♪ > this is "nightly business report" with bill griffeth and sue herera. ♪ in the bullseye. targ wows wall street with a much better than expected quarter, and the sck has an historic one-day gain. frenemies, stocks and bonds are developing a different kind of relationship, one that can be hard for investors to understand. peak suv. americans love big cars, but can the auto industry produce more of them while at the same time keeping their profits high? those stories and much more on "nightly business report" for wednesday, august 21st. and we do bid you a good ev evening,ybody, and welcome. it may be mid august when trading is supposed to slow down, but a few remarkable things hapned on wall street

today. retailers helped lift investor sentiment. yes, retail. that same sector that's been struggling to keep up with fast-changing consumer behavior. four of the five best performing stocks in the s&p 500 today were retailers. then there's the bd market. the yield curve inverted for the second time in a week. late today t t yield on ten-year treasury bond dipped below the two-year yield. that also forecasts a recession, and that's when it happened last week the dow fell by800 points, but not today. this time stocks held on to their gains. fact, the dow was up more than 240 points. it closed at 26,202. the nasdaq was up 71 and the s&p added 23. ail so let's start with r and target's surprise quarter. the big box retailer blew past every wall street estimate focast thrown at it, and that's not something that you hear very often when it cometo retail, which has seen a number of traditional stores struggle to figure out whatsu crs

want. target soared 20%, its best n one-day g ever. its market cap is now above $50 bi for the first time and shares are nearly four times higher today than they were in 2008. courtney reagan t a look at what target is getting right. >> reporter: target's quarterly results once again show that its three-year turnaround strategy is. worki store traffic is up. online sales grew 34%. both led to stronger than rapected compable sales growth. the retailers same-day online fulfillment options more than doubled their sales in a year, proof shoppers are increasingly andg target's website stores together. most retail experts agree target'sanagement team has done a good job executing a strategy that's resonating with sshoppers, but aong u.s. consumer also contributes to target's performance. on a media call i asked ceo hian cornell he views the economy and consumer.

cornell's answer, quote,s i have said for sometime now we continue to see a healthy consumer. environme consumer confidence remains strong. there's been a reduction in fuel prices which we thinkpo is ant for consumers. unemployment remains low and wages are growing. >> you also have seen some of the biggest retailers gettingcr ental share from some of the smaller retailers and probably think the trends will. contin you couple that with a broadly healthy consumer retirement and the ret dlers areoing better, and i think you will continue to see the big to outperform. ue >> there are categories they share that are still challenged. apparel has a glut of inventory across the secondory. consumer electronics suffers from lack of newness. the fact they have to navigate that will present challenge, but what target has shown for the erst several qua is they're up to the challenge. >> reporter: like other retailers, target will be ew dealing with tariffs on chinese-made clothing, shoes, toys and electronics in september and december. on the earnings cal cornell acknowledged it creates uncertainty and complexity, but

said target is confident in its ability to navigate through it." foghtly business report", i'm courtney reagan. and the big day for retail wasn't just about target. lowe'sbe reported er than expected earnings and revenue as well. the home improveme retailer ceo cited higher than expected contractor demand. he said that the potential impact on cnese goods is baked into the full-year earnings forecast. the news helped lift that stock by 10% in today's session. nordstrom reported a solid quarter as well despite being considered a department store, and they're facing more challenges than the big box retailers. the up scalele ret beat profit estimates thanks to stronger online sales. e company has been investing heavily in its digital business as well as its inventory and that sent the stock higher in initial after-hours trading. a clear trend has emerged from all of the retail earnings

that weheave seen in past week or so. retailers ed big box like walmart and target are doing very well. most department stories like cy's are not. nordstrom turned out to be an exception in the report today. but what does all say about the consumer and the economy? joining us tonight is john morris, the senior brand apparel analyst at d.a. davidson. thanks for joining us tonight, john. >> good to be here. >> you say it really is about the consumer just looking for better value, right? >> i think that's a very key element of it. i mean there's a couple of things goi on, but let's start with that. if you look at the dichotomy that y set up, it is perfect -- it really becomes drystal clear. on the one hou have the names that you were talking about, walmart, target. add to that list tjx.er on the o hand you have macy' macy's. you know, while nordstrom was good their revenues were low. look at the difference. the consumer's looking for value, and i think it is value and those companies that have been reinvesting in their

