The one sector that did not participate in the rally today was the Technology Sector. The best performing sector during the First Six Months of the year. Here are the closing numbers for you. The blue chip index advanced 129 points to 21,000. The nasdaq dropped 30, the s p 500 added 5. Also helping the climb today, the transportation sector which hit a record, that group is considered a key part of the market and the economy. And Morgan Brennen tells us where it may be headed next. The dow transports recently reversed court to out perform the broader market. Today was no exception. The dow jones hit a new high. Splashing a dow theory signal that means stocks could continue to gain ground. Analysts expect the strength of transports to continue. At least for now. A weak dollar and the unrelenting rise of e commerce should bode well for companies hauling goods. Ups and fedex will juggle a Record Number of packages this holiday season. Both are investing billions to do so. Ups has announced a new charge with fedex expecting to follow suit. A big rule taking effect at years end. Changing driver hours will take capacity off the road. The big wild card coo be ramp stocks they all chugged hire in the first half of the ye growth areas like auto has begun to wane. A big factor, energy production. Oil prices plunge, could begin to decline. For nightly Business Report, im Morgan Brennen. Corporate america getting ready to report Quarterly Results in the weeks ahead. As always, those earnings will be a key driver of stock prices. The early sign that we may be in for a positive surprise. Its early, i know, only 23 companies, about 5 of the s p had reported earnings for the Second Quarter, the results in the early have been surprisingly strong. Earnings for those 23 companies are up 12 from the Second Quarter last year. The big news is revenue. Guests have argued for years that Earnings Growth is coming from cost cutting, rather than real revenue growth. Thats not the case any more, it takes away a major argument for the bears. 5 is a small sample. What about the other 95 . They havent reported yet, analysts are traditionally optimistic, you know that, estimates come down in the quarter. Theyre not being reduced nearly as much as the quarter. Theyve seen it increase in the third quarter, not decrease, thats unusual. This applies to companies that are comfortable with earnings assets right now, otherwise theyd be cutting numbers much more aggressively. Earnings season doesnt start until july 14th, when jpmorgan and wells fargo report. Were off to a strong start. As bob just mentioned, the markets ended the first half of the year on a strong note, with all three of the major indexes posting gains. Can the runup in stocks continue through the second half of 2017. Here to discuss both sides is peter malook. Hes bullish on the market. Eric is a little more cautious. Eric, what makes you more cautious on this market. As we come up to july 4th, what a wonderful four years. Its a wonderful thing to see. That being said, were watching a couple things, in particular some tactical analysis and fundamental often times when it hits lows around 10 we see volatility spike up. The other is on the fundamental side, the technology index, the stocks index. Mid june it was 155 now its 138. Off about 10 . Were just a little more cautious because weve seen a little bit of a pull back in technology, and a few other indicators. Peter, eric says optimism is high, volatility is low, that concerns him, does it worry you . No, not at all. I really dont look at those things and really dont factor in the technical component into our Investment Decisions pretty much at all. The way we look at it is, its future earnings investors are saying hey, it looks like these companies are going to make a lot of money. One 24i7k that drives factors is unemployment being low. We have unemployment at more than 10 year lows, you have a lot of people going back to work, youre starting to see wa inflation. That means people feel better about the market, because Companies Earnings are growing, i dont see anything that tells me that thats going to change. Especially an environment where the 10year treasury is less than 2 1 2 . Eric, a question about the pull back in the Technology Sector that you mentioned, differentiate for me a pull back that you find somewhat worrisome versus a rotation out of those stocks, which have had a big first half. Glad to do that, let me address the unemployment and wage growth. What weve seen is that wage growth has been sluggish. What types of jobs are being created out there. You want to make sure you watch for that. Markets are forward looking. Were coming into a seasonally slower time. Markets are forward looking, we want to say as i like to say, im not a complete bear, but im cautiously optimistic from that perspective. Push back a little bit. Youre not worried about optimism. Equity prices are at somewhat extended levels. Thats number one, number two, Interest Rates are likely to rise over the rest of the year. Third the economy is not exactly tearing it up, and the trump agenda seems to face a lot of head winds. If some of those things materialize, what could happen . Well, the thing about everything you said except for the trump part. In 2008, 2009 amount way through this year, Interest Rates are likely to rise. For a lot of that time, Interest Rates werent predicted to rise. I think the fed is going to increase rates and they have, if you look at the 10year treasury, it remains very low. We have to look at the difference between the stock market and what the treasury is offering. My answer would be great, it would be great to have unemployment drop quicker. Weve been appearing slow growth for 10 years. Its not optimal, but its heading in the right direction. If unemployment is going to go down slowly, if earnings are going to go up slowly. These are not things that say, get out of the market quickly, or even take a defensive posture. Were looking at the market. I dont think a forward p ratio is a reason to run. What effects the market . Toilet paper and toothpaste. We feel a financials are undervalued. And they can benefit from a rise in rates as we move into the next phase of rate increases. Thank you very much. American manufacturers growing now at the fastest pace in three years, the institute for supply management said its index rose more than expected thanks to improved economic decisions. Both