♪ thiss "nightly business report" with bill griffeth and ue herera. solid results. apple's quarter was strong. the outlo was as well thanks to demand for products and services other than its iphone. murky picture.as president trumharp words for china, adding an element of round of to the new trade talks. breacssive bank millions of capital one customers had their data accessed bck a , but this one is unlike most others. those stories and moreonight on "nightly business report" for tuesday, july 30th. ♪ and we do bid you a good evening, everybody, and welcome. one of the tent poles of any rning seasons is apple's report. after the bell tonight we

learned that its renue returned growth, reassuring those shareholders concerned that theslowdown in sales of its flagship iphone was going to hurt other thi cs. thpany also reported better than expected profits and issued solid guidance. a there wa noticeable improvement in its operations in china and it posted record revenue for itservices business. apple's results, of course, are widely followed given its status one of the world's biggest companies and its shares are held in most mutual funds and retirements. accou tonight the stock rose in initial after hours trading. josh lipton starts us off tonight from apple's headquarters in cupertino, california. ♪ >> reporter: app today sel a range of products and services from the watch to music streaming but its bread and butter remains the iphone. iphone revenue in the quarter came in at $26 billion, that was roughly in line with what wall street was looking for. that was down 12%, but it is an improvement from their prior quarter. remember in q2 iphone revenue

was down about 17%. part of the issue for apple with iphone franchise right now is that the replacement cycle is eotting longer. i meane are holding on to their iphones for longer. i asked tim cook whether his trade-in programs at the company are having a positive impact or are they tightening the replacement cycle cook telling me it was a key part of the improvements sequin she'll, meaning quarter over quar mr. also he tothe trade-in and financing program were key to results in china.bu for "nightlness report", i'm josh lipton, cupertino, . californ dan morgan joins us to talk more about theumbers from apple. he is a portfolio manager with synovia trust. dan, welcome. we just saw josh lipto mention a couple of things, but it sounds like their multi-pronged approach to china was successful this last quarter. >> well,t, you're ri sue. i mean if you look at revenues

they only fell by 4.1% compared to a drop of 25% in the previous quarter. ng it seems like t are starting to turn around a bit. the bleeding in china, so to speak, is starting to improve. so that's a big part of the recipe for growth for them going forward. so very encouraging we are seeing not such a big drop in ina on this most recent third quarter. >> tim cook'so- notcret strategy has been to transition apple away from hardware sales and emphasize services more. are you seeing that with this kind of report, dan >> i thi so. i mean even though service revenue was a little bit short, it was still pretty strong. that is a big component, as youf say, their future growth story. if you think about this, servicgi, their gross m is about 64% and the total gross margin for the company is about 37%. so it is a big component of future growth and growing their margins. >> now what about this replacement cycle? josh once again mentioned that.

arefiou sat with the way that apple is approaching that particularproblem, people are holding on to their devices longer? are you happy with tim cook's strategy there? >> sue, it is still a big challenge for them and, you know, they have some new phones coming out this fall, the iphone 11. probab much is going to happen there, but next year they're supposed to be issuing their 5g, potentially a foldable phone that will compete against samsung. i think that's going to hopefully generate some of the upgrade cycle they're looking for. >> dan morgan,nk tou so much. dan is with synovis trust. and on wall street the dow snapped a today with a modest decline. certainly earnings are important ut so are the trade talks i shanghai, and it probably didn't help that president trump renewed his attacks on china just as the talks were getting that seemed to contribute owday's minus signs with the industrial tank 23 points to 27,198. nasdaq was down 19, the s&p

slipped by 7. r eamon javerseports tonight from washington. >> reporter: even as the u.s. delegation arrived in shangha today for a new round of trade e talks, presi trump gave a conflicting assessment of china's interest in reaching a deal. speaking to reporters outside the white house, the president first suggested chine negotiators were stalling until after the election, buteconds late said just the opposite. that he believed the chinese side was eager to do a deal with him. >> well, i think the problem to a trade deal is china would love to wait and just hope, they hop -- it is not going to happen, i hope. but they would just i love if got defeated so they could deal ikth somebody elizabeth warren or sleepy joe biden. i wi tell you this, china is dying to make aeal with me, but whether or not i'll do it -- it is up to mep. it is not up to them. >> the president's divergent assessments added anlement of confusion to an already-murky picture with both sides lowering

