auto . this is "nightly business report" with tyler mathisen and suzy gharib. brought to you by -- >> the street.com. interactive tools foor an ever-changing world. our dividend stock adviser helps guide income at a period of low-interest rates. we help you invest and trade stocks. action alerts plus is a charitable trust portfolio that provides trade by trade strategies. online, mobile, social media, we are the street.com. >> finding growth. the economy expands, but some say it's not fast enough. what it all means for you.

>> big mac. how mcdonald's sees the broadest economy. >> social investing. why using social media to get a competitive edge in the market could be dangerous to your wealth. all this and more on "nightly business report" good evening, everybody. s susie, any growth is good news. >> good, but not great. u.s. economy grew by 2.5%. that was less than the robust 3% most experts were predicting. much of the gains in the gross domestic product came from strong consumer spending. businesses and government spend less, raising concerns that growth may grind to a halt in the months ahead, unless big changes are made. american consumers get most of the credit for ramping up the economy. buying cars, lots of them, and houses. and paying utilities to heat

those homes. consumer spending rose 3.2% pace, the fastest in two years. why was the gdp number such a bummer? consumers funded many of the purchases by saving, and that tradeoff pulled the nation's saving rate down to 2.6%, the lowest since 2007. higher payroll taxes in march also didn't help. paychecks got skimpier because of the % tax hike. government spending cuts, the so-called sequester that went into effect on march 1st, were another biggy. deep cuts in defense purchases were a big drag on economic growth. and so were the furloughs and layoffs. with new job worries back into the mix for hundreds of thousands of government employees, people turned cautious about spending. american businesses also pulled back. spending less on equien and software and holding off from hiring. on the trade front, u.s. exports rose, but we imported more and

that sliced off growth. and american companies can't ok to europe for customers, as the recession there continues with little hope of improving any time soon. there are now new concerns about the u.s. economy creeping along the rest of this year and more sequester cuts on their way. many government agencies are just beginning furlough employees, and cut back on spending. >> here now to discuss his economic outlook is brian westbury, chief economist of first trust advisers. brn, welcome, goo to have you with us. great to have you. 2.5% in the first quarter, what do you see for the rest of the year? will we kind of muddle along at this rate? maybe a little better, a little worse? >> tyler, the last couple of years, we've been describing the economy as the plow horse. plow horse economy. not a race horse, not a thoroughbred. it ain't going to win the kentucky derby, but it isn't going to fall over and die

either. and what we've been seeing is about 2% growth in this recovery. we actually expect this year, 2013 to accelerate a little bit from last r,we're only looking for growth in the 2.5% to 3% range, today's growth on the low every side of that. growth in the first quarter. housing now coming back, autos have fully recovered from the crisis, banked are lending again, consumer spending, at a record high, business investment is up, and so, in fact, the private economy is growing, even though the government is shrinking, and by the way, that's a good mix. >> brian, i note today bond yields on t ten-year, 1.6%, 1.65%. all other things being equal, that would suggest a slowing economy. >> if you listen to bonds, we should never have had a recovery. if we look at stocks, you know we've been growing and corporate profits, all-time record high. i think you can spin this data

and make yourself feel really bad and talkbout how government is a drag on growth, but, in fact, if you take our gdp report today and take away the government, the government spending declined, if you back away a look at private sector growth, it was up 4% in the first quarter at an annualized right. that's a boom. that's the kind of growth we had in the '80s and '90s, housing up a double digit pace, consumer spending, as susie said in her report did very well. business was up. when you look at those kinds of things, they are the real drivers of private-sector growth. i think we've scared ourselves into looking at every number from the glass half empty point of view, a i -- i would rather see us think about it as the glass half full. and, in fact, in the past four years, when the economy has grown just 2%, plow horse type

