Profits. The most valuable Public Company in the u. S. Easily beat wall street estimates. Reportingarnings of more than 10 billion in sales of more than 30 billion both double digit increase from us ay year ago. It may have made its name in the wonts operating system but the future in the cloud. The Cloud Business called azure owth in the recent quarter was below 6060 a big number with you one that gave investors pause. The stock volume nil initial after hours trading, josh lipton asore on microsofts quarter. Expectations ran highan into microsofts latest earnings with the stock up nearly 35 so far this year as invtors bet that its a smart way to capitalize on the shift to clou computing. One b b n nber that investors watch, commercial cloud revenue you go incding azure microsoft answer to riviv aws and cloud properties. Commercial cloud revenue clocked in at 11. 6 billion with gross margin spanning to 66 . Kirk ma tern says the growth in the cloud is translating into real earnings power. And that he argues should drive the stock higher over the longterm. For nightly Business Report, josh lipton, san francisco. Lets turn to dan ives about the better nan expected earnings. The director of executive research ate had bush developments. Thank you for being here. Thank you. I know you were going to be focused on the Cloud Business. And that seems to be what has investors a little bit worried about tonight. Are you at all concerned . Yeah, i view it as a knee jerk reaction. In continues in my opinion to be a strong report and really one that puts gasoline in the engine in terms of cloud. You look at a 59 growth number. I think whats happening here is microsoft stealing share from aws and for the stock we vow this as something thats still in the early innings and moving higher. The stock as josh mentioned in his report is up about 35 . Youre still bullish on the stock what kind of target do you have . And does this percentage increase so far this year give you any pause . Yeah, we have 160 price target. I think we are only halfway through the move to ovchoud. And microsoft continues to be our bet. If i look at in quarter is gives you billishness to owning this. I view this a a start of whats a massive secular change when the dell and microsoft owning the cloud. What about amazon and the competition with in re Cloud Business . They really still own the space even though microsoft is gaining. Its a gat point. I mean, i think the first part of this, bezos and amazon won the first part of the cloud battle. But i think the next part is where microsoft and dell win there. When you lk at the earnings forest for the frees be i think this shows that microsoft is starting to steal share and in our opinion mix makes us more positive on shares on the cloud story going forward, in terms of the twohorse race between microsoft and amazon. If you ar longterm investor as many investors are, would you own both stocks on a kind of hedge your bet as to who wins the cloud war . Yeah, i mean, right here i view microsoft as my 10year play on cloud. And thats continuing to be our topic. I view amazon looking at the aws piece thats another name to own in the portfolio. You have 700 to 800 billion spent in the cloud in the next two years. These are the two ways to play it in my opinion. On that note, dan ives with we had bush securities thank you. Thank you. Boeing earnings cut in half as the Company Struggles to recover from the grounding of theop sellingng o 737 max jet liner. Revenue slid 20 from a year ago. But that wasnt as bad as feared. The company also said its sticking with the plan to get the 737 max back in the air. D that helped lift the stock in todays session. Phil lebeau has the details. Reporte fixing the 737 max continues to cost boeing hundredsf millions of dollars. But ceo Dennis Muilenburg says the company is moving closer to fixing the beleaguers plane. There are tangible milestones being achieved but we have more work to do. Last week wela complete add initial dry run of the certification test f ght sfla the certification flight is expectedappen next month. If it goes as planned, the head of the f. A. A. Could decide by the end of the year the max is safe to fly. Cleerpg the way for scores of 737s to get back in the air. But some on wall street have a different time line for the max. We have it returning to service in march. Are we changing that because of what the company said in . No this is a company that has a history of overpromising and underdelivering and eventually they get it right. Amp cutting production to 42 per month earlier this year. Boeing plans to ramp up to 57 per month by the end of next year. While investors are encouraged bofg is close to turning the corner with the crisis, some in Congress Still have plenty of questions about what went wrong. And next week theyll grill ceo Dennis Muilenburg during hearings on the hill. I anticipate there will be tough questions, challenging questions, a lot of scrutiny. And frankly we support the scruny on the work that were doing. That scrutiny is far from over. Regulators from around the world still must be kwon convinced the max is safe to fly. And in some countries like china, that may not happen for several months. Phil lebeau nightly Business Report, chicago. Caterpillar is considered a barometer for growth. It said it would not be issues Sales Guidance because the outlook is so uncertain. But the stock didnt fall as much as youd think. In fact rose. Seema modi explains. The softening Global Economy is putting caterpillar customers to think twice about buying heavy machinery. The industrial bellwether says dealers were holding off on purchases of equipment not due to financial distress but because of the uncertainty about where the economy goes from here. Obviously pmary is dealer expectations of inventory reductions. It depends where we end obviously the big