this is "nightly busine" with tyler mathisen and sue herera. >> good evening, everyone. welcome to a special holiday edition of "nightly busine m sue herera. >> and welcome from me as well. i'm tyler mathisen. the first half of the year is in the books for investors wrapping up a rocky six months for stoc are on edge now about what next big event could jolt the market. so tonight, as the nation gets ready to celebrate its independen we look ahead to the second half of the year and what to expect in everything housing to the economy to yes, stocks. >> and that is where we begin tonight. e are a number of issues the financial markets are keeping a close eye on that could increase volatility in the second half. dominic chu has the three things investors need to watch.

>> here's what to watch for for equities for the second half of the year. stock market investors are having to deal with a few bumps during the first six months and while volatility is low for now, there are a host of reasons why it could pick up. first, the greek debt situation has now gotten bad enough to spark global market concerns. stoc across europe and asia have caused big swings which could cause a voter referendum in greece on whether to stay part of the euro currency. however, many experts believe the u.s. will remain rather eninsud from the worries there. the next one is the fed whether they will raise interest rates. look for that kind of uncertai continue. and then there's corporate profits.s showing signs of slowing. they expect a decline for the third quarter and u.s. stock markets have not seen a pull back since 2011. those are a few sparks to a fresh downside move in the second half of the year.

for "nightly busine i'm dominic chu. >> as dominic just said investors will be watching corporate profits very closely. but what exactly should they be looking fo bob pisani is going to tell us what to watch for. >> here's what to watch for in the second half of this year in earnings. e signifi headwind for those earnings there's no revenue growth. we have modest low single digit increases in earnings coming but revenues continue to go flat to declining. it's a problem because if you want to kick start a second half stock rally, you'll need to see sales pick up and capital spending pick up. you'll need to see less emphasis on cost cutting and share buyback. however, it's not all gloom and doom. there's a major earning and the u.s. economy is slowing improving. prompting optimism amongst

analysts so for home builders and autos expected to be up double digits in the second half while financials and health care are also expected to see earnings gains of roughly 10% over the same period last year. unfortunat hopes for a turn around in energy stocks have now faded away with analysts expectin a roughly 50% decline in earnings. finally, there one wild card. the dollar. the strong dollar has been a major problem for earnings. the dollar has been weaker since march. if it comes down to still more that cou major help for stocks in the second half. and that's your second half earnings outlook for "nightly i'm bob pisani at the new york exchange. and now to the economy where the federal reserve isn't just focused on what is happening here but also on what is happenin overseas. especially in greece. steve liesma tells us what central bankers need to see in order to carry on what their eventual plans to hike interest rates. here's what to watch for in the economy in the second half of the year.

the outlook for the next six months is reasonably bright with one major wild card. greece. right at the average of the expansio the recession, somewhere bet 2 and 3%. fed officials continue to think that the economy will improve to the point where they can raise interest rates for the first time in mo t nine years. the possibility of a greek default and exit from the euro complicates the outlook. economist forecasts unemployment to head down and wages are seen picking up. that's your second half economic outlook. for "nightly busine i'm steve liesman. >> so if all goes as expected and the fed hikes interest rates in the coming months how will the bond market react? as mary thompson explains it's not only the initial liftoff of rates that's important to eye, but the volatility that could follow. >> here's wt to watch in the bond market in the second half of this year. the focus is the fed with an

expected rate hike in september or december. though a minority expect no hikes, when the fed moves, strategist see volatility though not at levels seen in 2013. instead, most see short-term rates rising and flattening with the yield curve. after the fed moves, the focus turns to the pace and amount of future rate hikes and the performae of the economy. the fed signal that plan to move at a measured pace but if the u.s. economy grows more quickly, strategists see long rates rising and the yield curve steepeni on fears that the fed will be aggressive enouo keep inflation in check. on the corporate side strategis say a continued strong demand from yield hungry foreign investors and a strengtheng u.s. economy could limit demand in the very rate sensitive junk bond space. well investment grade issue you arers are seeing getting out ahead of the fed creating a supply glut this summer. that's your second half outlook for the bond market.

