>> susie: u.s. payrolls lose more jobs at businesses and uncle sam cut 131,000 positions in july. some economists blame washington for those losses. >> i think it is the wrong time to be raising taxes. i think the concerns about the health care mandates are weighing on companies taking on board additional people. >> jeff: we've got the outlook for job creation and the unemployment picture. you're watching "nightly business report" for friday, august 6th. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:

this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt

>> susie: good evening, everyone. tom hudson is off tonight, and jeff yastine joins us. well, american businesses are still cautious about hiring. and jeff, the latest employment report shows the u.s. economy continued to lose jobs in july. >> jeff: that's right, susie. this is the second month in a row with a drop in payrolls. the labor department reported a loss of 131,000 jobs, most were temporary census workers. american firms did some hiring, increasing payrolls by 71,000 private sector jobs, but that wasn't enough to bring down the unemployment rate. it is unchanged at 9 .5%. >> susie: president obama noted one positive: the private sector has add ed jobs for seven straight months, but he did say that progress, quote,"needs to come faster." we have two reports tonight looking at what's ahead for the job market and what washington can do to speed things up. we begin with suzanne pratt in new york. >> reporter: the dog

days of summer are never a great time to find a job. this summer, however, the labor market is even tougher than expected. experts say despite better profits at many companies, management won't hire it gets clarity on the economy and washington policy. bruce kasman says firms are simply too nervous about the future. >> there is a shift that has taken place. the hope is, and our forecast is, we grind towards a better outcome. but there is nothing decisive in this report about where we're heading next. >> reporter: while the economy grinds forward, expect companies to squeeze more out of current staff, rather than add new workers. and average hourly pay grew in july. but even if the economy continues to muddle along, most experts say companies will soon need more workers. j.p. morgan's kasman

predicts the economy will add only 100,000 new jobs per month to payrolls through the end of this year. john riding thinks we'll do a little better, perhaps tacking on 150,000 a month, once employers cannot longer expand the work week for the existing employees. >> the economy needs to create 300,000 jobs to get the unemployment rate back down to 5%. >> reporter: riding expects the unemployment rate to be above 8% by the end of next year. he says americans will need to get used to a nation that could no longer offer full ployment. >> i think that picture of high unemployment declining, but remaining at high levels by the standards we were used to over the last decade -- that picture is going to be around for a long while. >> reporter: the economists say the current line on the labor market is it has settle nood a sluggish state. most experts believe we'll

avoid a double dip recession, but the economy not fully recover until we see a lot more jobs. suzanne pratt, "nightly business report," new york. >> reporter: this is stephanie dhue in washington. the weak jobs report had president obama looking for signs companies will hire. today he visited gelberg signs. the local sign-maker is benefiting from the higher act, which gives small businesses tax breaks. the company brought on eight new hires, and got tacks breaks for half of them. >> president obama: they've taken advantage of a new hiring tax credit, which says small businesses don't have to pay a dime of payroll tax when they hire a worker who has been out of a job for at least 60 days. >> reporter: the tax break is temporary. if the employee stays for a year, the business is also eligible for a tax credit for up to $1,000 per employee. the administration says

more than 5.5 million jobs have already qualified for the tax break at an estimated cost to taxpayers at $10 billion. martin regalia says businesses hire workers to meet demand, not for a temporary tax break. >> many of those jobs, in fact, most of those jobs, would have been created without the hire act. so what it results in is a tax credit without much bang for the buck. you're not getting additional hires because of that act. >> reporter: instead, he says companies need certainty from the economy, lawmakers, and policy-makers in order to hire. >> there are a lot of regulation that have to be promulgated under the health care bill and the financial reform bill, and this creates uncertainty, creates ambiguity, and then the economy is just not strong enough. it is growing, but it is just not growing strong enough to drive demand. >> reporter: the chamber says less regulation and lower taxes will drive growth. there will be a battle over that idea this fall, when lawmakers decide whether to let the tax

cuts passed under president bush expire. "nightly business report," stephanie dhue, washington. >> jeff: stocks spent the day sharply lower on those job numbers, but managed to trim their losses before the close. the dow closed down 21 points. and the nasdaq lost almost 5, and the s&p 500 was off 4. and inch tire rising on the big board and the nasdaq. b.p. says so far, so good with the cement job on its broken well head in the gulf. the seal appears to be holding with no oil leaking out. the oil giant also commented on its future plans, saying it will not rule ot drilling in that same oil-rich area of the gulf. new york's attorney-general andrew cuomo sued makers of l.c.d. screens for price fixing. the defendants include samsung, sharp, toshiba,