expectations of a deal between the two economic powers. it is not clearro whatess secretary mnuchen and u.s. trade representative lighthize make with their counterpart this week. still, white house officials voiced optimism that the talks were happening at all, the first to rekindle negotiations since talks broke down in may. >> weelt we were run to about the ten yard line previously and then we felt there were several hard liners within china that pulled back because some of the enforcement mechanisms they werv unwilling to with. i think it is going to challenge our relationship with china for sometime, is that when they strike deals they backtrack on a lot of areas where we wanted to weorce the restrictions tha put in place. >> reporter: and the president praised himself on twitter for slashing million of chinese jobs and seizing the itiative in the ongoing talks. officials have released scant details on the progress of or even the schedule for the negotiions in shanghai this week, but a white house official hells me that officials are

encouraged that talks are even happening. that means the relatio bhip might k on the right track. for "nightly business report", i'm eon javers in washington. well, the trade war and slowing global growth have proved to be a drag on some company's quarterly results but not all. that's one of the trends emerging at the halfway point of earnings sson. bob pisani reports from the new york stock exchange. >> reporte and there's bad news about earnings. the good news is we're halfway through earnings season. we managed to avoid an earnings recession two straigh quarters of negative earnings growth,co d orate guidance for the second half has not collapsed. earnings are essentially flat compared cond quart to the second quarter of last year, 76% of companies are beating. that's right in line with the recent average. but there arearning signs for investors. first, stocks are pretty pricey right now. there's very little room for misstep. second, clarity on global growth is, well, to put it mildly pretty illusive. and the trade wars and slower

global growth are clearly having an impact on earnings. companies that generate more than half of the revenues overseas are seeing declines in their earnings of about 10% on average, but companies with less than half of their sales from overas, that are more domestically focused, on average they're seeing gains of 6%at a big difference. finally, the markets are becoming a lot moreependent o looser monetary policy from the central banks to cushion them blow f slower global growth. but it is not clear that global central bank magic is always going to work wonders. the market's biggest fear istr that c bank rate cuts may in the future no longer provide any big g boosts tobal growth or to corporate earnings, implying central banks are essentially running out of bullets. if that happens you are going to see earnings guidance come down dramatically, but it has not happened yet. the most dire warning of thebe s have not come to pass, they do have a point though.be it is tough t bullish when the s&p 500 is up 20% for the

year, earningre flat, and there is so little clarity on globalwth. for "nightly business report", i'm bob pisani at the new york stock exchange. federal reserve policymakers began their two-day meeting on interest rates today, and while many expec the central bank to loosen monetary policy tomorrow, not everyone agrees. steve liesman breaks down the latest great rate debate. >> reporter: most in the marketa agree with the fed will do with monetary policy tomorrow, that is cut interest rates. but they disagree on what the fed should do. 98% of the respondents to the cnbc f survey see a rate cut and nearly all say it will be a quarter point rate skcut. but what the fed should do, and that's where there's a split. about half say the fed should not cut rates at all, mostly because the economys in pretty good state. chief investment officer at arden assess management wries in respo to the survey, quote, objectively the case for a rate cut is n obvious. the economic data has simply not

been weak enough a the level of rates is already low. more economic data today showed strong consumer confidence along with g healthyrowth in personal income and spending. it is not t kind of economic data you typically see when the fed is cutting rates. the surve showed most expect the economy to slow, but not much more than expected when the fe was still raising interest rates. growth in gross domestic product seen in th survey falling at 2.3% this year from 2.5% in 2018, it slows further to 2.1% in 2020, but it is roughly in line with most measures of what the potential of the economy is anyway. those supporting theut point to the uncertain effects. the global trade war and the low inflation rates in the united states. i think the case is probably stronger, inflation really does pea appearuiant. there's uncertainty where the economy is going in the future.

the risks of a cut seem lower than the risks of staying where we are and risking a tip into recessions. >> that would make the fed rate cut anut insurance, on the fear of what will happen in the future based on events like brexit. insurance policies are judged against the cost a the risk. for the fed right now, the cost of the insurance looks cheap compared to t risk of recession. for "nightly business report", i'm steve liesman. makesnt up an impor part of the economy and after a week spring, new reports hint at a possible turnaround. diana olick has the details. >> reporter: a surprise jump on home sales in june, gaining from a year ago for the first time in 17 months according to realtors. pending sales are signed contracts to buyg exist home so an indicator of closings in july and august. sales were stronger across the nation but particularly in the west where home prices have bee moderating the most.

