Announcer this is nightly Business Report with sneaker slop. One of the worlds most recognizable brands is cutting its workforce and shifting strategies. But investors dont seem pleased. Bridging the gap. The president touts Apprenticeship Programs. And businesses and workers applaud that idea. Tech savvy. Most most popular 401 k funds are loaded with Technology Stocks. Is yours one of them . Those stories and more tonight on nightly Business Report for thursday, june 15th. Good evening, everyone, im in for Tyler Mathisen tonight. Im Contessa Brewer in for sue herera. The Technology Factor kept a lid on stocks today. The nasdaq finished lower for the fourth time in five days. The Dow Jones Industrial average dropped 14 points. The nasdaq was off 29. And the s p 500 fell five. Technology wasnt the only thing investors were keeping an eye on. Bob pisani reports on a few other concerns hanging over the market. Reporter stocks were in the red with notable weakness in technology which had been our market leader. However, tech leaders like facebook, amazon, apple, and microsoft cut losses by more than half in the late afternoon. Two events are weighing on the markets today. First, overnight the Washington Post reported that robert mueller, the special counsel overseeing the investigation into russias role in the 2016 election, was expanding the probe to determine whether President Trump attempted to obstruct justice. The markets last notable drop, remember this, was on may 17th when the dow plummeted on reports that former fbi director james comey had recorded his conversations with President Trump in memos. Investors are sensitive to allegations that President Trumps behavior could create a sustained investigation. Investors clearly do not believe the trump agenda is dead. There is ongoing fallout from the Federal Reserves aggressive position on interest rates. The fed raised rates and indicated they still expected to raise rates one more time and start reducing its balance sheet. But inflation has been below the feds target recently, and other weak Economic Data like retail sales led many to believe that the fed would reiterate that the rate cuts coming were datadependent, a phrase theyve used many times. But it didnt really happen. The fed pushed through with their plans with nary a nod toward recent weakness. Nike was the worst performing stock on the dow index today. Investors were not enthusiastic about the companys decision to cut jobs. Shares of the Worlds Largest apparel maker are off more than 3 in todays session. Sara eisen takes a look at nikes plan to be more nimble. Reporter nike is cutting jobs, slashing 1400 positions, 2 of its global workforce, all part of a new strategy to focus on selling faster and more to consumers directly. Also part of the plan, slimming down the number of product lines by 25 , and zeroing in on 12 key cities where more than 80 of sales growth is set to come from, including new york, london, shanghai, beijing, and l. A. The back story to all of this, nikes growth has slowed down lately. Its also getting crushed by a resurgent adidas, whose retro sneakers and kanye west products have been a big hit in the United States especially. Nike is feeling pain from the broader weakness in retail right now. Department stores are suffering. And nike feels the impact of heavy promotions and slower traffic. Thats why the companys strategy had been and continues to be on selling directly to the consumer instead of foot locker and macys, focusing on its own website, its digital presence, apps, and its stores. Clearly consumers are changing habits, tastes, behavior, and style. And nike wants to stay on top of all of it by being faster and closer to that core customer. But theyll have to convince skeptical investors. The stock has fallen over the past year and continues to underperform the overall market. Well get more clues when it reports earnings in two weeks. For nightly Business Report, im sarah i eisen. The homebuilding industry has not been as optimistic as it has been. Diana olick has more. Reporter you would think the nations homebuilders would be on cloud nine given the high demand for housing. But shortage of buildable land and labor, not to mention material costs, are bringing builders back to earth. Mays reading was revised down by one point. Anything below 50 on the index is considered positive. But confidence has been falling after a big surge following the president ial election and the First Executive order lifting some environmental restrictions. The indexs three components, confidence in current sells conditions as well as expectations fell, and buyer traffic fell into negative territory, after new home sales in april dropped dramatically, due to a lack of starter homes for sale. The stock of existing homes dropped to another low, down 11 compared to a year ago. The average house sold in may went under contract in just 37 days, another new record. Redfin measured a 2. 