i'm mary thompson for "nightly " a joining us to talk more about the financial markets, earnings and the economy in the second half of the year burt white, chief investment officer at lpl financial and lindsey, chief economist. welcome to both of you. ladies first. lindsey, i'll turn to you, if i could. what, if overall, is your second half outlook? is it kind of steady as she goes or are you expecting a lot of volatility? don't think we're looking for much more than what we saw in the second quarter. certainly groh has improved from the general malaise from january throu march but mome remains a far cry from the gdp pace this time last year. we head into the second half remember consumer spending is still very moderate. business investment continuing its downward trend. suggesting that overall economic activity will continue a below trend for the remaining six months of the year. >> burt you heard what lindsey just said. does that imply that corporate

profits may face headwinds, some challenges and what are you looking for in terms of corporate profit number one, and are the prices the p's, are they too high for the e's, the earnings? >> well certainly there is some headwinds, no d about it. but i think we've got a lot of the headwinds behind us. the cold weather is behind us energy prices have stabilized you're starting to see the dollar stabilize a little bit as well. those have all been huge anchors to poll and we think that earnings are going to be much, much better in the second half. look at earnings in the neighbor of high and mid-single digits or so. that's think that can literally drive single digit growths in stock as well. variations are stretched, no doubt about it but they are not massively overvalued. we've seen about 35% of periods be more expensive than they are today. we think prices can continue to move higher but they are not going to move higher without earningrowth. that is the real catalyst and fuel for the second half. >> lindsey, do you agree with

that? because we haven't really seen a noticeable pul back in stocks for some time now. >> you know it's interesting becaus eventuall we'll have to see the organic growth in the consumer sector but over the last six months retail sales have been growing at .16%. this is the slowest pace in years. not spending the gasoline price savings but i want to go back to a stronger dollar. this is something that we do expect to be a lingering theme in this second half of the year particular with ongoing volatility greece. what do you expect lindsey, in fixed income specifically because that is your area of focus? and earlier this week fed official were talking as did bill gross, about some concerns about liquidity in the bond market or at least in corners of it. talk to me broadly about fixed in liquidity concerns that you might have. >> well i think the biggest idea is that we do expect rates to remain very low through the

end of the year. now, certainly the biggest wild card is a fed rate increase. but we have to remember that the timing for a 2015 rate increase is predicated on the fed's own forecast of continued improvemt in the overall economy, strong improvement in the labor market as well as the near term reversal of inflation back towards 2%. but we really haven't seen any of these variables. as i mentioned growth remains subpar. the labor market is showing positive but a loss of momentum in terms of monthly hiring gains and inflation has continued to retreat from that 2% target since 2011. so i think when cooler heads prevail and we do recognize the still lackluster pace of the economy, that will put even furtr downward pressure on rates goin forward. so burt if we don't have massivelhe val and the bull market continues, what does worry you? what would be a red flag for you that maybe we're not recognizing right now or that you're a little concerned about?

>> well the first and foremost is earnings growt be able to move higher? you've got headwinds there. clearly corporate america has not been spendings and doing a lot of cap x and investing in their own businesses. that certainly is a headwind. and then you have to look at the consumer and whether or no the consumer is going to open up their pocketbooks and go to the malls and begin to spend money. e starting see some of that. retail sal has improved housing has improved ism was pretty good and payrolls are going to continue to move higher north of the 200,000 range. based on all of that we think that you're going to start to see spending both at corporate america as well as the consumer and that's going to end up driving top-line revenue growth. it's going to sloppy probably in the 2% range. it's better than zero. that's where we've been. it's going to ultimately drive some success. let me ask you both very quickly, if we get together on the first of january 2016 burt

will stock prices be higher than they are today? if so by how much or lower? the same for you, lindsey? re quick. somewhere in the 5 to 7% from where we stand today. >> i think if the fed can properly communicate that they are going to remain on the sidelines thr 2016 we'll continue to see upward momentum and equity. >> on that note, burt, thank youry lindsey, thank as well. appreciate it. >> and now to the technology and banking sectors, two groups that matter the most because they are the two biggest sectors in the s&p 500. tech outperformed in the first half while financials were basically flat. so what happens next for these two groups? kayla touche has that. >> here's what to look for in the techs in the second half of the year? no product will get more attention than apple's new iphone which tim cook expected