hosinesses as big box guys have to be able to execute to the custome both in store and online and for the customer that wants value. i think that's where you're seeing the pattern emerge. >>n addition to value, there has to be a reason for someone to go a brick-and-mortar store, is there not? >> yes, very good. you kn y, if think about what's happened with the shift in the retail paradigm is a result of the disruption of the internet. what you really have is it is no longer about the distribution channel. that is department stores offering a wide array of choices. the consumer isow empowered, and what does that mean? he or she shops by brand.fi t online, they look online, they check it out, they get knowledg t and theny're much more dedicated. so that retailer or brand nds to b highly focused and ready to deliver, and that's wha you get, whether it is a walmart because of the value, tjx

because it is brands at really good pricing, or some of the other operators that are highly focused like we mentioned home depot alo 's. >> and it is not just what you are selling these days. it is how you sell it with delivery being very important for companies like target and walmart, whi are really improving the delivery right now. so convenience is obviously a very big factor as well, isn't it? >> yes, but it is also -- i'm glad you mentioned that because one of the reasonshy target ted the better-than-expected results is because they're doing a better j of same-day delivery. i mean this is how these retailers can fight back to the amazons of the world. if they have a number of storesr they can del same day very quickly, very fast, or they can provide you service in the store. so they can come at it from a number of different angles, and thatre the delivery, whether it is in store through service, whether it is same day or what have you makes difference. >> john morris with d.a. davidson. again, thanks for joining us tonight, john. you bet.

shifting now to the economy, alexisting home in july rose to a five-month high thanks to lower mortgage rates and ang stabor market. according to the national sales tion of realtors of previously-owned homes rose 2.5%, slightly better than expectations. this report marked the first year-over-year up tick in nearly a year and a half. existing home sales make up a large part of housing market activity. >>federal reserve officials were sharply divided when they voted last month to cut interest rates for first time in a de tde. accordin the minutes of the meeting which were released today, the decisionas seen as a recalibration of policy. it was not intended to start a eeset course for m easing. some members of the committee wanted a deeper cut, others wanted no cut at all. but policymakers did agree that washington's trade strategy is creating a headwind for the economy. president trump said he's no longer considering tax cuts because he says the economy is

strong. as we reported yesterday, the president said he was considering cutting payroll taxes and examining whether to reduce capital gains taxes by indexing gains to inflation. today he explained his change of mind. >> i'm not looki to do indexing. i have studied indexing for a longime. think it will be perceived if i do it as somewhat elitist.an i don't to do that. i want taxes for the middle class, the workers, the people that work so hard. if i wanted to do it, i believe i could, but i would need a letter fro the attorney general. the economic expansion became the longest onecord this summer, though there are some warning signs. overall growth isslowing, and as we mentioned bond yields k and onceast w again today. and although it did not happen today, the trend lately has beenhat when bond yields fall stocks tend to do the same. vestors are justrying to decipher that seemingly odd relationship. right now some see stocks and bonds as frenemies.

mike santoli explains. >> reporter: stocks and have a complicated relationship, and lately bonds have been firmly in control of it. the steep drop inond yields this month hasnocked the stock market off balance as investors do the rush of ten-year treasuries to three-year lows below 1.6% as a worsening sign. the recent pull back in the s&p 500, which at its worst last week fell mor than from the ate july record high, got rolling just as the ten-year cracked below 2%. even on aminute-to-minute basis, declines and yields have weakened share prices, while nearly the entire n3% bounce stocks over the last several days occurred at times when s yields havpped falling and lifted off their lows. yet it is not entirely the case that low yields are all bad for stocks. low rates act as supportquity valuations on a relative basis making stocks appear che compared to bonds than they have

efnce the sharp sell-off in late 2018 ande that in 2016. a majority of large stocks now have dividend yields higher than the ten-year treasury as does the s&p 500 itself, which now has about a 2% dividend payout. very low yields have boosted more stable defensive stocks such as utilities and consumer staples along with very big growth stocks with strong profit potential, seen for years to come without reliae on a hot economy. this probably means the best setup for stocks at this point would be aif modest in yields that allows more cyclical sectors and financial stocks the recover from sharp losses while easing some of the more intense fears of recession that the yield collapseas fuelled. for "nightly business report", i'm mike santoli. > america's deficit will expand by more than expected over the next decade. the congressional budget office cited the impact of the two-year budgea agreemented last month that includes higher federal spending. and while the directorf the agency says growth could be hurt