growth, the stock market up 150%, so, investors who would have believed in america would have more than doubled their money, and ihink being fearful of the economy, and what's going to happen in the future is costing people a lot these days. >> 2.5% growth with very little inflation, not necessarily a bad formula at all. you make the point, don't you, at the sequester actually may turn out to be number one, less damaging to the economy than the hand wringers would suggest, but also in a funny way, a good thing. explain that. >> yeah, sure. one of the key things to remember about government spending is that every dime the government spends, every dime, has to come from the private sector, they either tax it from the private sector or borrow it from the private sector, so when the government grows as a share of our economy, that means the private sector is a smaller share, and, therefore, there are

fewer jobs created. fewer new inventions come along and when government shrin as a share ofp,ch se key point. we're not actually cutting spending, it's just growing slower than gdp today, what that means is the private sector grows faster, and we saw that today. overall gdp, 2.5%. government down, but the private sector grew 4%. that's what we want to see. we want to see faster growth in the private sector and i -- as a result, i think the sequester in reality will help the econo grow as a more sustainable and a faster growth than just the plow horse growth. if we continue to keep it in place. >> brian westbury, thank you for being with us. have a great weekend. >> thank you, tyler. >> on wall street, stocks little changed. the modest rise in economic growth, combined with a dip in consumer sentiment for april and

a jumble of earnings led to mixed results in the major averages. dough traded in the narrowest range in months, arriving just 11 points. nasdaq down 10 and s & p lost three points. all three indices ended higher for the week. one company keen on economic growth is mcdonald's, the world's biggest hamburgeer chain keeps a close eye on changing commodity prices and energy costs and testing new menu items in research kitchens, carl quintanilla takes us in for the view to the outside. >> no better company to talk to about the broad economy than mcdonald's, 34,000 restaurants, 119 countries, serve 69 million customers every day, all around the world. a set of eyes and ears that practically are unseen anywhere else in corporate america. here at the innovations center at mcdonald's, a giant test

facility in suburban chicago. we talked to don thompson about the gdp number and what he sees for the broad economy. >> we have seen starts and stops of a recovery. and i think earlier retail sales earlier this year show that things were slowing just a bit. you have to look at it, take it with a grain of salt. we see the impact possibly of payroll tax, a little early to tell, but also you have got -- we have a little bit of histance relative to certain investments back into the broader economy, and relative to jobs. >> united states is an incredible important market for mcdonald's, 40% of system-wide sales and thompson sees a soft retail environment, they are trying to roll out new products and drive traffic in kitchens like this one, things like egg whites for breakfast and a new pomegranate blueberry smoothie. for nightly business report, i'm carl quintanilla, romeoville,

illinois. >> mcdonald's will beho holding its shareholders ne meeting as y season goes full swing. >> shareholders are focusing on boards and pay. big shareholders lobbying for big changes. chris of iss governance says the rice of activist investors makes for interesting meetings in the weeks ahead. >> pretty likely. i personally cover contentious meetings, so contested mergers and proxy contests and we're seeing that on a pretty steep upswing. >> among the meetings with big investors agitating for change, hess' on may 16th. they want leaders replaced in 17 years of underperformance. and a proposal from the california pension fund counselors aimed at improving

value by splitting steel and bearing businesses and a slate of directors looking like-to-be replaced. occidental petroleum, under nir in the past for executive bay, they now focus on directors wi the bod launching a search to replace steve chasen, supporters may seek to unseat directors who don't back him. in the wake of the london royal trading loss, jpmorgan's ceo and jamie dimon is facing removal. and they want to change how and how much they pay executives. the a fnch lnfl-cioafl-cio's an.

>> where companies should be most accountable to shareholders but frequently are not. >> shareholders at five hermes, including navistar have voted against a compensation plan. it signifies to boards they need to change the way they pay top brass. for "nightly business report," i'm mary thompson. >> one of the most popular and well attended meetings is berkshire hathaway, warren buffett's company. next saturday. >> you will be there. >> 40,000 people as well will be attending it, it's huge. all coming to hear what the oracle of omaha has to pay. >> happy shareholders, most of the time. >> have a great trip. >> coming up, four stocks at this week's market monitor says you should own right now. but, first, a look at how international markets fared today.

