♪ his is "nightly business report" with sue herera and bill griffeth. ♪ uncertainties around trade tensions, concerns about the strength ofhe global economy continue to weigh on the u.s. economic outlook. >> the fed chi signals an openness to a rate cut and the market the s&p breaks through 3,000 for the first time ever and the nasdaq clos at a record. battles for content. major media players are in sun valley as the industry enters a new era and competition among streaming services intensifies. the top state for business. why amazon had it right when it hose virginia for its second headquarters. those stories and much more tonight on "nightly business report" for wednesday, july 10th. .

good evening, everyone. welcome. well, the stage is set and investors cheered. federal reserve chair jerome powell bolstered the case for a possible interest rate cut when policymakers meet at the end of he suggested that lowering the benchmark rate would bolster growth and cited a number of uncertainties here and around the globe. thatd lif optimism on wall street, sending the nasdaq to new highs and the s&p 500 ble l briefly through the 3,000 mark before it pulled back. the downd jonestrial average rose 26 points to 26,860. theasdaq was up 60 and the s&p 500 gained 13. we have two reports tonight. bob pisani is at the new york stock exchange, but we begin with steve liesman and the fed. fed chairman jerome powell all but guaranteed thel fed w be cutting rates probably as soon a this month, from the testimony in the house today. while he said the u.s. economy is in a good place he emphasized globalncertaint

economic weakness and low inflation as the things guiding policy. >> would it be fair t characterize based on what we are seeing on those two factors specifically a strong case could be made for lowering? >> y,. as i mentioned, we think that uncertainty a around --und trade policy and also global growth, it is not -- it is n d aln to trade policy. >> right. >> there's something going on with growth around the world, particularly around manufacturing and investment and trade. andth s uncertainty is we think weighing on the domesomc ec >> powell said he was not swayed by the strong jobs report this past friday and, in fact, said the economic data had continued to disappoint. that leaves the mostmportant question. how many rate cuts after july? fed funds futures are pricing in a 100% rate cut inuly. markets see a 68% chance of yet a third rate cut i december for 75 bases point or of a point of rate cut this

year. >> it seems very likely. in fa, there's a decent possibility they could consider a es point cut. they want to be aggressive and earl and ensure it is a rate cut that can continue. >> on a separate lnote, pow was asked by maxine waters, chair of the house financial services committee, if he thought president trump could fire him. >> mr. chairman, if you got a all from the president today or today and tomorro he said, i'm firing you, pack up, it is time to go, what would you do? >> well, of course i would not do that. >> i can't hear you. >> well, my answer would beo. >> and you would not pack up and you would not leave? >> no, ma'am. >> because you think the wesident doesn't have the authority, is tha you would not leave? >> i have -- i've kind of said what i -- what i've intended to say on the subject, and what have said is that the law clearly gives me a four-year

term and i fully tntend serve it. >> stocks and bonds both liked the message from powell on thet k for interest rates. we will see if it continues that message in testimony before the senate tomorrow. for "nightly business report", i'm steve liesman. and as sue mentioned, investors did indeed like the fed chief's message, especially early in the trading day when all three major iexes hit intraday highs. bob pisani is at the stock exchange. >> stocks marched higher pushing ths&p 500 beyond 3,000 early on though we did end well off the levels. federal reserve chair powell testified before the house financial services today, reassuring the markets there's a case to be made for a rate cut later this month. in particular, powell's comments that uncertainties have increased pushed the s&p into record highs, but we came off n'ose highs fairly quickly. we d end above 3,000. right now there's a clear consensus in the markets around a 25-basis point insurance cut for july, some are calling it. some investors likely would be

surprised now if there was no rate cut, but others would be surprised if there was aoi 50-basis rate cut. so the consensus is just 25. sector winners today, big tech names like micron, cisco, intel and microsoft. energy was another brightud spo. e oil prices are knocking on the door at $60 a barrel. crude inventory showed a bigger aw down than expected helping exxon, chevron and hess. ne group left out of today's rally, bank stocks. all down as bond yields continue to driftni lower. fortly business report", i'm bob pisani at the new york stock the minutes of the fed's last meeting were released today. they show officials growing more concerned about the economic outlook and many backed a move the economy continued to struggle. economists say that the minutes add to the sense that the central bank is prepared to lower rates when they meet at the end of the month. let'sn t now to brian nick to talk more about the fed and

