, snap reported record revenue, up more than 35%. that narrowed its quarterly loss. the social media companyas helped by an increase in online

advertising sales. snap haseto report a profit, as a publicly traded company. the stock rally neld initial after-hours trading tonight. it finished theegular session with a 1.5% gain to $7.04. a growing number of people are leaving high tax states for places like florida following the passage othe new tax law, which capped state and local deductions. according to new data cited by "the wall street journal" miami is experiencing more activity than usual from people moving from new york and new jersey. juye erday, new york governor andrew cuomo blamed a late revenue shortfall on the number of peoplving and specifically mentioned florida s an attractive option for n yorkers. and that's just another layer of the current state of housing, a whereer a huge drop in sales at the end of last year, buyers are suddenly swarming back. is it an early spring or is something else at play? dian olick takes a look. >> at a sunday open house in

suburban dallas, there was a traffic jam on the main stairway. buyers buoyed by an unexpected drop in mortgage rates in deceeser. >> intert rates are low, on the decline, which is great. >> precisely why h selena and family of five are hoping to get out of their rental now and into a home of tn.ir not only are mortgage rates down from a recent peak in november, butome prices are also pulling back. more sellers cut their home prices in january according to realtor.com. >> when you see those numbers start coming down, oh,okay, this is the time to buy. you certainly don't want to buy at the top of the market. >> dallas area agent laura barnett said the renewed interest caught her and her olleagues off guard, in a good way. >> we actually did get a surge of buyers coming in a atter of fact, i've worked with two this weekend, one of which is under contract. another one is about to be.

>> she agrees its all about interest rates. >> i think they're taking advantage of it and d to miss that opportunity, so we're trying to get busy with our listings and getting our stings on the market early. >> the popular spring housing market usually doesn't start untilhe edge of february, but buyers this year are clearly seeing a window of opportunity early. the trouble is that while there are more houses coming onto the mark and prices are easing slightly, there still are not enough affordable h es for sale. >> if you are looking in a range which is 5 to 650, it is very competitive. once you go above i750s a little more open. it's not asco mpetitive, close to a million dollars. amt and his family were hoping to move up to a bigger home, taking advantage of the pause in rates. >> i think it's a good market because i mean just to beho st, i think the rates are going up. >> but this house was listed at $950,000. apparently even the higher end is now back in highdemand.

for "nightly business report," i'm diana olick in waomington. g up, detroit's profit machine. >> it's a big truck expected to generate big profits. i'm phil lebeau in flint, michigan, with a look aatthe fiercee brewing over heavy duty pickups. that story coming up on "nightl" the national retail federation is forecasting a climb in retail sales this year.

the nation's largest retail trade group is calling for consumer spending between 3.8 and 4.4% this year to about $3.8 trillion. but the trade grousacknowled that the ongoing trade war with china and a volatile stock market could alter that iarecast. chrysler is recalling more than 880,000 pickup trucks worldwide to address steering and pedal issues. the recall involves certain ram vehicles. there have been reports of one injury and eight accidents that e related to that issue. pickup trucks are big buness, and they're at the center of the latest battle between the big three. today general mot unveiled its new heavy duty pickup in the hope of strengthening one of its most protablemodels. phil lebeau has more from gm's truck plant in flint, michigan. >> a heavyweight fight in heavy ty pickups. the newest chevy silverado

compte with a 10-speed transmission, gm's latest haymaker in the battle of big trucks. >> these are tols but a refined tools. as refinement has increased, i think the market has gotten even more acceptance for those. ry important for us. >> not to be foutdone,d is also rolling out a new heavy duty wf-seriesh a bigger engine and more power, while ram execives say their n heavy duty pickup will be able to tow loads weighing as much as five african elephants, the kient of capabilities looking for in a work truck. >> part of the business of the manufacturers are ptecting the most, nurturing, not taking too many chances with is what we call the professional market, yes, the pickup truck market and specifically the heavy duty pickup truck market. >> that'shy these pickups are so important. they are extremely profitable. it's estimated each brings in

well over $10,000. roughl out of every four pickups sold is a heavy duty model with the f-series, silverado and ram dominating the market. there's no sign odemand slowing down, especially with the strong economy. >> we see employment, you know, driving a lot of this but a new construction starts and anything that's building, anything thas servicing, all of those things are very healthy and that helps our truck business and in particular the heavy duty business. gm's new silverado goes on sale this summer, a critical model expecte to generate big profits, as the automaker looks to win over a bigger slice of the lucrative heavy duty truck market. phil lebeau, "ghtly business port," flint, michigan. and finally tonight, the rob reports car of the year is or laini's new suv, which has a starting price of $200,0 i. it an lamborghini, after all, and it does 0 t 60 in 3.5 seconds. it's been a hit apparently. it helped increase the

automaker's sales by about 50% last year. before we go, here's a look at the day on wall street. the dow rose 172 points, the nasdaq climbed 54 and the s&p 500 added just about13. at will do it for us tonight. i'm sue herera, thanks for joining us. i'm bill griffeth. have a great evening. see you tomorr

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