have been able to boost profits even as their customers lose jobs. though economist harry holzer says there are limits to how well wall street can do when so much of main street is out of work. >> at some point, even firms start to think that they need a certain amount of demand in the economy. eventually, they run out of these restructuring things they can do to make profit. >> reporter: today's report doesn't mean we are falling back into what economists would call a recession, but that is cold comfort. >> i think a more likely outcome is slow growth, steady growth, but really too slow to put much of dent in the unemployment

rate, maybe even too slow to keep it from rising a little bit. >> reporter: but that forecast depends on the economy maintaining what little momentum it now seems to have. >> when you start to think where is the growth going to come from that's going to get employers to start hiring, and it's an open question. it's not clear where we are going to see that coming from. >> reporter: which is why sheirholz thinks there is a one- in-three chance the economy will fall back into recession in the next six months or so. darren gersh, "nightly business report," washington. >> susie: joining us now to talk more about all this, art hogan, chief market strategist with jeffries and company. hi, susie. >> let's pick up on what he just reported. a one in three chance of a recession. is that what was behind today's market sell-off? >> heuer is. i think that the soft patch in the economic data stream we have seen in may and june and into some of the july numbers has really got investors concerned that there is a credible

possibility of a double dip and that is what the market is trying to price n the credible possibility that the economy slows down to the point we go in reverse and have a double dip recession. something we haven't seen since the early '80sment i don't think it is a one in three chance. i think it is much more like 15 or 20% chance. and i think what we're really in is a new normal of slower growth in the economies that's going to be bumpy. it is going to improve but it's going to be slow. and that will not help job creation. >> susie: we are definitely seeing this as you look at corporate balance sheets most of the fortune 500 companies have put together something like $2 trillion in cash but they're not using that money for hiring. so is that telling you that they are also preparing for a recession? >> well, you know, understandably corporate america is hording their cash because they've gone through the worst recession we've seen in the last century. and i clearly think that that is the reason they're so reticent to put money to work in capital equipment and spending on new employees. and i think that that money is being put to work in other ways that are creative

and good for shareholder value like dividends and buybacks and activity that is accretive but it doesn't create jobs. consolidation doesn't create jobs so until we get to a point where we stretcheded employees that are currently working so that productivity starts to go down, we saw a little bit of that last month, then you'll start to see its hiring. i really think what we need to do is get money into the hands of the small and medium businesses that don't have it, that don't have access to credit. i think that's where the hiring begins. >> next week we're getting a batch of new economic reports about housing, durable goods, a report on gdp. how do you expect those reports to play out in the markets. will that trigger more selling? >> well, the gdp going to be the big bugaboo here as we look at that one. remember this is the second reading of the second quarter gdp. the first reading came in at 2.4%. estimates with the economic data since then have not been consensus estimate down to to 1.4. so it will be a draconia shift on what we thought the pace of the economy was on a

quarter-over-quarter basis. that could be the scariest data point we get. i think the new-home sales, existing home sales will probably be okay. i think the checks we've seen on that front will probably have that be benign economic data. i think the scare report will be the revisions of the second quarter gdp number. >> susie: and all these worries about the economy, we see that everywhere. people are pouring money into government bonds and even though the yields are so very low, what is it going to take to make investors confident about investing in stocks is it all connected to the job market? >> i think it's connected to the perception of the growth in the economy. i think if we get beyond a point where we assume we are going into a double dip recession f we have enough economic data through the course of the year that shows yes, growth is sluggish but it is growth and we shed that mechanism of trying to price in a double dip recession investors will look at the fact they have money earning two and a half, 2 and three quarters percent in treasuries and start looking for higher yield in the marketplace like dividend yields and some of the top

dividend pairs out there, that are much higher than a ten year treasury pays you right now on strong, stable companies that are probably going to be around for a wall. >> susie: you know on wall street the wisdom says that the stock market is a predictor of how the economy is going to do six to nine months from now. and given whu when you look at the dow is down something like 10% since april so is that telling us in about six to nine months we're going to go into that really, i don't know, a downdraft on the economy, whether it is a recession or something close to it? is that the timing, is that the timetable? >> yeah, you have to look at, you know, at what point in time are you looking at this. if you asked me that question on april 23rd when we were significantly higher than we are right now, 10% higher than we are right now, that, is for pricing trying to tell us the economy was getting better and that was the perception, it is hard to say. >> thanks for coming by. we've been speaking with art hoggan chief market strategist with jeffries & co..