and hitachi. cuomo believes the firms created a secret cartel to boost prices which costs new york city hundreds of millions of dollars. no comment yet from the companies. still ahead, tonight's "market monitor" guest says people who buy stocks today will be happy in the next five years. she mary ann bartels. >> susie: c.e.o. mark hurd is resigning effectively immediately. he is leaving after a sexual harassment allegation regarding an outside contract worker. h.p. says hurd filed expense reports that broke the company's business conduct standards. cathie lesjack will step in as interim c.e.o. and h.p. released

preliminary third quarter results, and jeff will have more on that in tonight's "market focus." meanwhile, there is a job opening at the white house. the president's top economic advisory is leaving to focus on her family. cyschristina nomar says she plans to return to teaching economics at the university california, berkeley. and she says he wants her 14-year-old son to spend his high school days in one place. >> jeff: late today the white house says the president will renominate peter diamond to the federal reserve board. the senate sent diamond's original nomination back to the white house.

>> susie: as you said, jeff, it was a volatile day in the stock market, and also a lot of action in the bond market. >> jeff: that's true. all eyes are beginning to turn to the fed and see what their next move is. we'll show you some results of that as we take a look at tonight's "market focus." the prospect of more easing by the federal reserve helped soften the blow of this morning's employment numbers. the dow bottomed out, down 160 points, and climbed nearly all the way back by the close. for the week, the dow fell in three out of the last five sessions for an

overall advance of 1.8%. the same story on the nasdaq. this week's overall gain, 1.5%, more than made up for last week's drop. of course, the late session burst, lifting the s&p 500 weekly gain to 1.8%. as for the best and worst sectors this week, health care was probably the one reliable place to be in this week's market while financials saw the smallest of gains. and if you think there is a bond bubble now, that bubble is going to get just a little larger. golden sacks sees the yield on the 10-year note dropping 2%. so where do you go for better yields than treasuries? look at this e.t.f. the ishares investment greg corporate bond fund, that's a near five-year high for this e.t.f., and all of the treasury-based e.t.f.s notched against as well. boeing received more bad news. a leaving company

cancelled 25 planes. cancellation now outnumber new dreamliner numbers for the year. boeing shares fell sharply early on and then rallied with the rest of the market. as media companies go, the "washington post" didn't do too badly in the earnings department. these results exclude the sale of "newsweek". second quarter profits more than quadrupled, but revenue games from the broadcasting and kaplan education units helped, but look at the stock chart, down 7.5%. investors very worried about the kaplan unit that was cited by federal investigators looking into recruitment and student loan application issues with the career colleges. as you can see, it hasn't been a good week for kaplan's competitors. on thursday, career education says it is see less interest from potential new students, something of a theme for that sector as well. new developments with a.i.g. as the company pulls out all of the stops so buy its way out of

government control. the company told the "new york times" it is close to selling its american general finance unit, which was a $2. 4 billion investment, and a.i.g. is looking at a huge secondary offer. significant solution, to the current shares to raise bailout, buyout shares. and they reported earnings, if you exclude all of the bookkeeping adjustments, and profits rose to $1.99 a share. and investors appeared to like the story the company is telling. the shares up more than 2.5%. at&t's deal to sell the iphone is a boom for the company, and something of a curse. what happens if that exclusive arrangement goes away. at&t now says an end, if it comes, will not have a significant material impact. and as susie mentioned, mark hurd is out at hewlett-packard, under the cloud of a sexual harassment allegation. better news for investors, though. h.p. sees third quarter profits revenues above

estimates. full year estimates were boosted as well. the stock tanking nearly 10%, however, after hours. and warren buffett's berkshire hathaway is out with tough second quarter results. profits were down 40%. the company blames unreallized losses on derivatives for the loss. berkshire earned $1195 per share, which is down sharply from last year's results, and less than analysts had expected. and that's tonight's "market focus."

