>> this is n.b.r. >> susie: good evening, i'm susie gharib. tom is off tonight. a hit and a miss for ibm, big blue's earnings top forecasts, while revenues fall short. tech analyst david garrity joins us to talk ibm, and preview what to expect from google and microsoft. and ben bernanke says he still has tools to boost the economy, we look at just what's in the fed's tool kit. that and more tonight on "n.b.r.!"

"nightly business report" is brought to you by: captioning sponsored by wpbt >> susie: ibm boosted its outlook for the rest of the year, after second quarter earnings topped forecasts. ibm earned $3.51 a share, well above last year, and $0.09 above analyst estimates, but at just under $26 billion revenues fell short of expectations. >> ebay posted better than expected. earning a penny above estimates. revenues jumped 23% to almost

$3.5 billion. enthusiasm about tech earnings helped wall street make strong gains earlier in the day. the dow rose 103 points and the nasdaq 32, and the s&p up 9 points. for more, david garrity joins us. the tech analyst. david, it's really interesting that at a time when ceos have been warning about earnings and revenues coming down for the rest of the year we have ibm boosting its numbers. what does ibm have going for it? >> it's focusing on making 50% of revenues from cost ware. they're not there yet, but that's the target by 2015. but the higher margin sales were certainly helping to drive the bottom line performance that for ibm is substantially better than expectations. at the same time, we have weak markets in franz, and italy down, and so all tolled, ibm

benefitting from a better product mix, and cost reduction. >> susie: and looking at ibm stock, itasup in the regular session, and then again in afterhours toup $191. you're recommending the took. why do you like it? >> certainly, we think ibm is on track to grow earnings 10% a year from now to 2015. $15 a share this year to $20 by the time we get to 2015. we k that the company given the breadth and depth of their ability ha to grow earnings through a cyclical downturn. >> and you like google. why? >> the company probably coming out with better than $10 a share earnings tomorrow, earnings that will be up 10% year over year on top of the revenue rise. goggle strong in terms of

search, and investor fears in terms of margin pressure having acquired motorola, we think that's mislaid. we think google stock is well positioned in this environment. >> susie: now microsoft is also on the schedule to report, and one of the stocks on your recommended list. what are you expecting them to say? >> about 4%. and earns down 10% year over year because of the impact of an accusation they did in 2007. we think that microsoft investors expectations are that the introduction of window 8 in the second half of 2012 is probably going to drive 15 to 20% growth, and the stock starting to move up in the second half of the year on the back of those numbers. >> susie: looking ahead to next week, apple is going to be coming out with incomes. is it going to hit another home run as it so often does

in quarterly reports? >> ibvestor expectations are for a new >> phone, but we think the june quarter is up 30% and earnings up about 33%. so in apple, certainly in this environment f we can see strong execution, the stock also we think can move higher. >> susie: so you would buy it at over $600 >> we think the price targelt we have is 650 between now and the end of the year. so it's a good stock to own ahead of the earnings. >> susie: interesting. any disclosures to make. >> we own microsoft, and google. we do not own ibm. >> susie: david, thank you zch. david garrity, tech analyst at gva research.

>> susie: "modest to moderate"; that's how the federal reserve describes the pace of the economy's growth in june. the fed released its so-called "beige book report" with anecdotal evidence of the economy's performance around the country. meanwhile, fed chairman ben bernanke delivered the same message to lawmakers on his second day of testimony on capitol hill. once again he said it is "possible" the fed could take new steps to boost the economy, but offered few details on when the fed would act, and what exactly it can do. darren gersh reports. >> reporter: ben bernanke's favorite options for fixing the economy would be for europe to get its act together followed by congress removing the uncertainty over expiring tax breaks and looming spending cuts. but that's not going to happen. and that's why bernanke is