>> tom: here are the stories in tonight's n.b.r. newswheel: $1.3 trillion and counting. that's the latest tally on this year's federal deficit. why the rising deficit? the congressional budget office puts the blame on the struggling u.s. economic recovery. there's new research casting doubt on the government's belief that oil spilled in the b.p. disaster is dissipating quickly. instead, scientists have confirmed the existence of a huge plume of dispersed oil deep in the gulf of mexico. they're worried it could be there for years. and, mortgage rates hit another new low, 4.42% on a 30-year, fixed-rate loan. it's the eighth time in nine weeks rates have dropped. >> susie: still ahead, bond rates tumble again. the yield on the ten-year treasury drops as investors pile into bonds. tonight's "market focus" looks at how close we are to a new record. >> tom: planning for better times was clearly on the minds at intel. the giant semiconductor company ponying up $7.7 billion in cash to buy mcafee, the big computer security firm.

intel's offer was a 60% premium for mcafee shareholders. does it make sense? our scott gurvey reports. >> reporter: intel's deal for mcafee surprised both wall street and silicon valley. intel shareholders' reaction was negative, due to the large premium their company agreed to pay. but industry experts say the deal makes sense. mcafee makes a wide range of hardware and software products designed to secure and protect against cybercrime, and intel says its customers have been demanding help in securing their information systems. intel's bill kircos says, in working to meet those demands, the company found mcafee to be an ideal partner. >> we've been working with them quietly for the last 18 months or so on a silicon product, a secure silicon product that we'll introduce next year. and as we sat in the meeting rooms with them, in the labs in the basement, we just realized that the companies just have an exact mirror of what we see as the world and a secure future. >> reporter: securing p.c.'s and laptops has been common practice for many years, but the gadgets

you carry in your pocket usually lack the capacity for running typical software-based security solutions. morningstar analyst toan tran says that's where the intel- mcafee merger could make a big difference. >> intel is taking a little bit of a gamble right now. it could pay out well for them in the long term, if they're able to integrate security and anti-virus into their hardware, their chips. it could give them an advantage over a competitor like, say, arm in the mobile space and in the desktop, laptop space it would give them an advantage over someone like a.m.d. >> reporter: there is no question that the market for network connected gadgets is seeing explosive growth, and intel reports that market will extend well beyond the smart phones and ipads seen today. >> we introduced our atom chip two years ago, and i'm not kidding, sewing machine companies, windmill companies, smart meters, it's incredible what people are thinking about-- how to innovate while they add more p.c.-like experience and internet connectivity to just about anything. i mean, if you can do it to a sewing machine, you can only wonder what people are going to

add internet access too, right? >> right, i guess, although, tom, i'm not quite clear sure why i want my sewing machine talking to the internet. >> tom: we'll see who knows what the future will hold here. this is intel's biggest acquisition so what does it need to do to make it successful? >> reporter: it needs to do apparently what it already was dwoing mcafee, what we didn't know about, work on a product to bring some of the mcafee security technology right into the silicon, right on the chips, the intel microprocessors. >> tom: intel kind of in an unfamiliar position when it comes to the mobile device market. always known as a leader for pc chips but a laggard when it comes to mobile devices so could this deal really allow it to break out? >> reporter: yes, it really come laggard being that this is a market that they hadn't really plunged into, one thing to be said for them is that when they did a couple of years agos with a product called the a tomorrow, microprocessor, a processor which is getting rave reviews and getting good marks and picking up traction with the manufacturers. but a lot of the manufacturers were already

using other people's tiny mobile type device processors. so it is intel trying to play catch-up there. and this certainly could differentiate them. >> tom: is it a game-changer when it comes to those intel mobile chips? >> well, as far as the intel line is concerned, yes. as far as the mobile line, yes. but of course your's going to see the competition try to pick up on some of this stuff too and put this technology into the hardware. >> tom: as you've been talking with the inside folks, any regulatory issues come up with this deal. intel is such a dominant player when comes to computer chips. will the anti-trust folks be taking a look? >> reporter: i haven't heard anything about that in all the people i talked to today say they have settled with the fcc. they have settled with the european union. and this is an area in which they did to the do business at all. and there is a lot of competition in the security business. so you know, you can't be sure but again i haven't heard anything about that yet. >> tom: now it's interesting, of course, intel seemingly very bullish on this idea, ponying up all this money in cash. but of course scott, as you know and we've been

reporting on this program, it comes when the economic data val kind of sour. so what does this tell us about intel's optimism? >> well, it tells you that intel is optimistic, that it does see this as an investment it wants to make it did have a lot of cash on hand. but of course this is a cyclic business fed economy stalls out here then the whole suck subjecter will tall-- the whole semiconductor industry will stall out and it will show in a few weeks. >> tom: and it a leading sector when it come to its growth phase. thank you, scott gurvey. >> take care, tom.