in fact, prices in see a little are lower than year ago according to the latest s&p schiller report, the first city to see ain drop 2012. clearly lower mortgage rates are helping. the average rate on a 30-yr fixed mortgage stood at 4.29% on may 1st and endedune at 3.81% according to mortgage news daily. that had to help with affordability, but home prices are still high and the supply oo s for sale, which had been gaining earlier this year, is underressure again. builders are still not putting up enough entry lel mes, but d.r. horton is seeing big gains with the help of its cheaper express brand. the company reported strong quarterly earnings. horton chairman donald r. horton called the spring selling season, qte, solid. june's strong sales read could indicate a turnaround but only if more supply comes on the mortgage and mortgage rates stay low. at this point neither of those are a sure bet. for "nightly business report", i'm diana olick in washington. time t a take a look some

of today's upgrades and downgrades. we beginonight with pfizer, which was downgraded to equal weight from overweight at morgan stanley. the analyst says that yesterday's spin-off deal with mylan may have inadvertently exposed a lower than expected earnings potential in pfizer's businesse price target, $40. that stock sells 6% today to $38.79. also at morgan stanley, micron was upgraded to equal weight from underweight. ths analyst s the trade tensions are driving short-term inventory accumulation right now. price target, $48. that stock rose more than 1% to 47.46. still ahead, big pharma big profits. despite pressure coming from washington. ♪ despite pressure coming from washington. ♪despite pressure coming f♪ ♪

♪ acquie ♪ it is one of the largest-ever data breaches of a big bank. capital one financial says a hacker accessed the personal information of millions of credit card customers and applicants. the scale of the hack and questions over other potential vu erabilities sent the sto lower in today's trading session. aditimooy has . >> reporter: it is one of the biggest breaches to hit a bank, and the number of customers affey ede capital one hack areer stag.

100 million u.s. customers impacted, 6 million in canada, and amonghe data stolen 140,000 social security numbers and 80,000 linked bank accounts. also nes, addresses, birth dates and even credit card scores. capital one estimates the intrusion will cost the company up to $150 mlion. but this breach is different. it involved one alleged perpetrator, paige thompson, a 33-year-old formerneoftware en who didn't appear to use the information for identity many other hacks are believed to be the work of groups or ate-sponsored actors. investigators arrested thompson after she accessedil the and made them more accessible. capital one says it will notify customers who are affected by the breach. the news comes just one week after aredit reporting bureau, equifax, settled its massive

2017 hack for $217 million t accordin a report from ibm, they account for a fifth of all rattacks. the reason, it is reese for bad actors to make money from a customer bankount information. cybersecurity consistently ranks among the top concerns of bank ceos, w are spending an increasing amount of money to protect their networks. >> if we spend $600 million a year in cyber, all of us spend huge amountsf money to protect privacy of the system. i agree with you, cyber risk is probably the biggest think the inancial system faces in the world. it is a global risk and you are correct. all of those folks get invold and make it very complicated. >> customers that might have been affected in the capital one breach will have to watch for anyal poten identity theft that could stem from their information landing in the wrong place. r "nightly business report", i'm aditi roy, san francisco. atms are also vulnerable to

high-tech threats and that's a story we will explore later in ourgram. in the meantime, merck and eli lilly are the latest to top wall street earnings estimates for the second quarter. both raised their forecast for the full but the market response was mixed. merck's shares finished higher and eli lilly lower. meg tir rrell takes a look. rt>> reporter: in ular, a vaccine called proquad, driven by demand amid the record measles outbreak in the nate. lilly's results were boosted by drugs for cancer and rheumatoid ars as well as a new drug fo migraine. it came despite cialis facing generic copies after loss of

patent >> what we need to do is invent new things at a r fastere than we lose the patents. >> reporter: the companies raised their forecast for the ul full-year rest following similar moves from johnson & johnson johnson & johnson a bristol-myers. the upbeat tone from the industry is at odds with gt wash, where the price of prescription drugs are being focused. alex azard joi the administration after leaving lilly. >> i am working with congress te change rules of the road so they have the financial incentives to have prices go >> democratics are focused on the issue as well and with a iacond set of preside debates tonight investors are bracing for the impact on stocks. >> i think the democratics will come outhe ll-out the merger announced with pfizer and mylan. i think it will be a great ck point for a number of the candidates. so i think pharm could take it on the chin in the debate. >> reporter: whether it resultsa

in actual drug price reform is another question. for "nightly business report",m meg tirrell. proctor gamble posted the biggest quarterly sales growth in more than a decade. that's where we begin tonight's market focus. the consumer products company toppedec etions thanks to raising its prices and seeing a thles increase in its beauty line. comes as p&g sees the importance of millennial customers. have to respond to the needs and demands of the millenal consumer as well as other demographics. we are generally doing that. 17 of our top 20 brands in the u.s. are either number one or number two with millennial nsumers. we a expanding our range of naturals offerings both under current brand names and under nergy-createdic and acquired organic brand names. >> shas ros nearly 4% to 120.41.r unmour had mixed results with an earnings beat but athleticissed as the

