this is "nightly business with tyler mathisen and sue herera. no growth. the economy shrank y in the first quarter. is it cause for concern and what does it mean for the federal reserve and interest rate. >> curing cancer. the names to watch drug and biotech companies attempt to change the way the degrees is treated. back in business. an iconic u.s. airline takes flight wednesday again nearly 25 years after its shut down. all of that and more tonight on "nightly busin" for friday may 29th. good evening, everyone and welcome. i'm tyler mathisen. sue herera is off tonight. well it is a triple-digit decline for the blue chip dowin tex to end the month. more on that in a moment. but we begin with the economy's

ugly first quarter. the government reports that the economy shrank by a decent amount by the first three months of the year. gross domestic broadest which is the broadest measure across the country, contracted by a significant .7%. as we've been reporting there are a lot of questions surrounding the accuracy of first quarter gld data historically but regardless of whether the economy shank .7% or whether it grew a smidge the bottom line is this the economy is weak and investors want to see more growth. steve liesman has more on the first quarter and what is ahead in the second and beyond. today's gdp number was ugly but the street is already moving on. the government reported the u.s. economy contracted by 0.7% in the firs from the first read of 0.2% for the upside. a higher trade deficit and lower inventory played the biggest

role. on t a pick up in business investment and housing. consumer spending was about the same compared to the previous report. many economists are looking past the first quarter to a bounn the second quarter and to over all growth in the economy. >> rear roughly at 2.5% economy and you have to look at the noise in the economy and you need to complement the gdp to the un34r0i789 and what the ifm is doing. >> the fed doesn't want to hike rates into a contractling economy but it has to take account of strong job growth. >> if you put into context of we're still creating the fastest -- jobs at the fastest pace since the late 1990s and at that time short range% at around 6% it is hard to adjust keeping the rate at zero when the economy is growing at 2% to 2.5%%. >> economists expect 220 jobs to

be created iy and the unemployment rate unchanged at 5.4% and showing sti strong growth.e "ni report," i'm steve liesman. >> david kelly joins us to talk about the market. chief local strategy edgist at j.p. morgan funds. these numbers, head snapper or head fake? >> head fake i think. as steve said in his reports, there are a lot of variability in the first quarter numbers and special factors but the main thing is if you look at other data pending home sales, strongest level since 2006. and next week we get light vehicles which looks at 17 million units an so economy is coming back and yet again we're being faked out by one weak quarter when the economy is motoring ahead. >> and what does this mean for the second quarter quarter and growth for the rest of the year where do you have it tracking?

>> well we think that growth will bounce back. i'm coming up with about 3% growth for the second quarter. a lot of that bouncing back from the special factors here. and then about 2% to 2.5% growth for the rest of the year. that doesn't sound like a lot but plenty for this economy to cope with. i think it will push the unemployment rate down toward 5% by the end of the year and really the federal res gets to get -- needs to get going here. >> obviously the gdp is a backward looking number and the federal reserve wil look at it and say done with that and we get it. they say they are data dependent. wh do you think the data is that they'll be watching closest and when do you think they'll start to move on interest rate. you've been calling them as you just did for them to move sooner rather than later. >> well this economy is a bit like game of red light and green light. every year we get a red light and they freed like the federal reserve and don't do anythingd then

gradually we sneak up on you will floimt. finally this year i think they'l can't freak out by a first quarter. by september we'll see a rate hike and unemployment close to 5% and wages start to mcup and -- pick up and one more rate hike in 2015 and have to get going in 2016 because they are way away from normal given where the economy is right now. >> and let's pin the scenario where to the viewers think of the most and that is the portfolio and where do you see stocks and bonds for the rest of the year. >> i think it is still positive for equities because as the economy picks up earnings will do a bit better and they have headwinds from oil and the dollar and i think that will gradually ease and short-term it will put pressure on long-term interest rate and people will extend from the bond market into equity so i still think there is reason to be positive in u.s. equities and i do think in the