over the long term, the near-term outlook isn't as bad t because of the consumer. >> we slightly upgraded our g estimate ofwth as compared to the forecast we made at the beginning of this year and that aswas on data showing pretty strong spding, especially by consumers. at the same time we see risks in the economy and our forecast has growth slowing in the second half of theea consumer spending we expect to subside a little bit in terms of its growth, and then business investment as wel >> the congressional budget office also warned that the economy could be stifled by further tariff hikes. time to take a look at some of today's upgrades and down grades. we have a couple to tell you about tonight.ha i hawaiian holdings was downgraded from selto buy. citing risk to earnings with the addition of new flights to hawaii by rival southwest.

shares fell about 25% to 210. red fas upgraded from buy to hold. the analyst says the cllpany is positioned for what it called the tech revolution in real estate. price target, $24. that stock was up 5% to 18.39. still ahead, match making like you have never seen before. ♪ buyers from around the world looking to play thefield, farmers desperate for a relationship. it is a kind of love story. i'm contessa brewer . i will tell it to you coming up on "nightly business report". ♪ ♪ president trump today defended his administration's

actions in the ongoing trade w between the u.s. and china, but that trade war has left american soybeaut farmers wit one of its major export markets. so some of them went to chicago today to attend an exchange of sorts where they meet with yers who are in search of new partnerships. contessa brewer repts tonight from the windy city. >> this is ground up beans. >> reporter: fmarm to table. at a trade exchange in chicago it is a kind of soybean speed dating. farmers are desperate for a ree'tionship. >> three weeks away from -- from the harvest of our soybean crop. it is -- we have no contracts booked. >> reporter: agriculral suitors have their pick of the global crop. >> the world market has changed, and china hasn't bought any beans in the last month. from 50 er: 400 buyer different markets from around the world. they're playing the eld, touring u.s. farms but keeping and eye onttractive competitors. >> i think that the brazilians

are doing all they can to take advantage of this situation, to expand their production i brazil, expand their relationships in china, you know. so that is a real risk. likewise, russia starting to produce more soy. >> reporter: thanks to the sour trade relations withch a, jilted u.s. farmers come to the table with a lot of baggage, more than a billion bushels of unsold soybeans, a record amountce soybean pri are near a ten-year low, plummeting from more than $10 a bushel before the trade war to about $8.50 now. >> we had a door of opportunity closed on us by losing a great trade partner short term. a>> reporter: now farmers getting out there, courting new buyers in asia, europe and south america, even as a chinese delegation visits wh american farmers, reinforcing their commitment to the relationship. >> we're making new contacts. we are developing new markets in other places. we need to come out of this

stronger than we went into it, but it think will be really hard for us to do if the outcome china. >> reporter: so with cautious optimism for a trade deal this fall, the daytime drama unfolds. buyers and sellers meet, hoping for a match. in chicago, contessa brewer , report". business children's place cut its full year earnings forecast and that where we begin tonight's market focus. same-store sales at the children's apparel retailer fell nearly 4%, leading to a miss in revenue. theompany also said it felt pressure from the integration of the bankrupt gymboree chain. shares opped. fitbit inked a deal with singapore to potentially provide hundreds of thousands of consumers with fitness trackers as part of the company's health init program. customers will not have to pay for the device but spend $10 fer mont a year for its services. fitbit was up more than 2% to

about $3.02. rica's largest ecommerce company said it found instances of fraud where, quote, improper orders were placed by employees and then cancelled, and that imcted jamia'ser qua they plummeted to 12.27. japan post whicher del the country's mail, runs a bank and insurance company, said today it improperly sold more than 100,000fflelac policies ovr the past five years due to not updating the management system. they charged twice or not letting customers switch policies. japan sell it aflac policies there. they were down on the new at 48.98. sony and disney reportedly cannot reach a deal over the highly-popular "spider-man" character. sony owns thes film rig to "spider-man" but it had recently

