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tv   Nightly Business Report  PBS  September 14, 2010 6:30pm-7:00pm EDT

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>> the retailers are going to get a good read on the christmas season from back to school, and that's what makes this whole back to school season so crucial as a forecast for christmas. >> tom: august retail sales are in, and if they're any indication, the nation's retailers might be in for a pleasant surprise from saint nick. >> susie: but will stores be confident enough to hire additional workers? an update on holiday hiring. you're watching nightly business report for tuesday, september 14. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
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this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> tom: good evening and thanks for joining us. the nation's retailers had a relatively strong back-to-school selling season, and susie, that has investors and traders wondering how the sector will do this holiday season. >> susie: tom, the commerce department reports retail sales rose for the second straight month in august. sales were up a better-than- expected four-tenths of a
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percent last month, while july's sales were also revised higher. >> tom: with "back to school" in the rear view mirror, retailers are looking ahead to the holiday selling season. many stores are deciding now how many temporary workers to hire, if any. as erika miller explains, those decisions can provide some important hints about the strength of holiday sales. >> reporter: in brooklyn, under the manhattan bridge, is a gift shop called stewart/stand. it's a family-owned business-- penelope runs the store, while her brother-in-law paul is in charge of the wholesale division. though it's only september, the two are already finalizing holiday hiring decisions. >> i would suggest probably gathering resumes now and seeing what sort of caliber people we can bring in. >> reporter: business was suprisingly strong in august, part of the reason the company plans to add more seasonal workers than last year. >> i think it's definitely due to the increase in tourism to this neighborhood. we are right next to the
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brooklyn bridge, there's a lot of different restaurants and places to go to down here. >> reporter: the picture from larger retailers is also fairly optimistic. the hay group, a consulting firm, surveyed major chains and found 83% plan to hire the same number or more seasonal workers. just 17% plan to hire fewer workers. but competition for seasonal retail positions is expected to be tougher than last year. given the nation's high unemployment rate, experts predict many unemployed professionals will apply for lower skilled temporary retail jobs just to have some income coming in. that's not the only hurdle facing holiday job applicants-- many stores are expected to rely on existing staff to cover extra hours. retail analyst r.j. hottovy says retail hiring will be watched closely, because it can provide hints about the outlook for holiday sales. >> generally speaking, if there are a lot of hires, we do see an
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increase in sales, when all is said and done. this year, i'm only expecting a mild pick-up in hiring, and as a result, i'm only expecting a mild increase in year-over-year holiday sales. >> reporter: and those holiday sales are crucial for many retailers, often accounting for a large percentage of annual sales. >> it's about 45%, i would say. we become profitable starting this time of year, and really ride that to the end. >> reporter: so, it's clear that for stewart/stand and other stores, a lot is riding on making the right hiring decisions this fall. erika miller, "nightly business report," brooklyn, new york. >> tom: we continue our look at the nation's retailers a little later in the program with our "word on the street." tonight, that word is "holiday." gregg greenberg of tells us which retailers to watch for early signs on how the holiday may shape up. >> susie: here are the stories in tonight's n.b.r. newswheel. the blue chips snapped their winning streak as investors
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focused on gold and t-bills. the dow fell 17 points, the nasdaq rose four, and the s&p 500 was off almost a point. trading volume was mixed-- the big board was down from yesterday's levels, but volume was higher on the nasdaq. gold prices hit a new record high as more people looked for safety amid the turbulent global recovery. in new york trading, december gold futures rose $24.60 or 2% to $1,271 an ounce. the energy department said gasoline prices rose to their highest level in a month-- they averaged $2.72 a gallon nationwide, up more than a penny from last week. and according to a report from mastercard, gas purchases fell 3% over the last week. and attorneys general from 20 states gained new ground today in their fight to block the president's health care reforms. a florida judge said he'll hear arguments december 16 on whether their lawsuit can proceed. the justice department has asked
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the judge to dismiss the suit. >> tom: still ahead-- it's one of tech land's biggest players, and its considering a new way to reward investors. what are cisco's plans to pay a dividend? >> susie: today is a big primary day in seven states and the district of columbia. now, the results will set the stage for the final showdown of november's midterm elections. political handicappers are placing big bets that republicans will take back control of the house of representatives. market handicappers are trying to figure out what that means for stocks and key sectors of the economy. darren gersh takes a look. >> reporter: quick question for those of you who voted today-- where does your candidate stand on hydraulic fracking? how about defense procurement reform? that probably didn't come up in the campaign ad, did it? too bad, because, for investors, regulatory issues like those will determine who wins and loses here. and that's what alec phillips tracks for goldman sachs.