long-term people need to look for overseas equities also because i think there lo be better long-term growth prospects overseas. >> david, thank you. have a good weekend. david kelly with jp morgan funds. >>e gdp report and weak data on factory activity in the midwest and soggy consumer sentiment for may pushed the major indexes lower on the last trading day of may. the dow industrials dropped to 18010. nasd fell nearly 28 points and the s&p 500 finished the session lower by 13. for the month, all three indexes were higher. the nasdaq rose the most as you see there. better than 2.5%. as for oil, crude prizes jump nearly 5% as the number of rigs used in oil fields decline for the 25th consecutive week. greece was a concern for investors today and today u.s. treasury sect jack lew issued a

stern warning to et ridden countries and the creditors, debt a -- get a deal done as the group of seven conference wrapped up in dresden, germany. steve sedgewick has more. here in dresden at the end of the g-7 finance ministers and central bankers conference it was the unofficial agenda making all of the headlines. i went to a press conference with jack lew where he talked officially of course about the agenda saying it was not important to rest on our laurel and we had low growth globally and important to get the growth up talking about the need for surplus countries such as germany to spend on investment and infrastructure. and the unofficial agenda forefront and i spoke to jack lew about the issues and asked him whether it was the creditors or gre itself that had to move. >> all to move. there needs to be flexibility on the part of the institutions

needs to be some tough policy commitment implemented in greece. one won't happen without the other. they have to happen at the same time. it can only happen when you go from the high level of generalities to the very specific levels of what actions you are prepared to take. >> of course jack lew has been very worried coming into the conference that the affairs of contagion has been uncomplained and said this would be in unchartered warters and greece would not stay in the eurozone. ins resum negotiated to buy altera and the two are closing in on a $15 billion deal. according to reports, if the deal gets done it would be the biggest acquisition ever for intel and would be at another tie-up in the fast consolidating chip industry. yesterday we reported that after ago has agreed toba broad com at

$37 billion. shares of altera up 47% and intel was up more than 1%. humana is reporting a sale of the company. first reported by the "wall street journal," humana has received takeover interest from etna and cigna and working with advisers. humana gets the bulk of the revenue from the patients who use medicare. shares surged 20% easily making humana the best performer in the s&p 500 and you can see where it jumped when the report came out. and it sent well care health etna and united health higher in today's session when the prospects of consolidations. > and one of the most development cancer product conferences is under way in chicago. a cutting-edge data will be presented and the focus on big-name companies and the work in the fight against cancer. meg tirrell has more. >> it is the biggest event in cancer research of the year.

more than 30,000 doctors, s and invest yorz and analysts travel to chicago for the annual american society of clinical oncology meeting or asco for the progress in the fight against cancer. drugs known as immunotherapy, development by merck, astrazenecao and roach and others. >> the therapy treatments we're developing today attempt to unblock, if you will or activate the body's immune system to begin to fight off the cancer again. >> bristol myers and merck have two of the newest on the market for the skin cancer melanoma and lung cancer as well. analysts are anticipating on how these drugs and others work for different cancers as well as how they fair in combination with other medicines. >> while merck and bristol myers

are the leaders of the two approved drugs, roche and astraza has two drugs not far behind. and the debate is a. how differentiates a these drugs, and is there any difference and are they all essentially showing the same data. >> and analysts are watching on updates for drugs for breast cancer including one from pfizer called i brands, an experimental drug from puma technology. puma stock sank when data was release add head of the conference and analysts say the company will seek to change investor minds about the drug at asco. and they are watching a race in drug cancer between two companies. we've seen multiple situations where two companies are developing targeted drugs,

like clovis who has a drug cancer d astrazenecaa and are the drugs any different and does one have an edge over the other. >> steve ser win said while there is unlikely to be a single cure for cancer progress is being made on multiple fronts. >> i'm more optimistic than i have ever been that immunotherapies will have some patients rebalance their immune systems and maybe if not eliminate the cancer and quote, cure it, turn it into a harmless chronic condition that really doesn't effect longevity or the quality of life. >> this weekend will give us the latest on where we stand. for "nightly business rep meg tirrell. this afternoon bristol myers released data on a drug just mentioned on theivo, improving survival for patients with lung cancer but the drug's effectiveness was tied to whether the tumors had high levels of a specific protein and