cooperated with dney's marvel studios to bring two movies to the screen. disney was reportedly seeking an equal co-financing stake for any future spiderman films,ut so far sony has said no. sony's shares rose nearly today to 56.65 with disney up a fraction at 135.76. after the bell tonight retailer l brandsopped earnings estimates but missed on revenue. same-store sales fell, especially its victoria secret brand, but l brands renewed the full year guidance. they wereolile after closing up 2% at 20 m3. ase americans driving and buying suvs and crossover utity vehicles, t auto industry finds itself at a crossroads. it mant meet d by offering more big cars or at the same time keeping the models highly profitable. as phil lebeau reports, that is getting tougher to do in a saturated market. >> reporter: they seem to be

everywhere, suvs and crossovers. with buyers looking for bigger vehicles where they sit higher and have more space, automakers are offering and selling more suvs than ever. >> suvs and crossovers is a body style or body type, will continue to increase but the pace is going to slow and there competitiveure is going to be even greater as more and more models are launched. >> reporter: from new luxury suvs like the bmw examines sprkssprk -- x- fewer versions of each suvll mol wie sold this year and the trend is expected to continue which will impact the chevy equinox, a popar suv. general motors is trimming production of the equinox at its plant in central mexico so h it doesn'e a glut of the suv in showrooms at a time when overall auto sales are slowing.

>> it is adding additional pressure, and i think the pressure is certainly causing some inventory issues and causing manufacturers to make some toughth decisions. is trimming production as well as looking at some changes in future model rollouts and options. >> reporter: the surge i suvs for sale could ultimately cut into the profitability ofods that have long been big money makers. aat's becauseomakers have to work harder than ever to win over buyers. in fact, the averagefo incentiv each suv sold this year is close to a record high of almost $4,000, a pricey sweetener to attract buyers who have plenty of options when it comes to utility vehicles. phil "lebeaughtly business report", chicago. and coming up, consumers' growing appetite for eating out. ♪ ♪

♪ the number of 401(k) millionaires is at a record. in the second quarter there were 196,000 fidelity plans with balances of $1 million or more. analysts say investo were able to recoup the money lost at the end of 2018. fidelity is the largest provider of 401(k) plans. bank os tend to have a unique view of the economy and the spending habits of americans, and today the head of bank of america said that he feels the consumer is doing well and is strong enough to keep the u.s. economy humming. >> they're employed and more importantly they're spending more money. base througher this time, you know, august 15 year-to-date, you have seenhe amount spent by american consumers atri bank of a, $2

trillion. it is up 5.9% from last year through the same period of time. so in 17-18 you were up 8.5%. 18-19 you are up 5.9%. think about that as 120 billion dollars more spending by our consumers this year versus last year. >> and a growing portion consumer spending is taking place at restaurants. kate rogers continues our look at the american consumer. reporter: if there's a recession brewing, the american insumer hasn't gotten the memo, particularly whe comes to dining out. census data show that people have been spending more at restauras this year than at the supermarket. one reason is that dining establishmentsre charging more, hiking prices at a faster rate than inflation. >> from a consumer perspective th reains substantial pent-up demand for restaurant servic o. over two of every five american adults report that they're not using restaurts as ch as they would like in their daily lifestyle, and it is even

higher for take-out and delivery. >> reporter: but hig prices aren't driving consumers away from spending at restaurants. in fact, the national restaurant association projects total sales at food and drink places will hit $8 billion in 2019. that's an increase of 3.6% over last yea and a new all-time high. restaurants account for ata subsially larger piece of overall consumer spending on food, from 25 cents for every $1 in 1955 to 51 cents today. the trend is helping the industry's bottom line. from chipotle to starbucks and mcdonald's, tech upgrade expanded delivery offering and more modern stores are luring customers. unemployment rates at historic lows are also helping, and even if the job market weakens spending on dining out will likely not fall off entirely. >> the typical consumer equates restaunt usage with a certain standard of living. it is pretty difficult for them to -- to cut back their visits.

it does alter their total dspending. an even during softer economic times, they will continue to patronize, but that patronage pattern definitely does change in line with what happens to income and employment growth. >> reporter: wle recession chatter swirls, the restaurant industry isn't expressing concern just " yet. foghtly business report", i'm kate rogers in englewood, new jersey. that is the "nightly business report" tonight. i'm sue herera. we want to remind you,his is the time of year your public television station seeks your report. >> i'm bill griffeth. thank you for that support. have a great evening. see you tomorrow. ♪

woman: this is "bbc world news america." is made possible b the freeman foundation; by judy anr blum-kovler foundation, pursuing solutions for america's neglected needs; and by contributions to this pbs station from viewers like you. thank you.