this is "nightly business report" brought to you by -- >> the street.com. interactive multimedia tools for an ever changing financial world. our dividend stock adviser guides and sdwren rates income in a period of low interest rates. real money helps you think through ideas for investing and trading stocks. action alerts plus, a charitable trust portfolio that provides trade by trade strategies. online, mobile, social media. we are thestreet.com. >> sell in may, that's how investors kicked off the month. erasing about half of april's gains. >> pedal to the medal. the fed sticks with the easy

money policy and calls out congress for weakening the economy. we'll talk with former fed governor randy cross. testing, testing. with five months to go, will the state's new health exchanges be up and running in time for open enrollment. this is "nightly business report" for wednesday, may 1st. tyler, the calendar changed and so did investor sentiment. >> the old saying sell in may, go away. did wring true on wall street. stocks fell sharply on more evidence of a slowdown in economic recovery. nasdaq fell 29. sfrp & p 500 down 14. big driver for today's sell-off. disappointing data on jobs, specifically the payroll firm adp reported 119,000 private sector jobs remember created,

far less than what economist's expected. march's numbers revise downward as well. causing concern about friday's big government report on payrolls and jobs. the institute for supply management's read on u.s. manufacturing in april showed modest growth, but dropped to the slowest rate of growth so far this year and construction spending during march fell 2%, largely because of a pullback on government spending. >> meanwhile, the federal reserve knows that the u.s. economy still needs help. so policymakers announced today they are leaving interest rates unchanged near 0%. wrapping up a two-day meeting, the fed says it will continue its massive bond buying program to encourage more lending and spending, the central bank says it's ready to increase or reduce the pace of those purchases. hampton pearson has more. >> at the federal reserve, monetary policymaker s wrapped p

a two-day meeting, vowing to keep interest rates at two-year lows and buying billions in treasuries to encourage borrowing and investment. the fed opened the door to increase bond purchases if the economy doesn't improve. >> right now, we are over easy. i would like to see it sunny side up. >> and ben bernanke sees an economy expanding at a slow pace and fiscal policy is restraining growth. leading economists say the fed benchmark of 6.5% unemployment rate for raising interest rates is becoming more elusive because of government austerity. >> weak because the sequester. fiscal drag from taxes and the sequester intermingle. >> disappointing data on private sector jobs and a partial manufacturing slowdown, adding to concerns ahead of friday's government employment report that april could see a second

straight month with a significant slowdown in job growth. for "nightly business report," i'm hampton pearson in washington. >> joining us now, the former fed governor and professor the economics at chicago's booth school of business. welcome. good to have you with us. everybody is saying the key sentence in the fed statement today is where they say they could increase or decrease the pace and size of their asset purchases. do you see it that way? and what does that very careful language suggest to you? >> it is really the only change in statement, both in terms of fiscal and monetary poifl. that was the key change. a lot of discussion of tapering off purchases. that discussion is now gone. two of the last three years, we've had these spring swoons or slumps when the fed started to talk about exit strategy and taking away the punch bowl, we

won't hear that anymore. the if i hhas decided it will u open mote and try to change people's expectations. >> randy, as a former fed governor, you sat in on the meetings, know what the conversation is like. what wall street wantston, how much longer this bond buying program is going to go on? what are you saying? how long is this going to go on? >> well, the fed change of communications strategy to get away from having a particular date like 2015 to saying until the -- the unemployment rate goes down to 6.5% for moving interest rates, for the bond purchases, i think it's likely it will go on for a while. by changing language, they made it clear that the balanced view that they could either increase or decrease, depending on how the economy is going, and, unfortunately, the economy remains in a sideways slide, not really getting the traction that we need, and so i would say it's

at least as likely that they will increase rather than decrease purchases over the next year. >> you wrote not long ago, asset purchases have helped forestall deflation which is why the fed has embarked on this course is qe the bond and other asset purchases, still helping and do we risk not necessarily kindling inflation at the consumer level, but an asset inflation that some people say could end badly? >> sure. we have the challenge of the regular price inflation or deflation, and we're starting to see some of the numbers go down lower and lower. inflation by one of the fed's favorite measures that just came out, is probably around 1%. that's half of the goal of around 2%. there are some potential concerns that by keeping interest rates so low for so long and making such promises, that you could get some more risk-taking occurring in different parts of the market.