>> susie: google is jumping into the world of social networking. today it agreed to buy app-maker slide for an undisclosed amount. slide used to have the most popular application on facebook, but its following has declined in the past two years. today's deal will help google keep pace with facebook and twitter. both of those services are attracting a growing number of online avertisers, threatening to steal away google's main source of revenue. >> jeff: here is what we're watching for next week, our friday "market monitor" guest is doug criggot. and monday a new study finds genetics may be the single biggest factor for investors risk taking. >> susie: things at ford motors are looking up so

much so, that bill ford is once again able to collect a paycheck. the great grandson of henry ford will be paid $4 million in salary, and he'll get stock options worth nearly $12 million. bill ford vowed five years ago he wouldn't take a paycheck until the automaker was profitable again. >> jeff: and a price war is brewing among coffee giants. and the result is higher prices. kraft foods raised the price on select maxwell house and instant coffees in the u.s. by more than 10%. the increase comes three days after j.m. smucker's hiked prices on the folgers and dunkin' donuts'. a search in green coffee prices is to blame.

>> susie: our "market monitor" expects a year-end rally, but she warns investors not to count on a study bull market for another three to five years. she is mary ann bartels, head of u.s. technical market analysis at bank of america, merrill lynch. nice to have you back on the program. >> thanks for having me, susie. >> susie: let's start off by getting your reaction to the market employment report. we saw a dramatic selloff and a dramatic rebound and

a lot of action in the bond market. what does this tell you about the outlook? >> the equity market, i would have thought, given how bad the unemployment mark was, would have had a bigger selloff. we saw two-year treasury yields back to new lows of a half percent, and we have a confirmed break down of 3%, and we're not ruling out 2%. we still think bonds are going to outperform equities. >> susie: so bonds are the place to be for investor, near term or for how long? >> well, until it time to exit, and we don't see any time soon. we're very comfortable, especially with this volatility owning bonds. we like stocks for the long-term. we like the mega cap multi-nationals. many of those companies have solid balance sheets, great cash flow, and many of the companies have very high dividend yields. and dividend yields help

cushion a portfolio. and some of the yields you can seek out now in the equity market are 5% to 6%. >> susie: let's get -- you're getting ahead of what my plan was for our interview. let's just start with the beginning that you're saying some of the market trends you're seeing, choppiness in the market, and market volatility between now and october and through the mid-term elections. tell us why you see that happening? >> mid-term election years, susie, historically are very volatile. we start off the year a little rough. the spring winds up having a great rally and then we get a correction. sort of sell in may, go away. but going right into the mid-term election year, generally what happens is market selloff. there is some uncertainty going into the election, but once you have the results, you don't have that uncertainty and you get a year-end rally.

we're remaining cautious in september and october. we just think august will be very choppy. we're telling clients, go away on vacation. expect some volatility, but we're looking to buy the markets. >> susie: that's why you say this is a good time to buy and hold for a couple of years, right? >> that is correct. and yield is going to become a very important component to the total return of a portfolio. >> susie: and let's look at that. some of the things that you think are important are the dividend-paying stocks that you were talking about, 5% returns. the big exporters and then the strong balance sheets, good cash flow, and solid earnings. so tell us about some of the attractive sectors that fit the bill? >> well, the obvious one is the telecom sector. it has great yield, and generally has a good history of paying dividends, and in some cases raising dividends. you have the sector called consumer staples. many of the stocks have 3%, 4%, tobacco

companies are yielding 6%. masters limited partnerships, also called m.l.p.s, that anywhere from 5% to 7%. and we like select pharma and receipt reits, we're you're getting 5% to 6% yields. >> susie: i know you can't name any stocks, but you have sectors you're telling clients to stay away from, the health care and the financials. why is your description of the financials. >> well, what happened with the financials was there was a very bad what we call technical break down. and when you have that, it generally takes a long time for the markets to heal. mortgages were a bubble. and when we have to heal a bubble, it can take on average, five to seven years. so we think financials will be range-bound. >> susie: that's a long time, five to seven years. so stay away from those stocks. and health care you feel the same way? a lot of uncertainty? >> a lot of uncertainty.

but we do like the pharma stocks. the section we like for growth is technology. if you're looking for long-term growth, the sector that is going to provide the growth is technology. >> susie: we're going to have to leave it there, but thank you so much. you've given us a lot to think about. >> thank you. >> susie: we've been speaking to mary ann bartels. >> jeff: we want to remind you this is the time of year your public station seeks your support. >> susie: that's right, your support that makes programs like "nightly business report" possible. >> jeff: i'm jeff yastine, good night, susie, and hope you have a great weekend. >> susan: i hope you have a great weekend, too, and we hope to see all of you again next week. captioning sponsored by wpbt

this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org