exploring other options, like communication. the fed now promises to keep interest rates low through 2014. it could extend that to mid- 2015, a move that might lower some interest rates a bit. but there is a credibility problem here. ben bernanke is scheduled to leave the fed in early 2014. a new chairman could chart a new path. another option: cut the interest rate the fed pays on almost one and a half trillion dollars in excess reserves banks keep at the fed. that might force some banks to look for another place to park their money. >> banks need to put the money someplace and it might help to get some of at money out into the market. but they might put it elsewhere if they were afraid to make new loans. they could invest it directly in treasury obligations or similar types of instruments. >> reporter: the fed could also lend directly to banks that promise they would lend that money out either to small businesses or to help boost mortgage lending. a dramatic expansion in access to home loans could lead to an additional one million sales a

year. but it is unclear how much risk, if any, the fed would be taking that a borrower may default. >> what we have seen is recently originated mortgages are performing exceptionally because recent home buyers are buying homes at a low price point. not at a high point like the bubble years. so it is a great opportunity for the fed to stimulate the economy, while taking on very light risk. >> reporter: the other option is to further expand the fed's balance sheet, buying up more bonds to try to move market interest rates down even further. >> it prolongs the period of record low interest rates which do harm to savers. they do harm to municipalities. they distort the financial markets. >> reporter: there may be no easy options left, but there is definitely one option bernanke cannot take. >> i just don't think it is good for the head of the central bank to say there's nothing we can do. he's never going to say that. that would just be too pessimistic.

>> reporter: for now the fed is exploring all its options while still hoping it won't have to use any of them. darren gersh, "n.b.r.," washington. >> susie: bernanke also told lawmakers there are modest signs of improvement in housing. and there was more evidence of that today. the commerce department reported that construction on new homes in june rose almost 7%, the fastest pace since 2008. and year over year, housing starts were up over 23%. joining us now, housing analyst megan mcgrath, of mkm partners. >> megan, you have said that the housing starts report is very critical in giving a gaze at the health of the housing sector. what do today's numbers tell you. >> we tend to look at the single family member too, that's important for the builders. that number was up 20% year over year, and 5 fx*r% from las

month, and year to date we're up 20% year over year. so we've probably hit the bottom, and bouncing up off of it. >> susie: now we're getting more housing daylighta this week, and existing home sales coming up. >> once we look at all the data pints what kind of picture do you think we're going to get. we're seeing slow and steady progress. existing home sales will comeute tomorrow. that can be a little more volatile than the other number. it will give us a good gauge in terms of gauge, and inventory is important, what is a month's supply. and new home sales next week, it should be a good number, because builder confidence released this week had a nice jump up 6 points from last month. >> susie: most people want to know, what about prices?

how do you see the trend in home prices? >> i think we're trending up very slowly. we're not seeing big moves in prices in most markets. you mentioned this afternoon. we had a couple talking about appraisals. appraisals are hurting price appreciation right now, because the appraisers aren't letting some price likes through. we're in a bottleneck, but making some progress. sox*uz you have a couple of stocks you're recommending. these are the stocks of home builders. we're going to bring them up. you recommend d.r. horton, lennar, and you continue to like ryland and toll brothers. they were all on the downside today. what's the attraction. and what's the unifying theme for all of >> it presents an opportunity

to get into these stocks. they were wek on goodidate a. the expectation is to continue to see acceleration in home sales for a couple of months and as long as the year over year pace continues we could see appreciation. >> it's a volatile sector, and it's important to keep that in mind. and risk tolerance, big swings day to day, but we think in the back half of the year you see the good numbers out of these guys. we think we're set up nicely to see the stocks go up. >> susie: any disclosures? >> no disclosures. >> susie: okay. lots of good information megan. megan mcgrath of mkm partners. >> susie: from strength in housing to rising commodity prices, the u.s. economy is grappling with a host of crosscurrents. suzanne pratt reports.