domestically and abroad. New orders rose sharply, and employment plans hit the second highest level since 2011. Summer is traditionally the busiest season of the year for auto sales. This year dealerships are seeing fewer customers. The pace of sales is expected to be under 17 million vehicles for the fourth straight month. Phil lebeau has more on the slowdown in sales. The signs of the season are out at dealerships. Theres plenty for sale not as many customers as dealers would like. Sales last month were not terribly impressive. For the four largest automakers in the u. S. The average price being paid for a new model, over 34,000, continues to tick slightly higher consumers are still spending, especially on trucks and suvs. Automakers have seen inventories rise as sales have eased, as a result, some Assembly Lines are stopping production for longer than usual this summer. But not tesla. Where the electric automakers production of its new model three will start later this week, with the first model threes being delivered later this month. It has an expected starting price of roughly 34,000. The model 3 is targeted at the mass market and critical to tesla taking the next step and becoming more than a niche all the toe maker. If initial reviews are positive, dont be surprised if we see a surge in reservations. Which already stand at well over 300,000. Phil lebeau, nightly Business Report, chicago. Iran signed a 5 billion agreement with francis totale and a Chinese Oil Company to develop an offshore natural gas fie field. Iran shares that offshore field with qatar, which is now in the middle of a diplomatic roux with a number of other states. The product will be developed in strict compliance with national and international law. Oil prices rose for an eighth straight session, the loaningest rally in more than five years. This comes after new data pointed to moderating u. S. Outp output. Only a few see prices climbing even further. Jackie deangelis has more. Locking a near 15 decline, after having touched bare market territory. The second half declines, crews could see the third down year out of the last four. Where do we go from here. The oil survey pulled analysts, traders, hedge funds to get their take there could be more price pressure. How low can we go in . Most say high 30s, there are others who see crude prices closing the year at 39 a barrel. The majority said the cartel will flex its muscles to try to support the market, but that opec has lost control of prices. Everyone says supply is still the most important factor influencing prices. 80 said that will continue goingforward. With respect to demand. Its trending stronger, but not Strong Enough to absorb excess product. President trumps pro Energy Policies were not having a direct impact on price this time. For nightly Business Report, im jackie deangelis. Still ahead, challenging market. Home buyers are having a hard time, prices up, inventories low. Could market prices ease later in the yea big pharma is turning to Artificial Intelligence to find new medicines. Glaxosmithkline is investing 40 million to use Super Computers determining which drugs will be most effective. Merck, Johnson Johnson and sanofi are also moving in that direction. Lawmakers are back in their districts or states talking to constituents on where things stand and a lot of questions remain. John harwood is not off today, hes with us tonight. Congress out on that july 4th recess, what does it mean for repeal and replace . They have a lot of work to do, tyler. I spoke to a republican strategist familiar with Mitch Mcconnells thinking, theres a one in five chance they could get the votes. When they decided not to vote before the july 4th recess, it signaled how short they were of getting the 50 votes they need in order to get mike pence to break a tie and pass the bill. Senate leader mcconnell faced objections. How does he walk that line . Not easily. But it appears theyve decided that the way to victory is to try to go left. Theyre not going to go further right. They believe that rand paul, who is a libertarian theyre hoping other conservatives are ultimately not going to shrink. Even if they dont like aspects of the bill taking their last best chance to substantially overhaul obama care. What theyre trying to do is figure out ways to defer or retain some of the obama care taxes. Theyll have more money to play with to increase funding for opiod Addiction Treatment and also for medicaid, which is a big concern for people in states like ohio, West Virginia and alaska. Lets assume the senate manages to pass the bill. Whats the reaction likely to be in the house . Will they take it or what . Thats a very tough decision for the house. I think if you start to get a senate bill that retains some of the obama care tax increases, it becomes much more difficult for the house to take the senate bill and send it to the president for signature. He wants to get this off his plate and get the tax reform, that would be a hard decision for if they pass the original version of the senate bill, i think the house within days would have passed it, put it on president trumps desk. Much dicier now. How long do you think they will let this debate go on, and do you think they come up with a bill . Well iing, the source famili with mcconnells thinking says no later than july 21st. They do not want to come back after the august recess and have to deal with this. They want to be on tax reform, if they pass it by july 21st, then you have one more week for the house to act before the break. Thanks very muc eqts propose to take over rice energy. Its a snag. The wall street journal says activist hedge fund took a 5 stake in eqt. In an attempt to block its nearly 7 million merger with rice. It would rather see eqt separate its pipeline operations. Shares rose 2 to 59. 75. While shares of rice energy fell more than 3 to 25. 66. Caterpillar did not submit the necessary paperwork to the government in recent years, regarding that companys export its part of an ongoing criminal investigation into suspected tax evasion at the equipment giant. The wall street journal says federal investigators have uncovered discrepancies between caterpillars regular filings and what it previously gave to authorities. The findings are preliminary. Shares of caterpillar were off. International speedway says it expects dividends to increase by 4 to 5 in 2018. That news was overshadowed by the companys lower than expected earnings and revenue. Investors put the brakes on to 3560. The canada based Oil Producers will not reinvest in its core business any time soon. The wall street journal says the company which focuses on mining oil will give investors the excess cash it makes for the coming years. Shares were up 2 1 2 today, they finished at 29. 