i don't think there is strong evidence of any dislocations, but we have to be really careful to monitor for that. >> all right. everybody is waiting for this important jobs report coming out on friday, and i know you watch it very carefully as well. the consensus estimate is that the unemployment rate will stay around 7.6% and something like 153,000 jobs created. if it actually works out that way. how would you describe the job market these days in view of what you said, the sideways slide in the economy? >> unfortunately, that continues to be where we are. it doesn't mean we will have a double dip, stop job growth. having job growth instead of 150,000, 155,000 area won't make a big dent in unemployment rate. it has been stubbornly high and we continue to slide along with growth around 2%, generating 100,000, 150,000 jobs per month. gradually bringing unempty down. the fed is frustrated.

wants more to happen. believes it's trying its best and pointing fingers at the fiscal authorities. >> would you like to see chairman pchair bernanke be renominated? >> i have enormous respect for bernanke. much like paul volcker, over time, people will realize that bernanke really slayed the dragon of he can nation and important for providing the basic support going forward. i would be delighted to see him there much longer. >> thank you for joining us. >> more on the economy today. more evidence of a turn around in housing. mortgage applications rose 2% last week, following another slight dip in interest rates. 3/4 of the applications were

current homeowners refinancing lobes at a lower rate. april a blowout month for auto sales for detroit's big three. saltz at ford surged 18%ing chrysler and general motors saw sales rise 11% last month. smaller, more fuel efficient cars like the ford fusion were in high demand. so were pickup trucks like the dodge ram. some see that as a by-product of the recovery in housing with big demand from contractors and construction crews to replace aging vehicles they held on to since the great recession. >> turning to our market focus. merck dragged down the dough. reporting lower profits on reduced drug sales and merck revised its outlook lower. it closed at $45.69. >> one company's pain, other firm's gain. allergan shares hit hard today after the company said it will delay final tests for its drug

to treat macular degeneration. as a result, shares of regeneron led the market. shares of allergan off 13% to 98.60 while regeneron gained 10%. cbs chair touching a new all-time high. solid profits up 23%. higher demand for generic drugs, the flu season and increasing prescription volume, and current quarter profits will be higher than earlier forecast. year-to-date, cvs up 20.5%, closing at $58.75. . >> visa reported higher profits in wall street than expected and increased net operating revenues as well. the company confirmed its full year outlook for low double digit revenue growth. shares of visa sold off by more than 2.5% before the close, but

they jumped in afterhours trading. humana doubled its first quarter profit and raised its outlook for the full year but expressed uncertainty about 2014. about 2/3 of the humana's revenue comes from medicare advantage. a private medicare plan. rates are set by the government, and humana says that's making 2014 earnings growth uncertain. shares gained more than 4.5% on the earnings performance and up 13% so far this year. >> sticking with health care, the affordable care act signed into law more than three years ago, now dozens of states gearing up to implement their own health care exchanges by october when americans can shop for their own state-run plans, bertha coombs shows us the challenges one state is having in setting up its own exchange. >> sort by the premium cost, the deductible. >> reporter: washington state has been test driving its health

benefits exchange since late march. >> other things in here. >> reporter: testing still in the early stages. it's one of 16 states and the district of columbia building their own insurance exchanges. health care portals consumers will use to find out if they are eligible for subsidies. most states seems to be on target says kaiser. it's less clear how things going with federal exchanges. >> we know a little less with how progress is proceeding at the federal level, but we are hearing that progress is beingmide. >> reporter: the federal government is building exchanges for 33 states whose governors opted against a buildout. critics worry health and human services won't get systems up in time for the october 1st start of open enrollment. but president obama downplayed those concerns. >> any time you are implementing something big, there are going to be people who are nervous and

