♪ this is "nightly business report" with sue herrera and bill griffin. amazon'sarnings f for the first time in more than two years as it ramp up spending on devery. return to growth. intel's revenue is revving. outlookk better tha expected and it buying back billions in stocks. the industrial conglomerate's outlook and explaining weakness in china. those stories and more tonigig on "nightly business report" for thursday, october 24th. good evening, everyone and lcome. bill has the ening off. it was the busiest day of earning season and that's whe we begin tonight with la-day results from amazon.

the company's earnings fell short of wall street expectationss its heavy investments cut into the profitability. they have been spending on one-day delivery to cloud business and advertising sales force as well. the good news is revenue grew at a healthy clip, but wasn't what analysts were looking for. josh whitman takes a closer look at amazon's quarter. >> reporter: good quarter, bad guide. that's how on lists are describing the latest earnings report, specifically of the company's g 4 forecast disappointed analysts calling for $80 billion to $86.5 billion. jeffrey says that's critical. g 4 is the big quarter, the holiday quarter, though he does caution amazon is conservative in its forecast. he also notes the company is

back in investment mode, spending to bring one-day shipping to its prim members and it's weighing on the bottom line. josh whitman, san francisco. >> let's push to tom forthey to learn more. he's a senior research analyst. toto welcome, nice to have you here. >> thanksor having me. >> i don't think you were surprised by the results that much. you had been saying the big investment they had been doing would weaken the bottom line. >> sure. looking the investment spending for faster prime shipping and content on their video platform would result in profits lower than expected for the september period, which, as it turned out, happened. >> now, how long do you think, though it's going to take to recoup some of this investmt? i noted on the earnings call today the cfo said they were investing heavily in hiring soft

ware engineers. there's a lot of money going into personnel. part of that is to drive content, but how long do you think it will take to recoup the cost? >> historically, actually, well suited on buying shares when they're under short-term pressure because amazon's ramping its investment spending. i think the good news is that while they're investing in faster shipping for prime,u seeing faster revenue growth because consumers can get more product to them quickly. it opens the opportunity to buy different things on amazon than not past and advertising and cloud computing, those are still two big profit centers for amazon. so it might be suited for a bigger payoff than historically. >> are you at all worried that their cloud business did slow a little bit? >> the answer is absolutely. if you look at the competitors, especially microsoft you're starting to see increme

pressure and it is important because cloud computing along with advertising and when other people sell on amazon, third-party retail sales those are -- for amazon. >> what about regulatory risk? that's something in your notes you pointed out a number of times. >> so glad you brought that up. i like to think of amazon as the great white shark in retail and i think o regulatory risk as the megalodon. the basic concern is the goth like they did with microsoft could institute rules not to be able to maximize sales and profits in the future. it's something we are monitoring closely. >> tom, thanks so much. >> thank you. it was a different s sry fot intel, the semiconductor company trounced earning ands expect faces, better than expected sales in the data ceer. its guidance was above estimates

for the entire year. john ft has more on intel's quarter. >> reporter: big takeaway from the intel's repept today is that it's really not about the pc business anymore. the company's been saying that for a while, but no quarter in recent memory underscored it like this one, the pc centric business was down 5% and yes, intel surprised big to the upside the cons of data and t t data center the business that intel has been touting at its growth area for years now. they really did deliver. we are talking everything from cloud to the regular server hard ware that companies buy to put in their own data centers performed strongly, not just for this quarter but so strong that intell upped its full year guidance. for "nightly business report" i'm john fort. it has indeed been a roller coaster ride for semiconductor stocks. this chipmakers have been caught

in the hashs of the trade war between the u.s. and china making the sector volatile and creating a lot of uncertainty. are things about to change for the group? joining me, from rock feller capital management. >> good to be back. >> let's start with intel's report. a lot of people were surprised they d d so well given the pressure the chip sector has been under. >> i think it's been a long time coming for intel. they hit a walk-off grand slam with these earnings numbers. even with this growth they're still treating it 12 times earnings, which i a low p.e. and they're yielding 2.5%. sonhis interes rate environment, not only is it trading cheaply from an evaluation standpoint you're also getting 2.5% to wait and own the stock for long-term. >> is this a success story, or

do you think that translates to the entire chip sector? >> that's a good point. look, we e in the middle of a technology kl revolution we'll never see again probably in the next 500 years. data is more important than ever as we just saw. from the cloud to everything they prove, everything that intel provides, until someone comes along and starts to compete with them in a meaningful way, i don't think -- you know, the sector is going to grow just because of technology, but intel is definitely a leader in this sector. i see that continuing for the foreseeable future. itot up that much, 11%, 12%. the s&p is up much higher. it hasn't hit high yet. you'll see this 12, 18 months out higher. we have a little bit of fear with the trade wars but like anything else, any other name, any other equity, anything else t solvopef sner ay those will

than later. i don't think it will have the impact everyone expects. >> it's interesting you say that. the company has been basically given the indication they think they are better prepared to handle the trade war than other player in the sector. would you agree with that? >> yeah, i think they probably are. they've expected it for a long time. they're repatriotizing some of their plans. they have expected this for, let's say, a year now, and even though it's not soft they're very prepared. i'm sure they've spent their money to be able to manage there through it as it gets solved. >> is it your favorite name in the space? >> absolutely. it's one of my favorite names in general, as well as technology and just in general. >> michael, thank you so much. dow component visa topped earnings expectations and gher than last year, but in line with estimates th company said an increase in its payment volume helped drive results for the quarter.