apparel maker saw an increase in footwear sales but a drop in omapparel. theny also lowered its full-year forecast with declining sales expected in north america. at sent the stockown more than 12% to 24.08. same-store sales growth internationally helped ralph laurn post better t expected results but the luxury clothing and accessories company seas weak north american sales due to what it calls a different result retail environment and less spending by foreign tourists. fell to 104.17. bp topped expectations anks to increase in oil and gas production, helping to rioffset lowers in the quarter. bp was up more than 2% to 39.99. mastercard beat street estimates with an increase in transactions, strong consumer spending and drop in operating costs,ut shares were off more than 1% today to 278.16. hca health care missed both

earns and revenue estimates mainly due to higher expenses. the company raised its full-year outlook as shares dropped 9% t 132.80. after the bell amgen beat expectations, but rev knew at the biotech heel because ofom increasedtition off older off-patent drugs. it raised the lower e of the full-year forecast. they closed theegular session today up a fraction at 176.45. coming up, just how vulnerable are bank atms to the new high-tech threats? ♪

♪ ♪ finally tonight, modern-day bank robbers don't have to enter banks anymore. they can now target atms in ways that you would nevermagine possible. this new high-tech twist has become financialor headaches many of the banks in this country. andrea days investigatehis cutting-edge break-i >> it is brazen. light and in d d front of hundreds of people. >> reporter: take a look at this atm attack caught on camera, the images obtained from the secret service. according to the agency, the guys you see in uniform are

criminals grabbing loads of cash. what left this seasoned investigator stunned? >> how normal it a lookednd how calm they were. we know for a fac that atm crime and fraud does cost the banking industry and financialu services iy billions of dollars per year. s the orter: david tente u.s. executive director for the atm industry association. >> it just seems like in the u.s. no one really wants to talk about that. they would ratherirot have the customers and others thinking that their atms aren'tepsafe. >>ter: according to the secret service, recent attacks like this one caughtn camera cost the bank more than 3.5 million in just a few months. but they're just the beginning f a new wave heating up overseas. >> it is just a matter of time. >> reporter: greg norano is the assistant special agent in charge. he says the secret service has been investigating training camps located outside the unite states with kingpins organizing

new recruits. >> some training facilities are in south and ctral america. reporter: are you saying they're bringing in foot soldiers into the schools, training them and letting themhe loose into united states? >> yes. >> reporter: we went to toronto, canada, toeet with ibm's special unit x force red. >> we are in the business of attacking atms because our mission hacking anything to secure everything. >> reporter: charles henderson heads up x force red. thebanks, he says are so overwhelmed by attacks they are quietly coming to x force for help. >> we a now sitting at a 500% increase since last year in testing rdemand. >>orter: henderson revealed an attack he thinks criminals could be fine tungight now. does the hacker mastermind have to en leave his computer or touch this machine to make it work? >> no. the criminal can sit at home, send a strt thug out to collect the money for them.

>> reporter: to showt works, ibm's david berm playing the role of the mastermind at a remote location, hacking into the bank's network. >> we intercept the traffic, the response from the bank and change the deny response to ana oval. >> reporter: the bank won't see that you have changed the no to a yes and gotten? >> that's correct. invisible to ly the bank. >> reporter: henderson plays the foot soldier. >> the street thug that the hacker mastermind sends out can conceivably sit here and collect money after money until tatm is empty. >> you can use tens of millions, sometimes huneds ofillions of dollars and very quickly. >> reporter: what can the banks do now? >> test that atm just like a criminal would before criminal has a chance to. >> reporter: and he says the banks aren't the only ones losing out here, that some of the atm fees are made to offset fraud. so when you pay that fee, you are really paying for insure atms. for "nightly business report", i'm andrea day. before we go, here is another look at the final day's

numbers wall street. the dow fell 23 points to 27,198. the nasdaq was down 19 and the s&p 500 slipped 7. tomorrow we'll get more earnings and theiled issue its decision on interest rates. >>ro we'llbly see some fireworks around 2:00 eastern time tomorrow. >> i think so. so you haveo join us. that does it for us tonight. i'm sue herera i thanks for joining us. >> i'm bill griffeth, have a great evening. see you tomorrow. ♪ ♪ ♪

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