Inflation did rise. So what did stocks do in they went up. Its all just a case ofuring that market adage inside outside. In this case, se the rumor, buy the news. After a stumble out of the gate tonight, equties rallied, and strongly, for a fourth straight session. The Dow Jones Industrial average advanced to 24,893. The nasdaq added 130 and the s p 0 was up 35. Babb pisani mightily tries to hy explain w stocks went up todwh most thought he would go down. Reporter is the market worried about inflation or not . Stocks took a knows dive on february 2nd when the jobs report pointed to strongh. Wage grow it fell on today when a read on consumer inflation came in stronger. But by late morning the market recouped all of its losses and move higher. What happened . First volatility has been a big wory recent. Today the main measure of volatility, the vix dropped dramatically, indicating that traders who make bets on volatility were betting that volatility would be lower in the next month. That relieved a lot of people. Thats one. Second, if you look the composition of the ra aly there pattern. First because Interest Rates are up, bank stocks which wouldb efit from higher rates have tperformed while real estate have been downs thi all makes some sense. While the markets are down this month grohl Growth Stocks like technologies and industrials outperformed today. Ats good newscause the growth story is intact. That ns traders believe the Global Economy is expanding and earnings will be holding up thats the growth story. Ndeed, earnings are holding up. In facthey are not just going up, they are going up for the first quarter, sec, third, and fourth qurds of2018. Ten year yield is going up 275 to 2. 9 in weeks, thats shock to everyone. But its not enough to derail ow the true driver for the markets. Im bob pisani at the new york stock he can change. What was it about that inflation numer t caught the market and investors off guard . Steve liesman digs deeper into e the rt. Reporter markets were nripped by a sudden inflation panic this mog when the government reported that the Consumer Price index leapt by. 5 . It rose. 3 both more than expected by wall stre. Thefth panic sent futures down nearly 500 points in three minutes. Then wall street seemed to take a breath and reconsider. Maybe it was the pea nine year over year inflation rate, just. 1 or the same as last month. Or maybe it was the idea that one time items like a strange 1. 7 rise in apparel costs in the i think a cellth were unlikely the repeat. Whatever the reason, markets collected lves and collectivelyin ignored the inflation threat torge surge as much as 200 points later in the day. Who had it right. Its important to keep in mine that nothing over the past two weeks, the elevated volatility, ins into of inflation creeping back in, none of thosere rnt existential threats to this economic xpansion and to this bull market. What you have had is a series of growing pains, growingfrpains real Interest Rates coming off of hisser toical growing pains associated with Inflation Expectations reviving after a period of also, you know, very low levels. Reporter inflation does seem to be firming with low unemployment, higher wages and stimulus from tax cuts its likely inflation will grow higher from here. If you see run away inflation or a fed that will hike rates much more than three or four timesy this r . We are closer to the target and the economy is still growing trongly from the starting point of full employment or beyond. In that environment i think the fed is going the keep doing what they chave been doing, ws tighten once a quarter. Reporter thats different from aed that raises rates by 3 4 of a point or a full percentage points. Cooler heads prevail, it something to be worried about but not cause a pull pledged panic. Sectors are feeling theof impact rising prays. Morgan brennan has a look now at where inflation is hitting hardest. Report if you are wondering whether inflation is pick up look no further than recent enings. From Construction Equipment to foodto travel Companies Across industries are reporting higher costs both for materials and labor. Tak whirlpool, which recently warned higher commodity costs to ke home afliances will shave hundreds of millions off profits thisyear. We are seeing inflation trend creeping in on many parts of the value chain. Reporter caterpillar, ford, Harley Davidson and Sherwin Williams are a few of the manufacturers grappling with a tighter labor market. After years of concern that stagnant wages and cheap s commoditould trigger inflation the recent increases may welcome since som inflation is good thing. The risk is if it rises too oks like its ast. Accelerating. At the very least, aum those fee mem who talked and warned about the worries of deflation, all of those ideas about deflation in the middle of last year, forget about it. s gone. Inflation is headed back to the 2 target. Reporter one area to watch, tensportation. Ecially for freight. The price to move goo by truck has spiked, in some cases by more than 30 over the past year. A better economy, a diver shortage, new regulations are all to blame. But those arent expected to let up any time soon. Le whi thats good news for , truckersits bad news for Companies Like tyson, which now predicts higher meat price this is hayear. Pe the biggest signal its merging lies in telecom. Sprintobnd tle are considering moves the dial back discounts, a big potential hift for an industry who is falling costs have helped tach down inflation for years. For nightly business report, im morgan brennan. The head of goldmta sachs risk of the economy overheating is rising. He cited the combination of tax cu and the potential for an increase in spending at a time when the economy is strengthening and people and companies are feeling pretty good. He made t commentsn msnbcs morning joe. Obviously, the supply side view is it wasnt at full capacity, and so they are putting a little bit more on. I would say from my point ofvi that wouldnt be the move i would take, you know, if the fire issere roing and coals have caught i dont know that i would be spraying lighter fluid on exactly. Especially if i might need that it looer fluid ater when the coals started to die out. Thats the thing. Because at some pointou are not going to take rates much lower than where they are now. They are not necessarily with these ificits g to come up with another stimulus plan you need it. You would like to have some thing in reserve. Does the economy hve the potential to overheat joining us is russel price from ameriprize financial. Good to have you with us. What do you think . There was one of the most respected names in american finance, lloyd bank wine saying he is a littled worr about all of the stimulus thats in the system. Are you . I do think that the stimulus that weve seen does stand the potential it add ae bit more inflation to the economy and at that will shave off some he consumer purchasing power. It comes at an unusual time when the economy has been doing quite well. Over the last several years people have been complaini e about thnomy being frustratingly slow. Its been still strong enoug for t Unemployment Rate to come down at a steady pace andon inflatto remain in check. If we do see it exceed the 3 level, if inflation takes off some of that purchasing power businesses, rs and you know, there is some argument to be made that maybe we a little bit of the stimulus that we may see this year and next year. If the inflation rate hits that 2 et ta isnt that what weve wanted it to do . Weve been waiting a long time for it to do just that. It would seem as though that would be a good thing. 2 on the core rate standard outlook. We think it might be a little bit more than that by 2019. Generally, we do think that that is the pace. We are n exactly in the catch where we think that inflation is going to overheat over any time soon. We think some of the fears and concerns may be a ahittle bit ad of themselves. Certainly, we are seeing wage inflation. But there is one bigce differe today than historically when weve seen wage insplaigs flags since the 1970s. That is usuallyompanies have to pass those higher wages on t customersder to maintain their margins. This time around they got aza sle tax cut so they have plenty of ability to pass on higher wages and still maintain their prices and still should end up with higher profit margins. Is there anything that consumers or investors should be doing . Because many of them have never lived thrugh an era where Interest Rates were rising in any kind of a sustaied way, not that they are going to get really way out of hand or thatl inion has been a factor at all. Right. I think generally speak there re still an awful lot of dynamics in the economy that are very likely to contain inflation not just over the next few years but for the foreseeable future, hings like demographics and slower population growth and aging societies, and technolog the ability of technology to keep prices in check. Those are verrf po dynamics. Right. I think what consumers basically can do is not really worry about it all that much. There is going to be an Adjustment Phase for Financial Markets as theyuate the data as it comes forth like. Weve se but other than that, i dont think that this too shall ha pass and move on. You are going to let me sleep tonight russel. Thank you. S l prize with ameriprize financial. A number of stooks tend to rise whennflation runs hot. According to one study that examined date t bac 2001 the top p. M. Ers in the dow one week after a stronger than expected report on Consumer Prices inc ude the followinu united technologies, apple, united health, and boeing. On the flip side, due upon and proctor and gamble tend to fall one week after an Inflation Report tops expectations. Time to look at some of todays upgrades and beyond grades. Target was raised to outperform from neutral at bair the firm says target stands to benefit from remodelled stores and its ofquisition igs shipped. The stocks price target was increased to 85 from 75. And share rose 2 to 75. 35. Avis budgetup saw its rating cut to sell from neutral by goman sachs. E firm cites mounting head winds like increased competition from Ride Sharing Companies and rising inter rates. Price target cut to 33 a share. Sharre fell m than 3 to 38. 73. Mkm partners raise its forecast for facebook. The analyst is urging investigators to be aggressive buyers of the stock. It reiterated its buy rating and the 240 price target. Shares ro 3. 