7month supply. Homebuilders claim they are starting to target that entry level market. But theyre still not hitting the price point that most young buyers can afford. For nightly Business Report, im diana olick in washington. And Manufacturing Activity may be leveling off. A report from the Federal Reserve showing an unexpected decline in may factory output, the second drop in three months. The decline comes as manufacturers crank out fewer cars, computers, and semiconductors. The Trump Administration wants to increase the number of manufacturing jobs and help workers who have been left behind by the current economic expansion. To do that, the president is expanding the federallyfunded Apprenticeship Program, widely used in a range of industries. Aditi roy has more. Reporter Christopher Paul is a machinist. Its a Critical Role in one of the worlds leading manufacturers of Industrial Gas turbines. But paul isnt a fullfledged employee. Hes an apprentice. Im getting, you know, handson experience with the career that im learning to be a part of. Reporter its an idea thats catching on. Tech Companies Like amazon and salesforce are using apprentices. Now even the white house has taken notice of the possible benefits of apprenticeships. Were empowering these companies, these unions, industry groups, federal agencies, to go out and create new apprenticeships for millions of our citizens. Reporter President Trump just signed an executive order expanding the nations Apprenticeship Programs, making them a key part of his labor policy. In a meeting with Business Leaders earlier this year, President Trump accepted a challenge from salesforces ceo, mark benioff, to create 5 million apprenticeships in five years. Last month, the labor secretary visited a bmw manufacturing plant in germany to observe the companys Apprenticeship Program in actions. Under Solar Turbines fouryear program, apprentices get paid, trained, and mentored. By the end of the program, all of them get hired. Company executives say the sixyearold Program Helps fill a critical need in a competitive marketplace. If the Apprenticeship Program helps us for the future. Reporter isaac moorehouse thinks apprenticeships are key to building the skills gap. Three years ago he started praxis, a startup that matches apprentices with companies. Its a threemonth professional boot camp. Were helping young people kind of get the skills and knowledge that they need to go and succeed in the workplace. Then were actually placing them in a paid apprenticeship. Reporter one company that works with praxis helps clients with electronic documents. Apprentices are critical to help them manage their web traffic. We have a Million People that come to our website every month. Im much more likely to hire someone from an Apprentice Program than someone randomly job searching. Reporter olivia chose an apprenticeship over going to college. She believes this path gives her a higher return on investment. Youre really just throwing yourself into this new lifestyle. I think thats huge. I think you learn so much more from that than being catered to in college or otherwise. Reporter employers may get a good return on investment too. According to a recent Commerce Department study, the return for businesses is 1. 50 for every dollar spent on apprenticeships. The analysis also found Companies Benefit from lower turnover and greater productivity. For nightly Business Report, im aditi roy, san f theres some reports tonight that the president will tighten rules on americans traveling to cuba and restrict some business deals, rolling back some obama era policies, according to reuters. Hell lay out his new cuba policy in a speech tomorrow in miami. Marriott is urging the white house to instead improve ties with the island nation. Hackers have a new target. The oil and gas industry. Thats ahead. State attorneys general from across the country are investigating the makers of opioids. The by paipartisan investigatio looking into alleged marketing practices by manufacturers of the prescription painkillers. The states are issuing subpoenas for documents. The high price of medications was a major topic of discussion among some of the industrys most influential ceos. Meg terrell spoke to them at an annual gathering in minneapolis. Reporter since even before he took office, donald trump has been putting pressure on the drug industry. The drug industry has been disastrous. Theyre leaving left and right. They supply our drugs but they dont make them here. Theyre getting away with murder. Reporter today reports the president may be getting close to action. One thing that we hear is on the table for an executive order is a directive by the Trump Administration to move towards a valuebecause e valuebased purchasing for pharmaceuticals. Reporter the news came as Health Care Executives and investors met in minneapolis for the Piper Jaffray heartland summit. One issue were talking a lot about is the difference between list prices of medications which are wide lly reported and what necessary prices are and how individuals are playing the list price and why should they be paying that. Reporter to health reform. Its possible without the right kinds of changes with respect to funding levels and other regulations associated with the Affordable Care act, that we may have to exit certain markets, because those markets are not sustainable. Reporter trumps plan for a potential executive order arent yet clear. But allergans ceo Brent Saunders says they could be a positive for the drug industry, by focusing not on pricing but not transparency within the system. We pay rebates to lower the cost of drugs. To have them more directly lower the cost of drugs i think is a good thing and ultimately will lead to a more clear and transparent system. Reporter such an executive order could be a boon to pharmaceutical stocks, experts said, as an alternative to measures