the markets,en chief inves strategy at new veen. thank you for j us tonight. >> thanks for having me. >> as you heard, the guessing ewgame has hit a level today, it is either 25 or 50 basis points according t morgan stanley or bank of america, but everybody seems to feel rates will be 75-basis point lowre than theyoday. what is your guess? >> i don't think it is going to be necessary for the fed to go three times with rate hikes this year. nk what has been priced in -- >> rate cuts you mean? >> rate cuts. i'm sorry. to that use >> we're only six months removed from rate heights, i'm adjusting to new reality. if chair powell was not intending to cates at the end of the month he would have had to say-so today and he obviously did. the likelihood that they will go againn september androbably pause, and the hope i think on the fed's part and on our part is thatd by the the year some of the risks that the fed is concerned about will have dissipated, that global growth will be showing signs of being onhepswing and at wlooleast some

of the sources of policy uncertainty whethbt it is the ceiling, brexit or potential deal on the u.s. and china on t trade,se risks will not have gotten worse and they will feel comfortable they've done enough. >> but the equity markets, the rally in the equity markets have been to a certain extent built on the expectation of the rate cuts. what is your outlook ofs equit if indeed we get the cut in july? >> yes, so the stock market in the u.s. is up about 20% year-to-date. our mid year outlook is to expect a tough err clier climb, particularly true of u.s. stocks poisede don't think are to give nearly the returns they did in the first half of the year. once the rate cutsre sort of priced in, that's the market basically saying, look, we need some help from the fed, we're going to get the help. even if the fed follows through and cuts rates two or even three times, it will be hard for the markets to rally further, g especialen the fact what we're concerned about in the next couple of quarters is aft period for corporate profits. at the end of the day if

corporate profits aren't growing there's only so far the t marke cavel upwards. >> and then there's the story, the bond market seems to be telling ase we contio see yields go lower there, in some cases to ree-year lows. how do we reconcile that with what the equity market has been doing? >> it is not typical that you have a prolonged period when bonds and stocks areallying at the same time, and that is again another reason why we're very cautious about the second half of the year for both fixed income and for equities. because this correlation probably isn't going to last, it is going to resolve i some way, probably with interest rates rising moderately. agai keeping that optimism alive for the end of the year with growth looking to be a bit better by q4, which means the interest rate should go up a bit. but also the corporate profits and where valuations are, probably oimiting the degree to which stocks continueove up. fo we're looking at flat judiciary retuish retus for the rest of the year for stocks. >> brian nick with new veen. thank you for joining us

>> thank you very much. comments from the fed chair rippled through the housing sector, the ia beingf the fed cuts interest rates mortgage rates wil m dip,ing home purchases more affordage. lower rates would offer relief for homebuilders who have seen t gher land costs giving a l today. there's another shift in the housing market and the change may be bad for buyers. diana olick explains. >> it is about supply. we have been in a housi shortage for the past several years which meant as demand rose prices did as well. this year we started to see more listings and prices easing, but it may be short lived. supply isro expected to again this fall and potentially hit a new low according to realtor.com. inventory gains began to slow this year from 6.4% growth in january to 5.8% in february. gaino continued slow throughout the spring and supply was up just 2.8% annually in june. it is now expected to flatten over the next three months and

could hit its first decline in october of this year. course, all real estate is local. the housing shortage is worsening in smaller, more affordable markets like oklahoma city, memphis, leigh, richmond and pittsburgh according to redfin. but in pricier markets where demand hasle f off like seattle, san jose, denver, chicago and boston, the suppl of homes is increasing. a looming shortage could help homebuilders but they still need build er lower prices or more entry-level homes because that's where demand is strongest and supply is leanestni fortly business report", i'm diana olick in washington. il> more now on prices which, as you heard, settled at a seven-week high today. two things drove theally. first, the government confirmed a larger than expected draw down in oil supply and t second ist storm taking shape along the gulf coast. forecasters warn t it could turn into a hurricane by the end of the week, and that has o prompted the industry to shut in production and evacuate

ri ahead of time. domestic crude settled 4.5% higher today above $60 a barrel. it is time to take a look at some of today's upgrades and downgrades. comcast was upgraded to buy from neutral and added to the conviction buyist at goldman sachs. the analysts cited the company's strongundamentals. the price target is $54. the stock hit a new high during the t trading session close at 43.79. comcast is the parent company of cnbc which produces this program. hca health care was upgraded to buy from neutral at goldman sachs. the analyst cites the health care services company's bargaining power at the local level. the price target is $160. the shares ros 1% to 136.68. deere was downgraded from neutral to buy at ubs. the analy says demand will likely weaken in the nexrtone to two qs as farmers hold back on purchases. the price target is 167. the shares fell 5% to160.81.