5 to 179. 52 fossil group saw its price target rais by debank. The firm says its focus on wearabletechnology will lead to higher hoirnls. Theyte rep better than expected earnings yesterday. The earning reportssparked a 7 rally in that stock. Ciscos streak is over, and investors are cheering. Cisco is seeing a return to growth. It ended two straight years of rev declines. The dow component reported earnings and revenue that topped expectations, it hiked its Quarterly Dividend and authorized a share bibuyback. Es the shawere sent initially higher in after hours trading. Reporter a positive report from cisco across thear it wasnt just the beat on the top and bottom. Malso grossrgins came in retter than expected at 65 . Infrastructplatforms, the companys ooed fwraed and butter core networking offings in lation to switching and routing grew 2 . Mkm partners highlights the boards decision the to aprove billion increase to its stock buyback progam enabilitied by the cash stockpile overseas which it can bring back thanks to recent tax reform. buying back lots of shares which will drive earnings estimates dramatically higher. At t reportedly wants a topt antust official at the Justice Department to testify during its morgeer trial. As reported, the move is designed to challenge the legitimacy of the governments lawsuit. The government sued at t to block the atelecomcoys 85 billion merger with time warner. At t has edreviously questio the departments motives. To start is expected mid march and represents one of the biggest antitrust cases in a generation. An ie mae may require a taxpayer funded bailout. This after the Mortgage Finance fompany reported a loss of 6. 5 billion in therth quarter of last year. That loss could trigger the first cash infusi into the company in six years. Fannie mae has been undeo rnment conservatorship since the financial crisis. The Trump Administration has proposed redu ing the time takes to permit infrastructure the projects and has pointed to a bridhat connects new york and new jersey as an example of red tape and bureaucrac run amuck. We have a report on the from new jersey. 200 feet above the strait, construction ctinues to expand the bridge. The project raised the bridge by 64eet to let bigger cargo ships pass. It wont be fully completed until 2019. At that point, the 1. 6 billion project will have taken nearly a decade. Ome blame the prmitting process and say speeding that up would get businesses to invest e bottom line is, right now its taking too long. And its not getting 20 of the costs fr the poject is now in the plan approval pcess sp not in the structure itself. Reporter the government released a two part increase for infrastructure funding and goals. This frameworko will lead a 1. 5 trillion investment in rastructure, a faster e approximating process that takes two years instead of ten years. Reporter in practice it more complicated. The bayonne bridge review was conducted by one federal agency, the coast guard, which completed its permit in 26 months. Its construction and engineering took six years because of heavy traffic and harsh northeast winters. The median time topermit the countrys largest infrastructur project three and a half years according to the department of transportation. Thats nearly cut in half since 2011. Amy go smith, t new jersey director of clean water action says furtherer shortening theev ew time would hurt local communities. There would be little to no chanism for the public to be engaged because these are complicated projects that require scrutiny. Reporter others say permits are meaningless if there is no ooney to pay for the projects. The white huse proposed steepdg b cuts in the building structure like the army corps of engineers. All they need is the money. And the army corps has 5 million 5 billion year. Its where is the 85 billion. Its not penalties or real estate views. Reporter the busiest ports on the eastern seaboard had ay recordar, processing 5 more cargo with future growth t expecte climb. For nightly business report, im kaela tausche, bayonne, new jersey. And to read more about the infrastructure permitting maze, head to our website, nbr kam. Bristolmyers squibb enters one of the largest drug collaboration deals ever. Thats where we begin tonights market focus. Bristolmyers will pay nectar therapeutics for the right to its experimental cancer treatment. They could also receive an additional 2 billion from bristolmyers. Shares climbed 2 to 65. 3a shares nectar popped 11 to 84. The Advertising FirmInterpublic Group reported Revenue Growth in this quarter that easily surpasseda expeions. It reported weaker client spending for the year but expects that to verse course this year. They forecast organic revenue to rise as much as 3 this year. The share rose 10 to 27. 49 increased marketing and a growing user base trnslated to higher profits over at groupon. Hey werent high enough and theyissed analysts estimates. Groupon continued to scale back its presence some International Markets and issued a disappointing forecast. The shares plunged 9 to 4. 