like direct government negotiation over drug pricing. Still uncertainty in health care abounds. Health suinsurer anthem just ma the decision to withdraw from markets in ohio. Further decisions have not been made to stabilize that marketplace. Weve come to a fork in the road in terms of our inability to serve our communities. Reporter observers hope for more clarity in the coming weeks as republicans in the senate hammer out their version of health reform. For nightly Business Report, meg terrell in minneapolis. A court has ordered another Environmental Review of the Dakota Access pipeline. A judge ruled that federal officials did not adequately consider all the issues. That ruling is considered a win for environmentalists. The oil industry says its not concerned about long term disruption to the pipeline which began moving oil this month. Oil prices are down this week on supply concerns. But thats not the only obstacles industry is facing. Cybersecurity experts say the oil industry is a target of hackers and it could shut down production. Andrea day has our story. Reporter an industry on alert. Boards are concerned because the attacks do affect the reputation. So ultimately, it affects shareholder value. Reporter the biggest risk, experts say, trade secrets like drilling techniques and bids for locations. The Core Advantage that the oil and Gas Companies have over their competitors. Reporter how much is this data worth . Billions of dollars. Reporter they work directly with oil and Gas Companies to help secure data from cyber attacks. Is it more exposed now . Oh, absolutely. Reporter he says thats because the same technology that gives workers Remote Access to well sites and pipelines can also open the door for hackers around the world. Nation state actors have gotten access to this Technology Without necessarily investing the billions. Reporter how much of this is actually reported . Most of it is not. Reporter unless personal information is breached, oil and Gas Companies are not required to report attacks. Most oil and Gas Companies do not like to acknowledge the fact that theyve lost intellectual property where theyve invested billions of dollars. Reporter the number of breaches is up 28 from the year before. Experts say thats just a small share of whats really happening. Most oil and Gas Companies have been subject to an attack. It takes about 200 days for an enterprise to determine that theyve been breached. And by the time you determine youve been hacked, the person who has been taking the information g gone. Reporter the trade groups that represent the industry turned down a request for interviews. But Homeland Security says while a majority of the nations Critical Infrastructure is owned and operated by the private sector, weve worked to build a strong partnership, and information sharing is a key part of this work. Experts say as more Companies Collect online, things could get worse. A recent Study Released by seemans says 68 of oil and Gas Cybersecurity workers believe their organization has experienced at least one cyberattack. Im andrea day for nightly kroger cut its profit outlook for the year. Thats where we begin tonights market focus. The nations largest supermarket operator cited intensifying competition as reasons for the warning. In the quarter, we had about 20 basis points of deflation, excluding fuel. That was a little bit less deflation than the prior year, and the prior quarter. But keep in mind, thats deflation on top of deflation. As for the latest results, the Company Posted better than expected sales and earnings that matched analysts estimates. Shares were hammered, losing 19 . Sales of bob evans fell short of estimates even as the food distributor said customers spent more on lower priced products. The Company Reported earnings that beat street expectations and reiterated Sales Guidance for fiscal 2018. Shares were off 4 to 68. 99. Newcore says it expects earnings to fall and miss expectations this quarter. It blamed weaker demand from increased competition. Shares fell more than 7. 5 on the news to 54. 60. Late yesterday, drug maker mylan said the food and Drug Administration requested more information regarding the the companys generic version of Teva Pharmaceuticals multiple sclerosis treatment. The news rattles investors concerned about a possible delay. Mile mylans shares were down, as were tevas. And a regulatory filing revealed that the department of justice recently launched a civil and criminal investigation into Booz Allen Hamiltons Cost Accounting and indirect cost charging practices. The Accounting Firm says it hasnt uncovered deficiencies through its auditing but is coordinating with the investigation. Shares initially plunged in afterhours trading and ended the regular session down marginally to 39. 