>> reporter: no matter what newspaper you read, when it comes to the economy these days, the headlines can be bleak. and, it's not just european nations that are in trouble, the u.s. economy has also de- celerated in recent months. federal reserve chairman ben bernanke is worried. and, so too are some economists. >> in my mind, just given the fact that we're more likely that not in a low trend growth rate world and periods of unevenness such as now, the odds of recession at any point in time could be as high 1 in 3. so, i think those are reasonable estimates. >> reporter: but, there are also reasonable positives: little nuggets that support the belief the economy will gain momentum in the second half of this year. those tidbits are pretty large including a stabilization in housing, and surging car sales. don't forget lower prices at the pump. a gallon of gas is $.47 cheaper today than in april. and, finally there's at least some faith in how much corporate

america will earn in the final quarter of this year. >> the quarter that you want to focus on is the fourth quarter, because if you look at expectations for q3, the growth rate, as of today, is only about 1%. so, again, expected to be a weak quarter. if we look ahead to the fourth quarter, analysts are expecting double digit growth in that quarter. 13% growth expected, now that could be a very optimistic number at this point. >> reporter: so, who's right? what economic scenario is correct? it turns out that might depend on policymakers, in europe and in washington. without more progress on the eurozone's debt crisis and clarity on america's fiscal cliff, economies could suffer. >> we will continue to see stall like numbers, close to potentially, potentially close to 0% growth in the u.s. economy. where the risk is ere is that that virtuous cycle can be come viscous. >> reporter: the biggest worry is that no headway will be made

on the fiscal cliff until after the november election. and, that might mean we could be talking about this soft patch well into next year. suzanne pratt, "n.b.r.," new york. >> susie: in its first major enforcement action, the consumer financial protection bureau is asking capital one to open "its wallet". the company famous for asking "what's in your wallet", will pay $210 million to settle claims it failed to monitor third-party pitches for credit protection to its customers. the agency says those pitches pressured capital one customers into buying add-ons they didn't

understand or want. about $140 million will be refunded directly to customers. the c.f.p.b.'s head of enforcement says he's putting the rest of the industry on notice. >> we issued a bulletin to others in the industry saying "this is the kind of conduct that we're paying attention to, this is what we're looking for, and if you engage in these kinds of behavior, we're going to be coming after you too. >> susie: investors closed their wallet to capital one shares, the stock fell almost a dollar or neay 2% to $54.89 on the news. capital one shareholders were in the minority today, as it was a good trading session for many other stocks on wall street. a slew of decent profit reports boosted all of the major averages, despite continued concerns about the u.s. economy. the s&p 500 rose nine points. earlier in the day, the index touched its highest level since early may and putting it back in positive territory for the month.

onhe sector front, high techs led the charge, rising almost 2%. industrials and energy stocks also were in the green. the biggest gainer in the dow was chipmaker intel. despite a cautious outlook from the company last night, investors gobbled up shares today. the stock rose 3% to close at $26 and change. other tech stocks powered higher as well, including hewlett- packard, cisco systems and microsoft. mr. softie reports earnings tomorrow after the bell. analysts expect to see strong growth in its enterprise unit. data storage equipment maker e.m.c. also helped to give the sector a boost. it replaced the head of its vm- ware unit and reported a preliminary second quarter profit. e.m.c. shares gained more than 9%, while vm-ware stock tacked on 12%. shares of qualcomm also posting some big gains after hours. the mobile phone chipmaker posted a profit and revenue miss, on lower than expected

chip sales. it also issued a somewhat negative forecast about the current quarter. but investors boosted shares on word the company's hiday quarter wille a nner the stock was up 5% after-hours. still, the shares have recently erased most of the gains they logged earlier in the year. not participating in today's rally: banking giant bank of america. it was the dow's biggest loser. bank of america reported profits that beat wall street forecasts by three pennies, but revenue fell short. the shares slipped nearly 5%, on disappointment the banks' profits came from setting aside less money to cover loan losses, and from cost-cutting. a sharp increase in claims over bad mortgages and mortgage- backed securities also rattled investors. after the bell, r-hharent of taco bell, pizza hut and k.f.c. said earnings rose 5%, but largely because of strong sales in the u.s. there was a rare profit decline in its key chinese market.

the shares gained nearly 2% during the session, but they fell a dollar in after hours trading. and for those trying to lose those fast food pounds, a new obesity drug will soon be on the market. vivus got regulatory approval for its "qsymia" drug. that's the second medicine that's been greenlighted to treat obesity in three weeks. shares of vivus surged nearly 10% today to $29 a share. as for the most actively traded e.t.f.'s powershares q's was the strongest, up a little more than 1%. and that's tonight's "market focus."