the stock wasas volatile in an initial extended hours trading. bell 3m is the latest manufacturer to be hit by slowing global economies. revenue fell in a third o oits markets and the company cut his earnings outlook for the year, fell 3%, making it the worst performing stock today. but the ceo has a plan to try to offset that weakness. >> reporter: from diapers to cars, 3m's adhesive products can be found everywhere. th's why its earnings report is widely regarded by wall street as an indicator of a global economy and the results were not good. revenue slowed, forcing the giant to cut due to ongoing weakness in china. a gaining market share in the company is becoming a bigger struggle for 3m at china's economy slows. at the same time competition from chinese players is making it harder to win new business.

on a call with analyst mike roman he says he doesn't see the situation in china changing in the near term. >> as i said in m m remarks we are still anticipating that slowing in china automomive and electrics continue to q 4, but outlook continues to are remain the same. >> reporter: this quarters results are seens a setback for roman who became ceo in 2014 and is facing pressure by shareholders to turn around the company. >> the f fst part of our five-year plan didn't go as anticipated. >> while those markets, which include china, electrics and automotive slow, the company is betting that acquisition in its health care busineses will pay off, having recently acquired a wound care company for more than $4 billion. >> the medical business is getting stronger. by the way, the results in health information are reflecting some of the early synergs. >> reporter: while the sale in

e company's health business did rise in the quarter, analysts caution it may not be enough to offset the weakness it's experience inningther parts of its business. for "nightly business report," sema modi. while they were big informations in individua stocks the broader market struggled. offsting a strong report from microsoft which we told you about last night. all of that result in the a mixed finish for major averages. the dow jones fell to28,604. the nasdaq up and the s 500 added 5. it is time to take a look at some of today's upgrades and downwnades. ford downloaded by diech bank. the analyst cites a weak earning outlook and pressure in the u.s. on volumes in china. the price target is $11. the stock fell 6%. ebay downgraded. the analyst says the soft ware will likely remain r rge bound

following the company's soft guidance for its growth. the price target is $24. the stock fell 9% to $3,562. tesla got a number offers in, including one from oppenh m oppenheimer. the call follows tesla's earnings which saw solid quarterly results and stronger free cash flow, which we told you about last night. the term has an outperform rating on the stock. it soared 17%. both southwest and american airlines reported better than expected earnings and that sent shares of both of those carriers higher. they have been also been forced to cut their capacity because they cannot fly the boeing 737 max and as w w report, their ces are not happy about that. >>eporter: southwest and american, bo posted betr than expects earnings thanks to strong demand, but both carriers

say they could have flown even more passengers if they had all of the planes in their fleet. not only has the grounding of the 737 max forced southwest and american to cut their flight schedules, they're tired of waiting for the plane to be fixed. >> i have been very clear -- we are not happy about our situation. you know, we put our future in the hands of boeing and thehe m and we are grounded. >> reporter: the grounding of the southwest planes means the airline, which has exclusively flown the 737 since i started in 1967, will now look at potentially buying air bus models in the future. meanwhile, american, which has lost more than $500 million being unable to buy the max says boeing will have to make up for the losses. >> boeing is bearing the cost of boeing's failures, not american airlines. >> reporter: the other challenge for southwest is making sure

customers will want to get back on the max when it'sed to fly. yes, the plane will be thoroughly checked out by the faa before it's declared safe, but it could take more than recertification to put everyone at ease. >> we are going to have to convince not just our own people, be yut our customers, t everything is fine and everything i safe. >> reporter: the other iues for airlines that fly the max, bringing those planes back next year. it may not be a smooth schedule which could create some operational challenges as airlines start to fly the 737 max again. "nightly business report," chicago. still ahead, demand is strong for new homes, sosohy are prices falling?

vice president pence expressed hope for a near term trade deal with cna while at the same time accusing beijing of restricting righthtand libertieiein hong kong taxpayer policy speech came ahead of a new round of talking aimed at ending t ending the trade war between the u.s. and china. >> the opportunity we have to set this economicelationship right is where a new reretionship between the united states and china not end. but in that environment of a more affair, mutually

respectful, reciprocal eclationship as the president often says, we think there is a foundation f our nations to move forward. >>he vice president also criticized the nba, accusing it of acting like a, ote, wholly owned subsidiary of china. this follows the nba's handling of a team owner's support backing protesters in hong kong. > other news we are watching tonight, boris johnson called for a general election on december 12th. he said he was asking parliament to approve a national election as part of his effort to ensure that britain leaves the european union. last week, johnson's brexit bill was passed bute failed to push through an aggressive brexit timetable. the european central bank held interest rates steady, but the ecb's president used his final appearance to warn about risks to the euro zone ecomy,