33. The most popular 401 k funds are crowded with some of the most popular and right now most volatile names in tech. The top three funds are loaded with tech names like facebook, amazon, apple, alphabet, the Parent Company of google. Vanguard, the fidelity growth company. What does it mean for you . Ken mahoney joins us now to discuss this, ken, good to see you. Lets put this in perspective. Over the year, tech is up about 18 . But we have completed earlier this week the biggest twoday slide in tech of the year. How concerned should people be about how much theyre invested in tech in their 401 k s . They should be concerned. The f. A. A. N. G. Stocks, facebook, amazon, netflix, google, people use these everyday so the leadership is pretty narrow. What we really want to do is start looking at these portfolios and start diversifying. Last friday, at one point the nasdaq was down 172 points, there seems to be rotation. So most investors may stay in this party too long. They may want to rotate, much like the Money Managers are rotating, into other investments that get better diversification. But these are mutual funds. When you think about Something Like the fidelity 500 index, how should you think about it in that context . A lot of investors, 401 k investors, have different funds in different choices. Most people go through and see the best fiveyear return, click, click, click, and not look whats inside those portfolios. The s p 500 is we will diversified, but a lot of funds are focused on Technology Stocks and Money Managers drift over to where the hotspot is and investors drift also to where performance is. Ken, im just wondering then, are there some other stocks, other tech stocks that are getting overlooked here . Because theres so much focus on the f. A. A. N. G. Stocks. 74 of the tech sector stocks are outperforming in the marketplace now. Where should people be looking if they want to invest in tech but without the volatility . Investors can look at p e ratio eeos. Tho ratios. Microsoft, intel have great earnings. In a strong market you may not get a full upside. But in a down market, investors will cling to those that have better ratios as far as value is concerned. All right. Whats your best advice about how much should be allotted to tech in our 401 k . Probably 20, 25 . Any more than that, youre overall weighting that area. Again, its high volatility, as you mentioned. If the market goes higher, youre going to get the biggest bang for your buck. We may have a correction and these are the names that will go down first. Ken mahoney, thanks. When we come back, turning a stadium into a high tech playground. Reporter im Julia Boorstin here in southern california, where theyre making improvements ahead of the fall football season. Well give you a look at the most Cutting Edge Technology being deployed at live venues like this one, coming up on nightly bus facebook is ramping up its use of Artificial Intelligence to combat terrorist content on its site. The company said it would use things like image matching and language tools quickly to identify and take down questionable posts. Facebook and other social media sites have faced mounting pressure to do more to remove extremist content. And amazon is reportedly interested in buying corporate chat room platform slack. Bloomberg reports the startup could be worth at least 9 billion, giving it the potential to be amazons largest purchase yet. Slack would bolster amazons Enterprise Services business. Discussions about a possible deal may not continue. With so many options for home entertainment, people may not be as eager to leave their living rooms to attend an event. Some stadiums are turning to all kinds of technology to make the trip and the high cost of tickets worthwhile. Julia boorstin is in carson, california. Reporter stadiums around the country are embracing a range of new high tech tools. The new Sacramento Kings Golden One Center is taking it to the next level. Its got roving security robots. It uses big Data Analysis to maximize ticketing and streamline traffic. It has an app that puts control in consumers hands. Just as you have a Remote Control that controls your tv, the phone becomes your Remote Control. So now everything can be done through that remote, whether its ordering food, connecting with friends, adjusting the temperature. Even if your kid drops a hot dog, well get you a new hot dog before your kid starts crying. Reporter the Golden One Center is leading a nationwide trends, working with arenas and stadiums to build mobile apps with new tools to control every part of the stadium experience. Theyve installed a new jumbotron and state of theard l. E. D. Ribbon board, waiting for the chargers to Start Playing here in the fall. Theyre rambling up security as venues across the country look for new ways to make sure that their visitors are safe. Beyond airportlike metal detectors and bag checks, venues are starting to tie tickets to mobile devices or even fingerprints and iris scans to check attendees against a security watch list. You dont want this to look like an Occupying Army or a prison. We want it to be a joyful experience for somebody to come and relax and come and be entertained. Reporter for those who cant make it to an event, Virtual Reality headsets. In partnership with live nations for concerts. I watched the nba finals from right behind the net. With vr, anyone can attend a game anywhere in the world. There are over 300 million nba fans in china, which most of those will never be able to attend a game. This gives incredible reach for a live experience. Reporter as for whether live vr could threaten ticket sales, they say it could drive interest if a fan is wowed by a virtual view of a game. Im Julia Boorstin in carson, california for nightly Business Report. Thats incredible, you would have such reach to so many fans around the world. Would you ever go to a game again . Why would you . Im Contessa Brewer. Im andrew ross sorkin. Have a great evening, everyone. See you tomo
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