unveil this fall. microsoft launches windows 10 the new version of it is operatin system. another theme to watch, tech companies splitting in two. ebay's spinoff of pay pal is scheduled to be completed on july 17th and hewlett-packard on november 1st with one company focused on business software and services and the other on personal computers and printers. finally, how will these changes play out with microsoft, twitter and google with a n cfo in the spotlight as investors wait and whether the company returns some of it is $64 billion in cash to shareholders. that's your second half tech outlook for "nightly busine josh lipton. >> here's what to watch for in the banking sector in the second half this year. investors in financi names will want to pay close attention to the fed. a rate hike will make bank business models more profitable

y baked in already. some of the most rate sensitive names are up more than 10%. payday for investment banks after a record first half former injuries and -- for mergers as deals come to a close. will await the fate of shelby's banking reform bill. its passage with changes could eliminate costly regulation for d banks with slightly more than $50 billion in assets currently deemed systemically important. watch for more pruning of bank branches. bas are closing more stores than opening them. jpmorgan is among banks aiming to close more this year. that's your second half banking outlook for "nightly busine" i'm kayla tausche. coming up, we've taken a look at expectations for the economy and the markets. but which sectors will shy?

the first half of this year was not as strong for home sales as expected. instead, it was a banner half for renting. he diana olick with some answers. hers what to watch for in the housing sector in the second half of this year. it is all about prices. for both buying and renting. home prices are still rising but at a slower pace than this time last year. not the case for rent which is at record highs in some markets as demands far outpace the

supply. we're seeing more multifamily construc and delivery of those units but occupancy is at an all-time high despite predicti more renters would turn into buyers. the key for buyers is two-fold. first, the mortgage market. rates are expected to rise slightly and new rules for lenders going io effect in the second half of this year could stem access to credit. second, sug s are rising but at a far slower pace than demand. builders are trying to hold on to their pricing power by keeping the markets slim but some are findly starting to give putting up lower priced homes. that your second half housing outlook. for "night diana olick. on to another leg of the economy, retail and the consumer. in the beginning of the half americans had a tight grasp on their wallet but that has eased up a bit. what's ahead for retailers and consumers? courtn reagan takes a look. >> r here's what to watch for for retail in the second half of the year. as the all important back to

school and holiday season gets under way, investors will be taking note of names like ralph lauren tiffany and michael kors to see if they can shake off conges the strong dollar with dwindling flows. back to school spend will be used to lift sales but apparent sales are likely to shift later into the third quarter as more students wait to buy until they see what their fries are wearing. jcpenney's incoming ceo takes over the reins on october 1st. and the holiday merchande has been ordered months in advance, gap has warned investors not to expect much improvement at the banana republic stores until the spring. for "nightly busine i'm courtney reagan. > innovation and expansion are on the agenda for autos and airlines in the second half.

ph lebeau tells us what is in the works for the two industries and how the price of fuel will play a big role. >> here's what to watch for from the auto and airline industries in the second half of this year. in autos watch fiat chrysler ceo who has promised a ferrari perhaps by late fall while continui to push a merger with another automaker. and the new model to look for will be tesla's first crossover, the model x, expected to come out around late september. it airlines the battle over expanding middle east carriers wi be front and center. u.s. airlines says they are losing business to gulf carriers getting subsidies, a charge middle east airlines deny. meanwhile, high demand and relative low fuel prices should keep airline profits soaring. th your second half outlook for the auto and airline industries for "nightly busine" i'm phil lebeau. and one sector that's really

on a roll so far this year is a lot has changed in that industry and it will be under scrutiny for the next six months. bertha coos tells us why and what is next. >> here's what to watch for in health ce in t second half. in a word consolidation. acquisition move also come to a head as insurers look to get more efficient through mergers. anthem if they succeed in buying cigna and aetna in acquiring humana the combined firms will have more than $100 billion in combined revenues. that could put the deals under tough anti-trust scrutiny. analysts say we could see more acquisitio by health systems. this fall the switch to a new electron billing system could cause problems for hospitals and doctors who are bracing for payment and glitches. that could help the i.t. systems

wh vowed to compensate doctors for delay. that's your outlook for health ca in the second half. bertha coombs "nightly busine yo> washington has a lot on its plate over the next few months from hearings to gearing up for the 2016 presidential race. john harwood joins us to discuss what is on the agenda in the nation's capital. john president obama has had a good couple of weeks. he's picked up political momentum the economy is doing well. what's he going to do with whatever political capital he has in the second half of the year? >> well he's got two big initiative tyler, that he needs congressional support on. one is this potential nuclear deal with iran. they've just extended the deadline. don't know if they are going to get a deal but i think the odds are likely better than 50/50 that they will. economical the number one initiati is getting the transpacif partnership. what he wants from congress so far is simply the authority to negotiat that deal without