anxious, is it going to get done? >> the deloit team helping to build washington's system, says the biggest challenge is bringing medicaid and other federal reporting systems up to speed so they don't trip up the portals. >> these changes are essentially to support the additional data capture we needed to do, to support the affordable care act. >> for the federal exchanges resolving conflicts with 33 different state systems will be a big, complicated piece of business in president obama's words. it will have to delay some small business options until 2015 because it can't get them up and running in time for october 1st. in washington, they feel like they are right on schedule to get both individual and small business plans online and ready on time. >> everybody is very engaged and very involved and very interested in our success, so that's been really helpful. >> reporter: for "nightly

business report" i'm bertha coombs. >> complicated, challenging, tyler. they have to communicate what is going on. a poll came out from kaiser saying half of americans don't know that the affordable care act is a law and they have to have insurance. >> picking the right splan tough enough before the law. >> complicated. a lot to learn yet. still ahead, if content is king which media companies have an edge, old media or new? first, the international markets, most of them closed today. here is a look at the ones that were open.

facebook losing more faf with investors. reported earnings below analyst estimates and bounced up and down in reaction. sema moody at the nasdaq with results. >> came in at 1.$1.46 billion, slightly higher than the street estimate, but as you pointed out, earnings did meet -- earnings did miss street expectations by a penny, now, mobile was the key buzzword on analyst's minds. mobile ad revenue makes up half of ad revenue, compared to 23% it reported last quarter. and ceo mark zuckerberg, we have seen strong growth and engagement across the community and launched several exciting products. facebook in general has been taking more steps to make its social networking site more mobile friendly.

made updates to the time line and other features and unveiled facebook home software for android users to lure in mobile user. back to you. facebook may represent the new media, but old media reported earnings today. after the bell, we heard from cbs, "60 minutes" and other shows. they had a jump in revenue from cable carrier fees. comcast, parent company of cnbc, made more than expected for growth than theme parks and cable news channels, even though it lost more cable subscribers. and time warner made more than forecast than cnn, hbo and other cable networks if owns, despite weakness in the movie studio and publishing business.

and if that wasn't enough to show that old guard is doing pretty well, shares of too more media giants, disney and viacom, touched all-time highs today on a down day in the markets. >> joining to us talk about the investing opportunities in all kinds of media companies, larry haverity, portfolio manager at avelli funds. you have been recommending facebook, do you still feel that way after seeing earnings? >> absolutely. the key statistics are not the earnings. the revenues in the engagement, and the ad revenues grew 43%. google and facebook in the next five years are going to capture all of the incremental growth in global advertising dollars. and you can see google's revenues, facebook's. now the question is how fast is facebook going to convert this revenue to operating cash flow? they didn't get a particularly

good grade. only converted around 25%, pretty low since you have a company that doesn't sell anything. they are spending a lot of money in initiatives. ith kind of like amazon. the market is going to give mark a hall pass on showing up for a while and we've seen act one of the movie, collecting the dollars. act two is converting them to a profit and we'll have to see. i think the stock is fairly priced here if it does down, it becomes more attractive and we'll just have to wait. it's not a definitive proposition. i think the market figured that out after hours. >> you know, larry, we've used the construct of new media versus old media. new media and old media cross pollinate, connect in various ways. if had you $10,000 to investory the next five years, how would you apportion it between or among new media companies as we traditionally think of them and old media companies and which

specific names would get the most of the money? >> i would go at least 50% in new media, and i think the biggest position would be google. google is very reasonably priced. went in search, went in video, and heaven only knows what will happen with google glass. it could be enormous, and it's a free call. i would maybe put 10% in facebook and 15% in yahoo! largely because i think the proposition with ali baba in china goes public, which i think will happen at the end of the year. the rest of it, old media not so bad. the collection of ad dollars problematic, but they figured out a way using technology to get their content views on more platforms and cbs has done this with its cable network.