that could potentially limit the market for the treatment and shares came under pressure as you see on that graphic, dropping 6.5%. still ahead, looking for cheap stocks? our market monitor will take us bargain hunting. the u.s. moving one step closer to normalizing relations with cuba today. the obama administration removing the island nation from a list of state sponsors of terrorism. was a key cuba demand as they want to conduct banking in

the u.s. among other activities. a mid increasing pressure from corporate sponsors fifa the top governing body engulfed in a massive scandal went ahead with the electionives and not without drama. wilford frost has more from zurich. >> president sepp blatter of fifa has been elected fifth term in office as the head of the soccer governing body and in a yo-yo afternoon he failed to secure a first round of the vote as we are heading for a second round vote the prince ali decided the gap was too large to close and he conceded to the re-election. i know that you accepted me that for the next four years i will be in command of this boat called fifa and we will bring it

back where finally football can be played. >> at the end of a torrid week for the world of soccer we hope this election result can lead to a new corruption-free era for soccer and for fifa. for "nightly business rep" i'm wilford frost in zurich. rosetta stone pops on buyout interest and that is where we begin tonight's market focus. the company evaluating an interest from rdg capital fund management. they have been wt costs as revenue has slipped in recent years. shares jumped 18.5%. finishing at $7.62. weak guidance weighs on shares of big lots. profit rise as same-store sales increase for the year it lifted the lower end of the outlook but the company issued soft guidance shares 2.5% lower to

$43.90. janesco missed estimates. the footwear and hat retailer said the first quarter is off to a good start but cut the earnings forecast and shares tumble to $66.19. apple has bought a german augmented reality firm called met io. the company developed technology that combined real world imagery and computer generated elements to make moving video to consumers can view the inside of a car before purchasing. the terms. deal were not disclosed. shares of apple off today by $1.50 to $130.28. and amazon is planning to expand the line of privately branded food and household products according to the "wall street j this would mirror the private label sfraet other large retailers follow and vars were a fraction higher at amazon today to finish at $429.23.

our market monitor likes mid cap stocks and has some names that are cheap and you should buy right so he said. he is briaperry, proerlt manager of the mid cap 30 fund. mr. perry welcome. mid cap 30. do you keep only 30 shares in the fund most of the time? >> yeah. what we do is we try and get a diversificat across the sectors to make sure we are well covered in that respect but we want a slightly concentrated portfolio so the names that work out in the portfolio have a more meaningful impact on the shareholder's performance. >> why does a small portfolio work for you as compared to other funds that have hundreds of stocks in them? >> you know i think that when we looked at it we thought that there was some exceptional names in the mid cap space and we would do better by keeping a concentrated portfolio. nobody wants a portfolio manager's 585th best pick.

>> no exactly. good point. general thought about the economy and the numbers we got today. are you worried about the economy or not? >> no. i think the economy is in pretty decent shape. i think the numbers we saw today from gdp were even better than we expected. we expected it to be worse than it came in. the porch closers on the west coast and the weather on the east coast, i think we are past all of that and it gets better going into the rest of the year. >> let's get on to your stock picks beginning with jet blue. why do you like it? >> i like the airline sector in whole. i think that they've done exceptionally well. it has a b of an olig onnoly. they have a great management team in place who is building the profitable and defensive networks and they are really starting to kind of branch out to the up lefrl consumer by instituting the mint strategy which has been going exceptionally well. so i mean i think it is a great airline and a great time.