94. The personal finance website bank rate is being bought by the Digital Marketing company for more than a billion. Red ventures will pay 14 billion a share. Bank rate up 8 1 2 to 13. 95. General electric has completed its 7 1 2 billion deal to combine its energy unit with baker hughes creating one of the Worlds Largest Oilfields Service providers. The company will be named baker hughes ge company, and will trade on the New York Stock Exchange under the ticker bhge on wednesday. If youre a homeowner or looking to buy a home, you probably know that prices continue to rise in the first half. As the number of houses on the market fell. It was a simple supply demand equation, will the same story carry through for the rest of the year. Diana olick takes a look. A lack of home listings has been the lead story in the first half of this year, keeping home sales at a slower pace than expected. Especially on the lower end of the market. Take a look. Sales of homes priced below 100,000 are way down. The higher end of the market is seeing a big jump in sales, but only because there are more listings, and buyers are less cash strapped. This is unlikely to change in the second half, even as seasonal demand falls off. Its a great opportunity for the nations home builders. Builders are hoping nor deregulation under the trump administration. Tough regulation accounts for one quarter of the cost of putting up each o home. The possibility of deregulation each year, coupled with the tight supply of existing homes for sale and low Mortgage Rates have had the stocks on a tear in the first half and could continue into the second. Dont forget the remodeling market, which is also getting a huge boost from the lack of homes for sale all names benefiting from that. When people cant move, they remodel and upgrade older systems. As for the elephant in the room, Mortgage Rates, we keep predicting theyll go up, and they havent yet. With the Federal Reserve continuing to pull money out of the mortgage bond market, there will be more competition for cash, rates will have to move higher. For nightly Business Report, diana olick in washington. Heading to the beach . You first might want to see if your state passed its budget. The worlds biggest casino huck saw revenues rise sharply in june. Macau said revenue rebounded after a more than two year tumble as demand from highroller vips accelerated. Macau is the only place in that country where gambling is legal. You may have noticed a change to your credit score, as of july 1st, all civil judgments and some tax liens will be removed from credit reports. This is a result of changes in policy. This is expected to affect 10 to 20 million people, with their credit score rising 20 points. According to the tax foundation, indiana has the only Corporate Income tax change with the rate decreasing to 6 . Individuals in kansas will see their income tax rates rise. Tennessee reducing its sales tax rate on groceries, and six states indiana, montana, new jersey, south carolina, tennessee and West Virginia have increased their gas tax rates. The Illinois House of representatives passed a final budget bill which approves 6 billion of bonds to pay prior bills. It approved a 5 billion income tax increase and a spending bill over the weekend. The budget implementation bill goes to the senate. The cash strapped state began an unprecedented Third Straight fiscal year on saturday, without a complete budget. As we reported the inability of illinois to approve a budget has put the state on the verge of having its debt downgraded to junk. Illinois isnt alone. 11 states did not have budgets in place on july 1st, when the fiscal year started in most places. Maines partial Government Shutdown entered its third day today. There is some movement. In wisconsin, the Sticking Point is over how to pay nor needed road repairs and in connecticut, the governor is funding the state by executive order. Public beaches in that state are op but the same is not true in new jersey where there are a number of places that are now off limits to visitors even during this popular vacation time. Kate rogers is in Liberty State Park in jersey city, new jersey. If youre looking to hit a state park or beach this Holiday Weekend in new jersey. Youre out of luck. More than 50 beaches, parks, historical sites and recreational areas like Liberty State Park are currently closed to the public. This is due to the State Government closing down at midnight this past friday. Governor Chris Christie and the state assembly failed to reach a budget agreement. Despite parks and beaches being closed, the governor found himself on a beach at island state park, even though its closed to the public. The Governors Office has a residence there. Some agencies will remain open, including state hospitals, new jersey transit, the lottery, casinos and racetrack. New jersey residents not pleased to hear about the state park and beach closures. Outrageous. Everyone knew this was company, its july 4th weekend, where people want to go to the parks, not to have that available, theres no excuse for it. Im stunned the legislature coupled with our governor cant figure it out. And he can go to the beach and the rest of us cant. That was one of our plans to go to the beach, the park at the north end, right . And we cant do that. They ought to be able to get to it. New jersey is one of many states facing a budget impasse, and reduced services to start the fiscal year residents are eager both sides will work things out soon. That is nightly Business Report for tonight, im sue herera, thanks for joining us. Have a great evening, everyone. Happy fourth of july, well see you tomorrow for a special edition of nbr. This is bbc world news america. Funding of this presentation is made possible by. The freemen foundation. And coal Fuller Foundation pursuing solutions for americas neglected me. Planning a vacation escape thats relaxing inviting. And exciting. Is a lot easier than you think. You can find it here in aruba. Families couples and friends can all find their escape o
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