71. Hotel freighter hilton said an increase ierall bookings and strong growth in its International Business helped quarterly profits outpace forecasts. Salan were also better t expected. Hilton shares were up 3 . They finished the session at 85. 97. Marriott bell, reported stronger than expected revenue as the Hotel Operator said results were helped by an increase in more exnsive bookings. Profits though slipped from year earlier. Marrowott shares initially in the extended session but they did end the regular day up 3 at 145. 24. According to a regulatory filing Warren BuffettsBerkshire Hathaway took a new stake in tel aviva. Shares of tel aviva rose adding a 4 gain during the regular session. Inflation is inching ,high when that happens dividend stocks are less ttractive to investors. What should you keep in mind when investing in dividend ru si us through that i a guest. What are things you should look atntn the environwe are in right now when considering whether to add a dividend ping ock into your portfolio . You want to focus on the fundamentals. Ulthe dividend sbe ancillary to what it is you are investing in. There are some things we do look at. Wwant to focus on low payout ratios. Coverage ratio, how much cash flow is available to pay out the dividend. We also want to be mindful of arverage ratios. Companies that highly indebted would tend to have higher debt servi costs. And dividend growers. Companies that grow dividen over time will likely continue to do that in the future. You used some technical terms there. Lcut to the chase. I dont blame you. Thats what you do for a living. Tell me where i find companies that have these particular attributes today, and by comparison, describe o somethe companies where the dividend or the fuamentals arent healthy in a rising interest rate, rising nflation environment. Absolutely. So in this type of environment as e sawlier in the show we want to focus on financials. Banks specifically. Interest margins basically compressed to zero since 2008. As rates do rise banks will be more profitable overtime. Additionally, Financial Institutions like prudental shou benefit becauseinsurers have related assets and liabilities. As more capital becomesf available Share Repurchases and dividend as regulations come off, we should see that come back to shareholders as well. We showed so of the stocks you like. Lets start with mcdonalds. You dont own it directly but hy would that make the list . Mcdonalds is a great story about being able to take advantage of changes in consumer behavior. Theyrave done very, v well when it comes to taking advantage of food delivery. The dinner portion of that delivery has reallycr ised. What is funny is that people order more deserts atinner time when they have it delivered. Mcdonald saidhey have figured out freshfrench fry delivery. And prudential, for the reasons we talked t, deregulation, ically important institution, if that designation comes off it will free up fund to come backto shareholders. Coming up, the most dependable cars on the road today. A new study shows that cars and trcks a more dependable than ever. Jd posers annualvey of people who own threeyearold models also points to an interestitrend. Mass Market Brands are closing the quality gap with lucky ones. Phil lebeau has the details. Reporter it may be the most important question people buying a car or truck will ask themselves in a showroom, how reliable is this model . Jd powers annualn survey vehicle dependabis ty sho three yearly models are holding up better than ever. The brand with the fewest problems, lexus, rscha, and buick, the highest rated mass marketed brand in the survey of over 30,000 owners. Overall mass Market Brands including chevrolet, toyota and hyundai are closing the quality gap with luxury lineups. While porscha owners still report few problems than those driving ot more common models, the difference between the two is shrinking. Whats notng ch is the frustration owners a experiencing with incar infotainment systems and features like voice recognition. This remains the top complaint ttcording to jd power. The three brands in this years is your shay, fiat, ld rover, and chrysler, which declined to comment on the results. If an automaker struggles or does well in a survey like this, does it hurt or help sales . Maybe not immediately, but jd power points out that Vehicle Dependability is becoming more important han everor those looking to buy a new vehicle. Phil lebeau, nightly business report, chicago. And before we go on this valentines day, americans are expected to spend a nr record amount. The National Retail federation puts spending at close to 20 billion. Much of th will be on jewelry, yes. Followed by a night out at dinner. No. Flowers yes. Candy, eh. And get this, more than 00 million will be spent on gifts for coworkers. Hmm. Hmm. Hmm here. Heres one more look at the gains in stocks. The dow advanced 253 pnts. The nasdaq added 130. And the sppd was up 35. A you arways so good on thols your love will he wife. Happy lentines day. Happy valentines day to you and to all of you. That does it for us. Im suherera. Im tyler mathisen. Have a great valentines day dinner, everybody well see you tomorrow. This is bbc world news america. 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