risks that include a no deal brexit. >> the likelihood of a brexit over cliff edge improved the overall situation. at the same time the medium term uncertainty is considered with concern. so, and at the same time, the rest of the geopolitical uncertainty continued to affect markets. >> he'll leave the ecb after eight years in charge of that institution. mix reported on the u.s. economy today. durable goods fell more than 1% last month, more than expected and the largest amount in four months. within that report, a closely watched business investment was lower for a second straight mo manufacturing in the second quarter expanded at a more robust pace. and a number americans find the applications for unemploymentenefits dipped, suggesting the labor market

remainss tight. mortgages increased for the third straight week but remama below levels. according to freddy mac, the fixed rate averaged 3.75%. a separate report shows sales of newly built homes were notes so strong but the it was the dip in prices that got all the attention. >> reporter: the median price of a new home sold in september fello the lowest in nearly three years but not because builders lowered prices. instead it was due to a shift in the type of homes sellin namely cheaper homes. exactly half of the home sold in september were priced below $300,000. compare that with 43% just one year ago according to the u.s. census. builders are starting to put up more entryevel hom but not nearly enough to meet the demand. >> one of the things we have seen since the great recession is the shift in the new construction market up to the higher end. larger homes, more expensive

homes. the reason why costs went up it's easy to pass along the cost to buyers at the higher end of the market. eers porter: recently build turninged to town homes which are cheaper. >> one of the cases we have seen is building townhouses. townhouse construction has grown 15% in 2018. we think it will continue to grow going forward in the cycle, and the reason why is they represent smaller homes. >> reporter: lower mortgage rates helped demand, keeping sales above a year ago when rates for much higher. but today's buyers are very sensitive. rates moved slightly high near september and sales fell in august. newly built homes have always come at a premium to existing homes but existing homes are heating up again. that price gap is shrinking. that could help buyers move in as long as mortgage rates don't

make a move higher. a technical bug takes down twitter's results. that's where we begin tonight's market focus. the social media company ported 145 million daily active users, beating analysts' expectations but missed revenue and profit estimates base in the part onhat the company says was a glitch which denied the ability to tarart ads and share data to partners. >> reporter: the setting was not working as expected. we were usinghe device setting to swdso them. when we realized it, we tweeted about it so people were aware in an effort to try to continue to be transparent and also stopped using that seseing. there's impact when things like that happen. >> twitter also gave weak guidance and shares fell nearly 21%. nokia warned of a price fall.

they'll be halting its dividend to cover the chaos for 5g equipment and the company cease weakakemand in china and pricing competition from huawei. shares lost neay 24% to $39. $39.00. dow posted better than e eects results as it cut plans for chemicals used inlasticicand other products. >> inventories are down. you have seen the backlog in the industrial sector down. i think we are poised now where any pull on the industrial sector, a a kind of a tail wind at all means we'll get a little bit of earningsomentutu and margin improvement and tightening of the supply/demand balances. >> do you rose. candy bars and other chocolates help cover rising costf ingredients in shipping and led to hershey's rise.

but they had a drop in sales and hershey dropped more than 2% to 146.37. coming up, for all of those who sayhe department store is dead, well, don't tell that to nordstrom.

cvs is pulli all 22 ounce containers of baby powder off its shelf and removing it from its website. j and j, whied a recall in an abundance of cautiononnd after a te that showed the presence of asbestos. j and j fell further this ternoon when that announcement was made. when you think of retail you probably think of online retailers and boutiques and nordstrom is betting a ven-story department stores the future. courtney reagan is at nordstrom's new flagship store in new york city. >> reporter: two decades after it was first considered and seven year after planning began, nordstrom opened its first flagship department store in n york city today. while there are more than 110 nordstrom department stores the

new york city location is what investors call a generational investment. what the company calls a possible $700 million market. >> it's the singl biggest invement we have made as a company. we are not paying rent. we own it. >> reporter: it's seven stories, 320,000 square feet. the beauty haven has facials, hair blowouts and even botox. there's 24/7 online pickup. 3,000 handbags. two floors ofwomen's shoes. nordstrom expects the new store will add about 7 force sales. the retailereeds a boost. department store sales fell 4% in the first half of the year. new york is already the largest for online sales. when a new store opens digigal

sales increase up to 25%. the planning -- nieman marcus opened its first new york city location. saks underwent ren nation but closed its downtown women's store and barney's is in bankruptcy. >> does new york need anoth store? no. will the great store do well? yeah. the thing about new york, there's opportunity here. >> i don't think there's any risk for nordstrom in this store. there's plenty of risk for them out there. nieman's is in trouble. sak's is in trouble. nordstrom plays in that space. i think they'll stay around and absorb tt business as those two struggle. >> reporter: the new flagship connects the to other locations, rack store and a men's flagship across the street. they work together to fulfill inventory, take returns and

provide services. the company spent decades dreaming about today but they'll have to wait longer to see if it's worth the investment. on this busiest day of earnings major averages finished kind of mixed. here are the closing numbers once again. the dow fell 28 points to finish at 28,605. the s&p 500 added five. and that is "nightly business report" for tonight. i'm sue herrera. thanks for joining . have a great evening and we'll see you right back here tomo.

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