>> susie: today the c.e.o. of goldman sachs penned an op-ed saying america is the best place to invest for the long-term, but that as a nation, we need to solve some key issues, including immigration. lloyd blankfein writes quote, foreign students who graduate from u.s. universities should be eligible to work in the u.s. permanently. we should also remove the cap on visas for skilled workers." tonight as we continue our look at immigration and the economy, we meet an iraqi immigrant, with an engineering background who's finding a tough time on the road to the american dream. >> in iraq, he was an engineer. his wife a math teacher. in america they work in a

hotel. they clean rooms. he started out in charge of the laundry. iraqis are among america's best educated immigrants and admitted into the in record numbers following the war. >> how may i help you. >> resepgds an reception, and p. >> most have come as rev feas. harzan was given a special immigrant visa because of his work with the u.s. army corps of engineers post war that put him and his family at risk. he came to america with high hopes for a better life. he could speak english, had experience working with americans, and he had a letter of recommendation. >> i give my highest recommendation too him and >> the family arrive ntd the middle of recession, and the stock market was tight, and

carsan did not know that his experience would not meet professional standards in america. >> yes, it's the easiest thing i was expected to get a job with my skills, at least in my field -- like maybe assistant engineer. but still engineer. and my wife -- get a job in education. >> harzan and pinoir are willing to keep their hotel jobs for now. but catching toup u.s. standards is expensive, time consuming and discouraging. >> thank you for your interest in employment opportunities. your qualifications will be reviewed and after careful consideration of all factors, we are unable to offer you a poogz, and wish you success in

your -- offer you a poogz, and wish you success in the future and wish you success in the future. >> he has not ruled out the possibility of going back to iraq or some other country. the united states is no longer the only place in the world for educated immigrants. >> susie: homeland: immigration in america. is produced by the "nine network" in saint louis, the full series begins airing on p.b.s. stations this friday. our coverage of immigration and the economy continues tomorrow. we head to arizona, ground zero for the nation's immigration debate, for a look at how that state's "show your papers law" is impacting businesses. and as we mentioned, we'll be tracking earnings tomorrow from google, microsoft and morgan stanley.

in the money file tonight, saving for a rainy day, or perhaps a torrential storm. here's manisha thakor, co-author of "on my own two feet... a girl's guide to personal finance." >> reporter: according to bankrate, less than 25% of americans have an adequate emergency savings cushion - defined as six months of living expenses. this may sound like a meaningless factoid. to me it's eerily reminiscent of iceberg sightings and the titanic. from the late 1950s to the early 1980s our national savings rate averaged in the low double digits. importantly, these were decades in which retiremenand alth care were costs typically picked up by employers during both our working and our golden years. today, these twin burdens are on

our shoulders. thus, you'd think our national savings rate would be higher. yet lower it is. so the next time you hear a "yet another" stat about emergency funds, consider using it as a gentle warning signal to take a look at your personal financial ship and make sure there are no economic icebergs floating in your midst. i'm, manisha thakor. >> susie: and speaking of your personal finances, don't expect much of a raise in your paycheck next year. a new forecast says salary increases will run about 3% in 2013. that's way down from the average pay raise of 4.4% back in 2000. many companies froze salary increases during the recent recession, and with the recovery stuck in the mud, many are still not feeling generous when it comes to raises. that's nightly business report for wednesday, july 18. good night everyone. we'll see you online at: www.nbr.com and back hertomorrow night.

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