we don't often report from beautiful sun valley, idaho, but ce a year it becomes the center of the media world when allen andhosts its annual conference. over the years the sofds of some the biggest deals in history have been planted there. there was jeff bezos purchase o "the washington post". verizon's acquisition of yahoo!. most famously, disney merger with abc in 1995. this year, the focus may be less on mergers and more on content. julia boorstin is there for us tonight. ♪ >> reporter: with media moguls su as brian roberts, john malone and gre masay arriving ohere in sun valley onef the big topics is how the media and tech giants are battling with content. with a number of new streaming services set to launchrom disney, apple, at&t warner media and unersal. >> n one will compete with netflix in gross subscribers. i believe they've won the game

annothing i can see will dislodge them. amazon is a completely different business in that it is selling prime which gives you different services. disney has the best chance because of its very, very popular content. >> reporter: with so many media and tech comnies such as apple and amazon competing for premium showsnd movies which barry dillard calls an arms race, some of theompanies are looking for value elsewhere like discovery's david dazlov which is building on his company's strength with coent around food, the home and science. >> they all look the same. apple is doing it, scripted movies.great great companies will be fighting over the market share, price of content going up. it is great to wa i think it is great for consumers, but it is incredibly crowded. >> reporter: with cbs and viacom controlling, sherri red stone here along with james murdock, it is stry veteran says way to soon to determine which

of the giants will come out on top. >> netflix has the most extraordinary install base, an amazing headstart. disney has put together a phenomenal group of brands, and warner, you know, has some traco over the years, plus hbo. you he hul urku out there, too. i think it will be a competitive environment.nd >> reporter:ow everyone is watching to see how consumers wi respond to warner media's upcoming hbo max launching next spring as well as disney plus and apple tv plus, launching fall. for "nightly business report", i'm julia boorstin in sun valley, aho. sti ahead, wages are ticking higher after being stagnant for years. but there is some concern that higher pay will threaten profit margins. ♪ ♪ ♪

♪ >> the white house is ordering an investigati into france's plan to tax technology companies. the probe is goi to examine whether france's digital tax plan would hurt u.s. t and unfairly target them. according to reports, the investigation could potentially lead to the u.s. imposingew tariffs or other trade restrictions. >> a new goldman sachs report says higher wages is putting pressure on corporate profit margins, and that s&p 500 companies could be affected the most by higher costs from a less competitive labor how much of a threat could it be? matt maile, equity strategist joins us. welcome. >> thanks for having me.

>> you think it will have an impact on profit margins but maybe not right away? >> yes, it is kind of interesting.y it is definitaving a little bit of an impact.of on one, of course, the concerns is that it is the boy that cried wolfrd we hor so many years that wages have to increase, wages have to increase, and they never have. people have gotten to the point where they kind of dismiss it and have not built it into any of their assumptions. now that we're trying to -- finally starting to see a little bit of that, it is going to affect not only earnings overall but a miss of earning expectations which is tough for stocks. there's also hidden danger that you alluded to, sue. it is just that, you know, a lot of the companies out there, you get to a certain point and they're not going to be willing to pay above that level and they have a of technology already in place to replace those workers. >> rig i. yes,ean it is -- it depends on the sector of the economy we're talki about. technology, wages are going up. there's no question about that. health care, wages are still

going up because demand is there. but when you get into indus fies like example, food service where margins are slim to begin with, when wages go up -- which oiey have been -- that will cut into profit margins right away, won't >> and there's no question. at some point there is a levele they will just change. i mean a great example is what happens with monald's. they've had the technology in place for several years that can replace a lot ofhe people that work in their restaurants, whether it be makin-- cooking the food, at the cash registers, et cetera. the one thing though is that all of their studies over the years told y,em, it is good for us both economically and for publ relations to hire people in the neighborhood. we want to be a good neighbor, we want to be a goodwi partner in the neighborhood. but there comes a level where it gets too expensive. it u to be at $15 an hour, now it is a little higher than that. like isaid, this technology is already in place, so it is not something that will take three years it will take a very short time. that will get people suddenly

with unemployment at a low level, it could start to cre up. >> you mentioned the $15 mark, and a number of companies are phasing in that $15 mark. but at what point do you think we start to see the impact? is it at 15 or is it below 15? >> ll, i think 15 -- it is depending on the company andhe obviously industry. it depends on the area, too. a lot of people will say $15 in new york city doesn't very far, so it is kind of a roving number or a wide range. but i think anything, when you start to creep above $15 it h definite an impact. of course, a lot of the serviceo jobs ares that people don't have the qualifications to do other things. if the g unemployment rats up, it has an impact on earnings of other companies ast spreads through the system. >> matt, thanks so much. >> thank you. american airlines raises its revenue forecast, and thas where w begin tonight's market focus with the airline saying it has seen fuller flights and as a

result it anticipates upea to 4 in in its unit revenue. however, the carrier also did say its pretax profit would take about $185 million hit due to that prolonged grounding of boeing's 737 max planes. the stock today rose nearly 2% to 32.94. elsewhere, amino prmaceuticals is looking to reduce annual expenses through a d newly-announ restructuring plan. the drugmaker has been dealing with supply iues with epinephrine auto injectors. shares lost more than a third of their value today falling 36% to 4.36. neo ese electric carmaker reported more deliveries than expected. the company said it delivered more than 1,300 vehicles in june. last week we recall its u.s. rival tesla exceeded its own delivery expectations.