time warner done hbo go and tv everywhere. and you are getting new streams of people paying for content like netflix, amazon and tv stations are collecting we transmit consent and the beauty, 90% incremental profit. not really spending a whole lot more money to produce the content. incremental margins are terrific. companies are generating in the neighborhood of 8% to 10% cash flow growth and management has all gotten religion how to distribute that cash flow growth to the shareholders, i think time warner has gotten the most religi religion. pretty distributing 100%. cbs is right up there with them. >> we'll leave it there any disclosures to make? do you own any of the stocks you just talked about? >> we own them all. >> thank you very much. portfolio manager, larry. jcpenney is sorry.

posting a public apology on youtube and facebook pajsges admitting it made mistakes. >> it's no secret. recently jcpenney changed. >> jcpenney knows it messed up. by eliminating coupons. wall street wasn't particularly impressed by the mea culpa. coming up, what one cola giant is doing back-to-win back consumers who have sworn off soda. first, here is how commodities, treasuries and currencies fared today.

finally tonight, with u.s. sales on the decline for eight years straight, things have been pretty tough for soda makers who are working harder than ever to sell those drinks. especially tough for the number three soda maker, dr pepper/snapple. jane wells shows us what that company is doing to get more americans to come back to buying the bubbly sweet stuff. >> you like orange? >> in a laboratory on the ground floor of an office building in maybo, texas. david thomas is leading a team trying to break through the clutter on the soda shelf and lure americans back to drinking

cola. >> we're all about flavor. >> reporter: headquarters for dr pepper/snapple group. the perennial number three to coke and pepsi. trying to thrive in a company where people are switching from soda to energy drinks or water. >> there is a lot of cola fatigue out there. flavors are continuing to grow. we play in the flavors, that's what we do. >> low calorie soda in the history of mankind. >> young says the company is starting to win back people who have sworn off cola with a new ten-calorie product line which he says has the same mouth feel as full calorie cola, the new line is helping dr pepper gain market share, but young doesn't buy the argument that sodas are the cause of obesity. >> everybody trying to say obesity, being caused by soft drinks. how can soft drinks s be declig and obesity climbing?

>> reporter: there is a new initiative adding video to snapple reinfactments. >> we have to think differently. trojan horse in the beverage industry. have to be creative in how we approach things. >> reporter: the company is proud to show off all the risks it's taking. almost all. they won't let us go everywhere. behind this door is the vault, which contains the secret recipe for dr pepper, all 23 ingredients. they won't let us see the vault, they will let us see the door. will the innovations pay off? it will be a long, tough fight. >> so far, i've seen a lot of fleas make a bulldog bite his but. >> reporter: any bulldogs biting their butts yet? >> we're still gaining share. >> reporter: jane wells, plano,

texas. >> one of the things that little can become big. you drink a coke, sugar drink a day, it adds up to a lot of calories. i have to replace them with the waters. i do like diet dr pepper, my favorite among them. tomorrow, i'm hosting "nightly business report" from washington. talking to some of the biggest names in the mutual fund business. >> friday, i'll be in omaha, covering the berkshire hathaway meeting, big event for value investors and interview warren buffett and a complete wrap up on monday. >> that will do it for tonight's "nightly business report." i'm tyler mathisen, thank you for watching. >> and i'm susie gharib. thank you for watching. we'll see you tomorrow. >> "nightly business report" has been brought to you by -- >> thestreet.com. interactive multimedia tools for an ever changing financial world. our dividend stock adviser

guides in a period of low interest rates. and we educate beginning and seasoned options traders action alerts plus, a charitable trust portfolio that provides trade by trade strategies. online, mobile, social media. we are thestreet.com.

hello and welcome to this is us. i'm becka king reed. this week we're experiencing the rich history of san jose. right now we're in the heart of the city at the sight of the first state capital. san jose was founded in 1777 and is the oldest settlement in the golden state. today we're going to find out what makes san jose one of the most fascinating cities in california. we'll also meet a revolutionary biologists who's one with the dolphins. an astronaut who took flight aboard the discovery. and one of california's most famous rugby coaches. we have some great stories to share and it