>> we talked about it a lot on yesterday's program. congress working to reach a deal on airport travel delay because of sequester cuts. today the house followed suit to the senate's plan. giving a green light for the department of transportation to use unused funds for air traffic controllers furloughed. clear howuickly the furloughs workers will be back on the job full time. shares were mostly higher on the day. also higher today, dr horton, that's where we begin today's market focus. shares surged after the company reported second-quarter earnings and revenue well above expectations. and the nation's largest home builder earned 32 cents a share,

easily beating 19 crept estimates. revenues came in just shy of 4 $1.4 billion. stock up more than 8.5% to $26.66. lower oil pris hit chevron in its bottom line, the second largest u.s. oil company posted 4.5% drop in quarterly earnings and 16% in revenue. the company did earn nearly 6$62 billion in the first quarter. that works out to $3.18 per share. 10 cents higher than estimates. shares however were higher on the day, closing at 120.04. >> the rubber met the road in the first quarter forgood year, as the company recorded record profits in rth america an asia. good year earned 45 cents per share, rolling pass the target of 33 cents. europe put the brakes on things, and shares fell to 4.8 billion. weakness in european and

venezuela were key news. and it fell to $12.51. kellogg is hiking its quarterly dividend to 46 cents per share in the third quarter. shares essentially flat today, but up a krispie, 30% in the past year. >> stock averages may continue their march higher this year. diane jaffe of tcw, and the dividend focus fund she manages rose 21% last year. welcome, diane. i want to talk about your stock forecast, because, you know, the economic growth numbers we got today, not so great and earnings have been so so, so why are stocks just keep going higher and getting close to new records? >> the records are being broken, but the valuations are still unbelievably attractive, and that's a lot of important points for viewers to focus in on, valuations are still really exceptional and good opportunities.

>> so as you manage your funds, what's the key theme of the stocks you are selecting? >> they must meet one of our five valuation characteristics, generally speaking three or more and a company specific catalyst for cash flows, operating margins and eventually higher earnings growth. >> let's begin with fizer, largest holding i ur funds. up 20% this year. why do you like pse, that trades on the new york stock exchange? >> for two reasons. first of all, they have gone through significant cost cutting focusing on core business of pharmaceuticals with the sales of the neut richal business anda fapulous pipeline. >> and why are you recommending general electric? better than expected rnings last friday, but its stock stuck

in the 20 range. what is the attraction? >> you're right. valuation the same as ten years ago, but a brand new company underneath. ge capital, much less important to the day-to-day life of the company and they are focusing on energy and infrastructure and health care. two areas very positive on. >> and you think it will break out of the $20 range sometime this year or this yore? >> i think if they don't, jeffrey immelt willave to have some talking to. >> home depot, hd trading on the nyse, stock up more than 18%. what is the story here? >> well, you know, they floated on the housing bubble, came down with a crash. and new ceo frank blake said we have to do things differently. he continues to invest in the company. they focus on technology, distribution centers and making easier for do it yourselvesers and professionals to come in, buy products, the right products at the right price. >> and the fourth stock that you

are recommending, citigroup, somewhat controversial. why do you like this one? >> new management, you think there is a breath of fresh air there. last year and they got their pay packages for vickram, ko'd by the shareholder base. this year, they passed with flying colors and the turn around of this company has gotten approval stamp from regulators and we think there is more to go. very attractive valuation. >> and michael corbett, new ceo, getting your approval rating? >> thumbs up. >> thumbs up. okay. any disclosures to make? >> i personally own citi and all of the other stocks, including citi. >> thank you so much. diane jaffe. senior portfolio manager at tcw. >> coming up, why using social media to invest could be a risky business. first a look at today's commodities bonds and currencies.