unknown factor is what is our dealer expectations of future growth going to be at the end of the year, because that will impact their order patent in q 4. Weaker demand rumted in caterpillar posting the first decline since 2016. Energy was weak. The Company Makes things like pumps and drilling equipment. That softness some experts say is the result rf result of the trade war and slowing global growth. Our mines cususmers are cautious and hesitant to pull the trigger on new equipment again though we see increased sales. And improvements in the business. Also keep in mind when miner delay that creat opportunities for us for rebuild in parts. Caterpillar continuing toon deal with ongoing weakness in asiapacific where sales fell 3 . Over time they are confident they can fend off competition in markets like china. We are confident in our ability to compete in china longterm and demonstrated the ability to do that. But there will be fluctuations on a shortterm basis up or down. Thats part of the deal. Despite the disappointing Earnings Report some investors are hopeful the company can stage a turn around over time. Theyve done a vy good job, the smort little up cycle we have. Keep in mind the industrial upcycle is not great. Mining is not great. Oil and it was not great. Construction okay. Not a powerful up cycle the margins have been exceptional. The biggest challenge for caterpillar will be navigatinin the uncertain Global Economy. For nightly Business Report seem awe modi. The earnings were not enough to driving stocks in onene direction or the other. The major averagingng wobbled trading narrowly session throughout the expectation. The Dow Jones Industrial 45 points. The nasdaq added 5 and the s p added 8. Now the hard part making sense much Corporate America hits and misses this earnings season. Bob pisani here to help lead the y. We are about a quarter of the way through earnings season and analysts wonder wonder whether the high profile missessre spelling broader trouble ahead for the overall marke fedex, mcdonalds, now caterpillar and boeing all missed earnings expectations by a significant amount were talking a miss of 30 by b bing outliar. The misses arent trivial they may be outliar. Only 15 of customers missing estimates thats roughly in line with the historical trend most of the large miss was company or sector specific. The boeing issues are wellknown. Fedex h h many company spsk issues look at rival ups boasting strong numbers in the next day air delivery service. They didnt have the same problems fedex had. Mcdonalds likely saw signififant traffic dfrpgs around the wholeho chicken sandwich wars earlier in the last few months. Competitors like pop eyes. But if the miss is reflecting trends in the broader economy youd be seeing far more companies missing and overall guidance would be much worse than it is. In leaves caterpillar, the poster child for the trade war and mc. Reducing inventory to uncertainty in the Global Economy resulting from trade tensions. Thats their words. And they said end user demand was flat. The caterpillar earnings trends have beenoor more than a year. Not j jt in quarter and the fact gnat suffolk is up today seems to indicate that the street believes t tt caterpillars earnings could be bottoming. The question now is the global slowdown getting priced . Alec young from russell calls in the muddle threw mechanic where investors expect one to two gdp growth and maybe 5 Earnings Growth or less in 2020. Thats a lot better nan recession fears we had six months ago. For nightly Business Report, bob pisani at the new york stock exexange its time to look at todays upgrades and downwnades. Coke upgraded to buy from neutral at ubs, the analyst site yiet attention acquisition opinion of globa coffee brand and innovovion. The stock rose more than 1. 5 to 56 p 64. Trachl travelers upgraded to hold from sell at deutsche bank. The analyst saying underwriting margin may be bottoming. The pris target 140. The shares gaining. 5 to 132. 1637 Walgreens Boots Alliance waps downgraded to neutral from overth at jp morgan. Citing growth challenges in the near term. M. The prays target is 63. The stock fell 1 to 54. 56. And service now was downgraded to neutral from buy at securities the analyst cites the departure of the ceo and broader concern over kbe attrition. Last night you may remember we told that you service now ceo is going to go over and head nike. The price target is 230. The stock is down more than 3. 5 peppers to 220. 01. Still ahead, facebooks ceo did not find many friends among lawmakers on capitol hill. In the news tonight, President Trump today lifted all sanctions on turkey. Saying thereill be a permanent cease fire in the conflt between turkey and the kurds in northern syria. The cease fire required Kurdish Forces to move out of a roughly 20mile zone on the turk irk border. By the moves that we have made we are achieving a much more peaceful and stable area between turkey and syria, including a 20milewide safe zone. The Administration Says it reserves the right to reimpose the sanctions if ankara falls short of obligations. Adding that its not the job of the u. S. Military to police the world. Facebook Ceo Mark Zuckerberg went to capitol hill today to anticipates questions about his companysan cryptocurrency projt called libra. And he found himself defending just about every part of his social media network. Ylan mui mass me on the heated hearing. Mark zuckerbergs hearing on capitol hill lasted all day. Facebooks founder and ceo fielded questionens on everything from Election Security and political speech. And democrats were angry and exas per eight zblad Facebook Changes the rults when it can benefit itself. Have you learned that you should not lie . Facebook has been systemically found at the scene of the crime. For the richest man in the world to come here and hide behind the poorest