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>> so you're looking at industries like health care, energy, financial services, as well as a few smaller ones like, for instance, student lending, maybe tobacco. >> reporter: if republicans win big in november, analysts say that will be good for big energy, blocking democrats who want to restrict that natural gas drilling known as hydraulic fracking; and place tougher restrictions on coal plants and offshore oil producers. i.s.i.'s andy laperriere says energy companies have the most at stake this november. >> it will make a big difference whether republicans are in charge versus democrats in terms of the likelihood that legislation will raise the cost of producing in the gulf of mexico, so the companies that operate there have a lot riding on this election. >> reporter: if democrats hold the house, laperriere says, that's a plus for alternative energy like wind mills and solar and other clean energy sources. infrastructure companies would also do well under democrats. discount retailers, too, since democrats support benefits and tax cuts aimed at lower income americans.
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republicans would be better for h.m.o.s, pharmaceuticals and biotech, since the g.o.p. wants to roll back or at least block portions of president obama's health reform. the sector that might move the most after the election is also one of the smallest-- for-profit education. democrats have attacked the industry for its high costs and low graduation rates. also, for-profit education companies rely heavily on the federal student loan program. >> in terms of a few companies at might be most leveraged to the election, it might be these relatively small for-profit education companies. >> reporter: most analysts expect the election will end in divided government-- democrats holding the senate and republicans the house. which is a recipe for gridlock-- republicans block new spending democrats support to help the economy, while democrats block republican efforts to cut spending and reduce the deficit. >> so, in some ways, from a fiscal perspective, having that split government approach isn't necessarily as positive as many
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people think it would be from the regulatory perspective. >> reporter: tax policy is the huge wild card. the tax rate on dividends and capital gains determine how much of their money investors get to keep and, right now, no one can say for sure how the election will affect that. darren gersh, "nightly business report," washington. >> susie: microsoft's bing is moving up in the world of search. bing knocked yahoo out of second
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place when it comes to online search engines, according to a ranking by media tracking firm nielsen. google, of course, tops the list with over 65% of the market. and a.o.l. round out the top five. >> tom: cisco systems was the heaviest traded stock today on news it will start paying a dividend of between 1% and 2% beginning next year. c.e.o. john chambers made the announcement at cisco's analyst meeting in san jose, california. like other large tech firms, cisco is sitting on a lot of cash, and analysts speculated it would be used for a dividend. since the beginning of last year, cisco has spent more than $4.5 billion to buy more than a dozen companies. >> susie: first, the flash crash; now, the securities and exchange commission is looking into what it calls "spikey quotes." reuters reports the agency is targeting three trading sessions. on august 24 and 25, and september 1, buy and sell orders spiked just after 10:00 am, raising concerns about excess noise in the market.
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the s.e.c. wants the exchanges to explain exactly which firms entered and canceled orders those mornings. but so far, tom, the agency doesn't know whether that spikiness was an anomaly or what's called "quote stuffing." >> tom: that's when firms flood the market with bogus orders to get a trading edge. there has been a lot of talk about how unanswered questions about the flash crash and the weeks after that have perhaps except some retail investors away from the market. >> susan: we still don't have some of the answers. but in the meantime, give us the answer of what is going on in the market. >> tom: we broke four arrows of major indice. let's get you cisco is the last dow component not paying a dividend. the dividend talk helped the technology sector lead the way. hewlett-packard put in the best
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performance among dow components, adding 2.6%. speculation is increasing about the naming of a new c.e.o. meantime, one of h-p's biggest competitors took a swing at its buyout strategy. i.b.m. c.e.o. sam palmisano tells "the wall street journal" h-p had no choice but to buy cloud computing firm 3-par, saying former c.e.o. mark hurd "cut out all the research and development." big blue stock was fractionally weaker today. speaking of acquisitions, the market is speculating on the next buyout in tech. that talk was focused on rad- ware today. it makes internet equipment. shares jumped 38% on huge volume with rumors about it being a possible candidate for either i.b.m. or hewlett-packard. from cisco's dividend to gold-- that was the other big story for investors. gold hit a new record high.