making it subject to amendment when it goes before congress but he doesn't have the agreement and he doesn't have congress approval. so those are the two biggest things the president is going to be pushing for. >> which brings us to congress. what about the republicans in congress? the agenda for them? >> sue, i think the number one agenda for republicans in congress is to get through the end of the fis fiscal year and start the new fiscal year without havin a debt crisis. that's a challenge because of the abuse of some of the republican members. we've seen democrats threaten to hold up spending bills if republic don't match the increase that they plan for a defense, ie some domestic programs. we have the makings of a confrontat thi repubn leaders have been burned by past shutdowns and past debt crises. so they are going to work very hard to avoid them and so will the white house. >> at what point, john does the presidenti race start to make washingt and policy making seem irrelevant?

>> very soon. the debate is accelerating among the very large republican field, much smaller democratic field. the first televised debate among all of the republican candidates is going to take place in a couple of months. that will be on fox. we'll have the third one on cnbc and all of those are going to be events that command the pub the political attentio of e country and pretty soon president obama is going to have a hard time being heard. john how many of the 400 presiden candidates in the gop are going to be less standing at the end of this year or early january? >> well i think that the rational voter hopes that it will be maybe half of the current field. we've got dekrar candidates scott walker and john kasich are talking about getting in. they need not only attention but money to continue to compete. you have events early in the year in iowa and new hampshire but i think the debates before

then may have some of that effect and candidates not getting tractio are going to have it difficult to have the money and attention to keep going on. john thanks very much. have a great weekend. john harwood at the white house. there's no doubt that oil and gas prices will be in focus for the second half of the year. are there warning signs heading into that second half? we'l. here's what to watch next week. a report on international trade

the economic trades here and aboard. on wednesday we'll hear from fed chief janet yellen on friday. th what to watch next week. >> of course the transportation sector is a key gauge of economic activity overall. here's morgan brennan with a look at the shippers and the rails. >> r here's what to watch for in the transportation sector in the second half. volume. es for railroads. this year has been a bumpy track for rail stocks like union pacific northern and cfx as coal has fallen due to low energy prices and a stronger dollar. analysts expect the numbers to stay weak over the next few months before stabilizing in the fourth quarter as volume comparisons to last year become less challenging. consumers shod fair better as it translates into more spending. should boost trucking which moves the majority of retail products and, with it names like swift transportation night transporta and warner

enterprise truc volumes, while growing, have been softer than anticipate that is expected to pick up as we head into the holiday season. lower diesel prices should also bolster pr of holidays ups and fedex are already gearing up for their peak seasons. they are going to implement new pricing strategies to make the most of their shipping network. the question now, if they do will those costs trickle down to consumers? that your second half transpor outlook. for "nightly business i' morgan brennan. the transports and basically of the industries that we've disc benefit if oil prices stayed at the low levels that we few factors could cause volatility. jackie deangeles will tell us what to look out for. >> rep here's what to watch in energy for the second half of the year. domestic supply the market has certainly been off balance, despite the roughly 60% in oil rigs oil production is still

9.5 million barrels per day. there could be a pressure that could drive oil down to the 40s or even perhaps the 30s. also in focus, geo politics. how do conflicts in the middle east play out and will opec producti be threatened? the cartel will meet again in december. if there are no issues of violence across the region, wille cartel decide to cut production? there's iran. if the nuclear deal is reached and sanctions lifted will the internate flooded with oil? and what did demand? eurozone is a concern of oil prices to come. that's your second half energy outlook for "nightly busine" i'm jackie deangeles. and finally tonight, the roads will be the busiest they've been in years this holiday weekend, thanks to a stronger economy and rising consumer confidence. aaa expects the number of american hitting the roads will

be the greatest since 2007 because of cheaper gas. the national average today around $2.78 a gallon for regular that he is nearly 90 cents less than it was last independ day weekend. i will not be one of those people on the road. >> i will probably not be either. no. stay home. >> i'll be local. >> that does it for this special edition of "nightly busine i'm sue herera. thanks for watching. well. time tillyl mathisen. have a great week, everybody,

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