they had a pull back in the last week or so. right now it looks like a great entry tht jcpenney. why do you like it? it has been a troubled stock but the new management seems to have things moving in a better direction? >> you know i think that is the key element, tyler. when you look at the company, they have had concerns and their strategy obviously didn't work out for a couple of years there but i think the new management team in place has turned the ship around and they are getting it going in the right direction. whether it is teaming up with the likes of disney and sephora to put those stores in their stores and bringing consumers back into jcpenney and focusing on the core business which is providing value to consumers in their fashion lines. >> let's go to the final choice which is pilgrims pride. people would be worried that that company might be affected by the massive outbreak of bird flu. should they be? >> so far pilgrim's pride hasn't

been affected by it thankfully. i think that is really a great catalyst for why you want to own the stock at this point. when you look back at say if you can get a discount in the market in in case avian flu, the chickens price is going to stay high and the feed cost will stay relatively low and so over all p pc looks like a great stock to own for the next 12-18 months. >> brian, thanks very much. we appreciate. >> thanks tyler. have a great day. >> thank you. you too. brian perry with the hennessey 30 mid cap fund. >> and coming up an airline once again taking flight nearly 25 years after it went out of business. yes, your eyes do not deceive.

here is what to watch next week. data on manufacturing sentiment and important economic indicator. d c sales, a read on consumer spending and friday jobs day. we'll have the employment report from may. and that is what is on a very full agenda next week. snap chat the app that lets users send vanishing messages isn't disappearing any time soon. according to reports, the app is valu at -- $16 billion. they are raising $16 million in equity. event spaces coworking offices, they don't sound like things you see at a shopping mall. but they very well may help keep

malls relevant amid the rise of online retail. courtney reagan has more from san francisco. the idea of the death of the mall gets a lot of attention. but the truth is as retailers like sears, radio shake and dealy close stores many malls are morphing what fills the space. the smart malls are going after exs those like amazon can't deliver, restaurants, malls and gyms and more. they want to lead the way by launching the e o fourth floor of the san francisco mall. >> the 37,000 square foot space is a co-worker mall and pop-up malls and all available for short-term rental. >> it is a physical home for innovative companies from start-ups to large brands. most of whi have a focus on the intersection of retail and

technology. you can get seats or desks or officers or couches or bean bags an can you get them for days or weeks or months and it is short-term because it is innovative in nature. it is designed for fast tlur put and high turnover and innovation for adaptation and it is designed for companies to test the relevancy of their products. so by nature it is designed to be quick and fast. >> shoppers can describe custom shoes with shoes of prey or cust t-shirts at bow and drake. five designers from san francisco will be here for a month. even angry birds rovio will debut the virtual reality game. >> it will definitely draw me back to the store and i'll dock by the mall and see what pop up shops are here. >> he doesn't believe every mall is dead but believed darwin's

mall is playing out in retailer. >> malls like this that are loerkted in unbelievable cities great locations with great retailers, those malls are growing and growing really well. >> while this mall is one of the heavily traxed -- trafficked mall in the u.s. a little traffic can't hurt. i'm courtney reagan in san francisco. and finally tonight, something i wouldn't see. eastern airlines is now back. under nur owners has started charter flights out of miami but can they stay airborne this time. phil lebeau has more. >> it looks like vintage eastern airlines but this boeing 737 is new and the start of a new life for eastern. >> we like to say eastern is in the dna of miami and so it was logical and natural for us to put the airline back here in miami. >> eastern flew the new plain over miami in announcing the return late last year. for now, eastern is a charter

airline, making daily flights into havana. and eventually other cities in cuba. over the next couple of years regal plans to have 20 planes as eastern branches out into commercial service into florida and the east coast. but re-establishing eastern won't easy. especially with the biggest airlines adding capacity and making it tougher for niche carriers to break into key cities. still, wiggle thinks he can attract fliers. >> we think a combination of the fact we have newer airlines the next generation boeing 737 plus the name on the side of the airplane that many of the passengers and the tour operators and others who charter our aircraft will recognize and that gives them a level of comfort. >> i'm frank goreman the president of the eastern. >> it has been more than 30 years since frank boreman piloted the first airline industry. thos were heady days in the mid '70s but by 1991 eastern

went out ever business due to labor struggles and poor management decisions. a legacy leaders of the new eastern vow not to repeat and to take off in south florida. phil lebeau "nightly business chicago. >> and that is "nightly business for tonight. for sue herera i'm tyler mathisen thanks for watching. have a great weekend, everybody. we hope to see you right here monday.

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