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the new high is just below $1,272 per ounce. a survey regarding europe's biggest economy, germany, was disappointing, helping fuel the gold rally. best buy lived up to its name today as stock staged a sharp rally. earnings blew away estimates in the last quarter, helped by its mobile phone business. best buy thinks electronic book readers and apple products will help it into the holiday season. shares jumped 6%. the firm raised its earnings per share outlook. other retailers also were optimistic, too. j.c. penney thinks its fourth quarter same-store sales will be an improvement from a year ago. j-c-p jumped almost 8%. teen retailer zumiez zoomed up 16%. it raised its earnings target. the gap caught a bid, as well. today's almost 4% gain takes the stock to a one-month high. steel maker nucor also was out talking about its business. it says demand slowed over the summer. nucor now expects earnings per share to be, at best, a third of what current estimates are.
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shares took a 3% hit, falling on strong volume. on monday of this week, the stock was at a three-month high before falling. cliffs natural is related to the steel industry. it makes iron ore. shares fell 6.5% after reducing its forecast for north american coal sales. not all the forecasts we saw today led to selling, though. corning and investment management firm blackrock each rallied off of their outlooks. corning was up almost 5%, despite warning of weaker demand. it makes l.c.d. screens for tvs and computers. investors ignored the warning, focusing instead on its forecast for stable prices despite weaker sales. blackrock was up 6%, its biggest rally in a year. it has seen "very strong fund deposits this quarter." biotech arena pharmaceuticals was very active. it comes ahead of a f.d.a. review panel tomorrow to consider its obesity treatment. the stock has been on quite a
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ride since early july, when it partnered with a japanese drug maker even before the f.d.a.'s decision on its weight loss medicine. shares plummeted 40%. documents indicate the f.d.a. may focus on the long-term safety of its drug and its effectiveness. the two others hoping to get a weight loss drug on the market-- orexigen and vivus-- each dropped, as well. orexigen's goes before the advisory panel in january. vivus's treatment was initially rejected in july. and that's tonight's "market focus." >> susie: boeing could feel some turbulence tomorrow from the world trade organization. it's expected to rule that huge subsidies paid to boeing from nasa and the pentagon since the early 1990s are illegal. the international trade group has made seven similar rulings on tax breaks given to boeing. the panel is expected to do it again in a 1,500 page report released tomorrow. the timing is crucial. boeing and airbus are competing for a deal worth up to $50 billion to sell an aerial
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refueling tanker to the u.s. air force. >> tom: as we saw with the august retail sales results, consumers turned out for back- to-school shopping, drawn by last minute discounts. now, retailers are gearing up for their most important season of the year. tonight's "word on the street" is "holiday." gregg greenberg is a reporter at he joins us from the nasdaq. >> tom: welcome back to n.b.r., gregg, nice to see you. >> always great to be here. >> tom: what kind of
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shape is the retail industry in as we head into the fourth quarter? >> well, over the last month, let's call it, retail stocks have outperformed the indices, and a lot of people say this is because you had some good august same store results, which means that the consumer is opening up their wallets, and we need them to open their wallets because it is a big part of our economy. what we'll find out over the next few weeks is which retailers are doing the best, and we'll see that from back-to-school sales, which are a big lead-in to christmas sales, the most important of the year. >> tom: what kind of inventories are stores expected to carry into that christmas season because that clearly winds up on the bottom line when it comes to fourth quarter margins. too many inventory, and odds are the sales margins get pinched. >> we had good inventory sales numbers. that said, retailers want to keep it nice and tight. they do not want to be
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caught with extra retail. they'll have to cut prices if they have too much on the shelves, and that hurts their margins and wall street doesn't like that. >> tom: best buy, retailer -- what kind of stores should we be looking for for the early warning signs of how the holidays are shaping up. >> of course you have to look at the major retailers, like your target and your wal-mart, but when you're looking at back to school, some people look at some of the youth apparel, the american eagle, your abercrombie & fitch, your gap. and thing at the mall. now more than ever, you have to look on line. you have to see what amazon is doing. what happens a lot of the time, kids will go to school and see what everyone else is wearing, then they'll go home, and they know their size, and they'll order whatever they saw at school on line, whether it be from j.crew, american eagle or wherever. >> tom: that's a good