universal health services jump more than 3.5%. and did got a shot in the arm after two analysts raised price target for the stocks, uhs, better than expected results late yesterday and the shares up a very healthy 30% year-to-date. joining us now is alan mill, chair and ceo of universal health services. good to have you with us. >> thank you. >> a lot of unknowns in the affordable care act. one of the factors, there will be a lot more patients, customers for you, who have insurance. how much is that going to help

your business and affect your bottom line? >> going to help our business tremendously. i think when you talked about the analysts raising our expectations and our price targets, we'll see 31 million people that have not had coverage before, and it's going toave a good effect on our bad debt so that will go that will be excellent. and up with of the things that most people don't know is that there is going to be a lot of coverage going into the mental health area because there is a parity law. if you have coverage of acute care mental health must match it, and a lot of the small plans haven't had that, and now they will be obligated to have a mental health capacity. and that's going to be tremendous for us. maybeanotr 31 million people will be covered as well some of we're very bullish about that. >> alan, talk to us about what patients, the consumers, can

expect in the new world of health care with the landscape changing? one of the big questions is always about quality of care. will it get better, will it go down? canxpect terms of what we can pay in terms of medical care services? >> well, i think one of the -- one of the misleading things when the plan was sold, premiums will go down, premiums are going up, and everything we read, because of extended coverage, premiums are going up. we are working very diligently to make sure that our quality is as high as it's ever been, and the g. overnment is helping tha with payments related to quality. i think it's look closely, but there will be no diminished rent in quality at all. and we'll have extensive coverage of the population. as i mentioneded, about 60 million people which is really very good thing for them, and certainly a very good thing fo us. >> what would be the one thing,

mr. miller that would do the most to retard the growth in health care spending in the united states? >> well, there is a complicated answer. really comes around to the transition from just a number of volume procedures to some sort of a bundle payment, where you would have an organized coordination between doctors and providers, and that's what an acl is intended to do. it would take a number of years to bng it about, but that's the only way i can see that would you get away from this continual escalation and costs. >> the thing that always surprises me about health care, in almost any other industry, you see prices coming down, whether it's a cell phone that's very expensive years ago and now so cheap, but in health care, no matter how much technology, no matter how much invasion, prices keep going up. >> but life is better. i think that's what the tradeoff is.

there was an article today in "the new york times" about pharmacology, helpingo solve some of the problems of certain ncers d we're gti a will the for the dollar, but it is going up, but people are living better lives and longer lives. >> all right, mr. miller, thank you for being with us. we appreciate it. >> you're welcome. >> alan miller, ceo of universal health services. >> finally, tonight, investors are always trying to find an edge and in the 21st century, using essential media is growing exponentially on main street and now wall street. when it comes if-to-finance, ka kayla tousci tells us it's a risky business. >> twitter, facebook, stock twit and now google. where new research suggests search history could hold clues to predict the market, but using that information is a viral game of risk to be sure.

>> we saw a big jump in sentiment last week. >> in 2011, paul hutton, an english entrepreneur and johan boll an, an indiana university pressor, claimed to have found a formula that would mine twitter. hailed as revolutionary. >> social media enabled to us take a large set of data from a large audience that we couldn't really do before. and it needs a lot of refinement and used in the right way, but certainly -- certainly really interesting from our point of view, the results are astounding and we don't really understand why. >> reporter: but not understanding why it works was just too risky for investors. their twitter hedge fund csed just a month after it oped. >> the president was fine, i was just with him. >> reporter: the ap twitter hack illustrates exactly why inves r investors have a right to be cautious. markets went into free fall

after false reports of explosions at the white house. >> it's about as much about trying to predict how the market will move off a certain story and many times, independent where it came from, people jump on board too quickly to sell or buy something in response and many times it's the wrong move. >>eporter: it's a delicate and dangerous balance for all investors. between speed and greed. for "nightly business report," kayla tousci. >> the false tweet that went out will send a chill to try to think of ways they could use facebook and twitter to release information to the public. one false move can really disrupt -- >> no short cuts, tyler, have to do real research, no magic. >> that will do it for this edition of "nightly business report." thank you for watching. >> have a great weekend, everyone. you too, tyler, we'll both be back on monday.

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