neo was off 3.68. the intertechnology is cutting its quarterly outlook. late today the chip maker said it is seeing weaker than expected demand. shares initially dropped in after hoursdrading but clo the regular session up a fraction to 16.08.r af the bell bed bath and beyond topped earnings expectations but fell short on venue. the home goods retailer saw a drop in sametore sales. sales initially rose and in >fter hours trading closed up 11.52. ere we are in july. the start of the new school year may seem far away, but already retailers are gearing up for back-to-school sales. this year gadgets may take a bigger bite o out parents' budgets. courtney reagan has more. >> reporter: for millionsf justren in the u.s. school let out for the summer, but ck o-school shopping is starting soon andec expted to peak later this month and in early august. that's when more than half of

annual school-related spending happens and a new sur fym deloitte forecasts the total spent, nearly $28 billion, will be on par with last year. it doesn't mean the consumer isn't healthy, but rather the back-to-school supplies are largely commodity type items. a pencil is a pencil forsthe mo part. that ups the ante for retailers. >> you have to be sharper ins te of what the proposition is for the consumer. one of the questions we always ask ispoell us what is ant to you in terms of picking either the venue or the specific brand thatin you're sho we hear over and over, it is price, it is product, it is convenient. >> reporter: nearly 90% of s shoppersay mass merchants, retailers like walmart and target, are the top destination for olback-to-scho arene retailers like amazon now the second shopping preference for back-to-school. some retail experts say amazon's prime day shoppingoliday helped it grab more school supply share. >> amazon is basically takin over along with walmart and electronics are an online

business and electronics will be the big growth area. >> reporter: deloitte says spenti spending on electironics will surge 20%. >> those who wait until the last minute spend more money than those who start in the middle of the peak. >> reporter: about $370 more on average. buyer be ware. "nightly business report", i'm courtney reagan. still ahead, theop state for business. >> when amaz top state for its $5 billion hq2 project it came here to virginia. ack up by irginia the numbers? i' scott cohn. we will have this year's nkings coming up on "nightly business report". ♪

♪ the district of columbia is suing marriott over what it d calleptive fees. the attorney general says the hotel did not discloshe additional mandatory costs up front to its customers in rates displayed online. the lawsuit alleges that marriott made millions of dollars by violating consumer protection law a forleast a decade. it was filed after an investigation conducted a by 50 state attorneys general. marriott says it does not commentn pending litigation. cnbc is out with its annual list of the top states for business. all 50 states aren graded more than 60 measures of competitiveness including infrastructure, workforce and the cost of doing business. this year north carolina came in at number three thanks to a strong state balance sheet and

steady economic growth. at number two, texas with a high growth rate and low unemployment. and, as youard, top the list virginia thanks to its workforce and strong educaon system. scott cohn has thetory behind this year's top state for business. ♪ >> reporter: from theouains to the sea, an american original and a business powerhouse. >> tonight the celebrations have begun. >> -- that amazon has found its next home. >> reporter: virginia was already a winner, beating out more than 200 bidders for amazon's hq2 project. >> we were really excited by virginia, wt it had to offer. probably the most important thing was the attraction of this ace to talent, and particularly tech talent. >> reporter: the numbers bear out. virginia has america's top workforce. smart and tech sav. tied for the top in education, and number three for business friendliness with a bipartisan

program to cut regulations. >> what functioery well in this state is government officials, business officials, local citizens groups. people talk to each other a lot. >> whenne bues, large and small, want to call virginia home, that is a one-two punch for our economy. >> reporter: but not all is perfect. >> what doan we when do we want it? now! >> reporter: the governor's own hi helped revive questions about the state's inclusiveness. >> we are really focusing on those iniquities and our cabinet addressing those, but i want to let this country know and certainly virginia kn we are an inclusive state. >> reporter: and then there are the costs, an expensive place to live and do business. for now it ises a price compa are willing to pay. it is no coincidence that the last time virginia was this strong competitively was in 2011t, after t defense spending started to decline and no state is more dependent on the pentagon. now that budget is back and so isa. virgi

for "nightly business report", scott cohn,le bentonv virginia. >> before we go, here is another look at the day's final numrs from wall street. the dow rose 76 points to 26,860. th nasdaq was up 60 to close at a record, and the s&p 500 gained 13. and i already saw a couple of traders on the floor ofhe new york stock exchange with s&p 3,000 hats there. >> i'm sure they'll have those on tomorrow. that does it for us tonight. i'm sue herera. thanks for joining us. >> i'll bill griffeth. have a great evening. see you tomorrow. ♪ ♪

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