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point. a couple of weeks ago, we were talking about retail exchanged rated funds, which mean they don't change what is inside, but there are plenty of actively traded mutual funds, including the celebrity retail. what do we know about this fund and actively managed retail focus mutual funds. >> well, the key to any specialty retail fund, a fund that concentrates on retail stocks, is to see what is in it? is it targeted towards the wal-marts, or some of the teen retailers. and now there are lots of different things that get thrown into the consumer base or retail arena. it could be price line. this is a place where people shop and spend money. you have to crack open any mutual fund and see what is in there. >> tom: you can go broader with the icon consumer discreshnary fund. i.c.c. x., not just
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retailing, but really all consumer discretionary stocks could be included. >> once again, it really is such a wide category. there is consumer staples, when you talk about your p & gs, and your colgate's, and your consumer discretionary stocks, the stores you go and shop at. you've got to go and know what is in these mutual funds, and that will show you how to invest. >> tom: any disclosures for the stocks or the funds? >> i don't own any of them. >> tom: it is greg gregg greenberg, you can read his article on great to catch up. >> susie: here's what we're watching for tomorrow: the federal reserve releases industrial production numbers for august. we'll also see the weekly reports on mortgage applications, and crude and gasoline inventories. also tomorrow, they're some of the biggest and brightest names in business. so which companies landed a spot on a new list of the world's top brands, and which ones didn't make the cut?
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harley davidson plans to keep rolling out hogs in wisconsin. the company made it official after union workers agreed to concessions, including pay freezes and job cuts. harley davidson had warned it would move production to another state if its three wisconsin unions rejected the deal. the contract was approved yesterday, even though it will reduce the workforce in 2012. that's when harley has said it expects to cut about a quarter of its full-time workers. >> tom: in contrast, jobs are returning to a general motors plant in tennessee. 400 idled union g.m. workers will be coming back to a former saturn plant in spring hill to build a next-generation four- cylinder engine. the company is expected to formally announce the plans later this week. the auto maker laid off about 2,000 workers from this same plant last year. fewer than half have relocated to g.m. plants in other states.
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>> susie: tomorrow is the second anniversary of the collapse of lehman brothers. we're now learning just how much closing the failed investment house cost in legal fees and accounting services. a report in today's "financial times" puts that number at $2 billion. but tonight's commentator thinks closing lehman cost far more than that. he's allan sloan, senior editor
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at large at "fortune." >> you'll be hearing a lot tomorrow about the anniversary of the lehman brothers bankruptcy, which, two years ago, came close to melting down the world financial system. what you probably won't hear, but should, is that lots of people initially thought it was great that the feds let lehman go under. six months earlier, there had been lots of complaining about the government rescuing bear stearns. so there was applause when lehman croaked. the market was being allowed to weed out the weak. wasn't life grand? but the applause was short- lived, because lehman's failure had unintended consequences. it started a run on money market funds when a money fund that held lehman paper broke the buck. it started a run on goldman sachs and morgan stanley because some hedge funds had their assets trapped at lehman. you could feel the world financial system trembling. it was really scary. the only thing that saved the system from collapse was governments and central banks
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throwing trillions of dollars and loan guarantees at the problem, and letting goldman and morgan stanley become bank companies. the lehman fallout was a major reason the government felt it needed to bail out a.i.g., which was bigger than lehman. so tomorrow, let's remember that letting lehman fail turned out a lot messier than it first seemed to be, and that even though bailouts are hateful, they sure beat having the world financial system collapse. i'm allan sloan. debating here on wall street whether or not lehman should have been allowed to collapse. >> tom: we hear that all the time on main street, as well on capitol hill. this will be a debate for the ages, there is no doubt about it, susie. >> susie: we'll have to let the historians figure this out. that's "nightly business report" for tuesday, september 14. i'm susie gharib. good night, everyone, and good night to you, too, tom. >> tom: good night, susie.
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i'm tom hudson. good night, everybody. we hope to see all of you again tomorrow night. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you.
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thank you. captioning sponsored by wpbt captioned by media access group at wgbh >> more information about investing is available in: to order this dvd, call 1-800- play-pbs or visit online at >> be more. pbs.
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