people in the world and say thats who youre trying to help, youre trying to help thoeps for whom whom the dollar is not a good currency, drug tealers terrorists tax evade zbleers republicans were tough on zuckerberg but some cautioned against the broader bibi techbacklash. Thatt why i believe americn innovation is trial this day in this hearing. The focus of the hearing was supposed to be facebooks ambitious plan to launch a cryptocurrency called libra. Zuckerberg sayse understands why washington is kept skeptical. I get im not the ideal messengeror this right now. Faced a lot of issues the past few years and im sure oomts of people who wish it were anyone but facebook proposing this. Forward wh libra without tov approval from i say regulators and he said he would be willing to leave the association backing the cryptocurrency houfrp there will be costs to stepping away. While we debate the issues the rest of the world isnt waiting. China to moving quickly to launch the similar idea in the coming months. Libra will be backed mostly by dollars and extend americas Financial Leadership around the world as well as our democrat values and oversight. But if america doesnt innovate our Financial Leadership is not guaranteed. This is zuckerbergg areas first public testimony on capitol hill in 18 months. He leaned foorpd in seat while listening to questions and answering them. This hearing may be over, but the spotlight isnt going away. For nightly Business Report, ylan mu y in washington. Sales of o of e eli lillys top selling drugs misses th mark. Thats where we begin the market focus. Rebates and discounts on a lilys diabes drug trulicity curved revenuend came in shy of targets but the dru make are topped expectations and raised earnings forecast. Shares fell more than 2 to 107. 40. Angst emropes more than 20 peppers thanks to enrollment gains from people enrolled in Medicare Advantage anddi medica. Anthems 2020 guidance was better thanfeared, easing concerns that did kmaltd medical costs would cut into profits. Helping to send shares up to 263. 51. Norfolk southern with tariff uncertainty and global weakness could impact the coal and steel transport markets. Notspg southern shares slipped more than 2 to 184. 87. And shares of resid owe technology fell following the company lowering revenue guidance. The smart home and Security Products company also sai c its cfo will be leaving and it has beguhn gun a kprens. Shares lost nearly 40 of value to finish at 9. 50. And after. The belel ford postea lower than expected profit as higher warranty and incentive costs and slowerand i china hit the bottom line. The auto maker also a cut fullyear didedens. Shares initially fell following the news but closed the regular seseion up about 1. 5 to 9. 21. Also after the bell, tesla shares initially spiked after the electric car maker posted a surprise profit for the quarter. But revenue did fall slightlen from a year ago. And you can see the after hours move after closing the regular session down a fraction to 254. 68. Well price target hikes are common within wall street but today a couple caught our attention. Wells fargo and Morgan Stanley increased their target on the paint Company Sherwin Williams to 650 a share. Now there were only a handful of companiesrading at that high of a dollala amount which got u thinking why the companies kmoos to keep the stock prices high. We decided to examine the phenomenon in in a segment we call surprising stocks. Joining to us talk about in is art hogan, the chief Market Strategist as national securities. Good to see you art. Nice to see you thanks for having me. Sherwin williams was a surprise with the price it trades at. If you broaden it out why would a company companyo choose the keep pinstripes that high insteaddf splitting it. Its a great question. On the companyide there is three kind o fundamental reasonshyhe keep that. Its a prestige thing and all of a sudden post the 1999 the 2000 rm time frame when everything fell apart the higher the price is it seemed you are a fansier better company. Thats persistent. Weave seen that. The sec thing, large Institutional Investors bay pay by share so they put pressure on companies not to split the price to she dont have to pay as you have in transacting remember in 1999, 2000 ab2008 when prices came down precipitously if you start lower local and slipped between 10 it was a slippery slope where you might be delisted or the price might be too low you couldnt trade on exchanging or couldnt be in funds. I think thats the three main drivers f corporations. For that last one that you mentioned, it could be a defensive strategy. Case. Very much so. If the cfo or ceo thinks perhaps the economy is slowing or headed for recession or something along those lines. Thats generallyhe thought process. The prestige thing i have a 50, sr. 1,000 stock or the 500 stock there is the large Institutional Investors saying we are paying by the share and we dont care how expensive it is. And remember in008 a we got to down to 5 and the stock price was too low and nobody could invest. Knows are the fundamentals. But i dont think knows are great reasons zpla on the other side, one of the reasons that you might want to split the stock i would think that you broaden out shareholder base. Absolutely. So human psychology for with whatever reason its just easier for me to contemplate that a 20 stock is going to 40 and i think im buyinin more if i buy it at 20 even though spending 10,000 than if i paid 20 oh a sre and it goes to 400. The kplapgs of going from 20 to 40 easier to grasp as an investor than thinking i i can o to two hundred to 400 appear and that percentage feign is the same, i just believe its easier for it to happen from 20 to 40. Right. I believe i can buy more. Its a human nature thing you get more investors saying i can afraid this stock at 20. Cant afraid it as 400. Wha