>> susie: you know, tom, a difficult day in the markets and i was just looking at some statistics, back in april the dow was at 121-- 11,200. so between rape and now, we've lost somehow 1,000 points. >> tom: and just yesterday we were close to unchanged on the year. but now decisively back in negative territory. let's get everybody updated here with tonight's market focus. >> tom: the markets gave up today what gains investors had seen over the previous two days. the day started out weak, thanks to the jobless benefit numbers, but the selling didn't really pick up until late morning. that was when the philadelphia fed business activity outlook soured. the general index fell almost 8% after a jump the two previous months. this is the first negative

this data number in a year as mid-atlantic manufacturers cut back on new orders and hiring. the economic data overshadowed the intel buyout of mcafee and drove investors into the relative safety of u.s. government bonds. over the past three months, the interest rate on the ten-year benchmark u.s. bond has fallen from 3.4% to 2.6%. in the week and a half since the federal reserve said it would buy bonds to try to stimulate the economy, rates have fallen 0.25%. lots of buying going on. a longer-range picture tells the story of investor appetite for risk. when the financial crisis hit two years ago and the economy went into a tailspin, rates bottomed just over 2% in december of 2008. the intel buyout of mcafee we reported on earlier put computer security stocks in play, with investors speculating about the possibility of more deals. symantec jumped more than 6% on five times its usual volume. it's at its highest price of the month.

websense was up 5% on twice its usual volume, to a one-month high. after the close, two of the world's biggest computer makers released their latest results. first, hewlett-packard. no surprises with its bottom line, with higher sales across the globe. two-thirds of h.p.'s business is now outside of the u.s. remember, the company pre- announced its results the same day it surprised investors with the departure of c.e.o. mark hurd in scandal. h.p. has hired a search firm to look for a new chief executive. shares of h.p. came into the report down more than 1%, and fell fractionally after the news. the stock remains 11% below where it was the day before hurd left. dell, meantime, may threaten its 52-week low if the after-hours selling holds tomorrow. the stock was down 1% during the regular session, and fell another 2% after the bell. profits were two cents better than estimates. computer sales improved, but margins were down. the big mover after-hours was salesforce.com, driven by an

improved outlook. the company makes online business software. excluding charges, earnings were above estimates. both revenues and expenses were up. the stock was not spared the selling during the regular session, but after raising its guidance, the stock popped more than 6% after the bell, to within $2 of a new high. one more moving after hours was intuit, maker of the turbo tax software. shares added almost 6% after dropping during the session. it lost money in the latest quarter, but not as much as expected. the outlook came in better than forecast. sears was the biggest drag on the s&p 500 today. it was the biggest percentage loser after disappointing earnings. the company continues to lose money-- less than a year ago, but more than expected. same-store sales at sears and k- mart both fell too. the stock lost 9%. shares have lost more than half their value since hitting their april high of $123 per share.

video game retailer gamestop was the second worst s&p 500 component, falling 8% on strong volume. disappointing earnings and a cut to its outlook took their toll on the stock. and that's tonight's "market focus." >> susie: remember that program, "build america bond," set up as part of the stimulus plan last year? they're municipal bonds with a federal rebate equal to 35% of

interest costs, a popular incentive. apparently too popular. new numbers show it will cost the federal government $2 billion in lost revenue this year, and more than $30 billion over this decade. the bonds were meant to help finance infrastructure projects when the stimulus plan winds down at the end of this year. president obama wants to make the program permanent. >> tom: here's what we're watching for tomorrow: the july report on mass layoffs is released. it tracks layoffs of 50 or more people from a single firm. we'll also see quarterly results from j.m. smucker. our friday "market monitor" takes us on a trip around the globe, to talk about attractive stock opportunities overseas, instead of fixed income. she's cindy sweeting, portfolio manager at templeton growth fund. >> susie: boeing is adding to its manufacturing operations. it's opening a new manufacturing facility at a long-struggling airport in southwestern illinois, mid-america airport. initially, 75 people will have jobs there doing assembly work.

boeing's facility is scheduled to open later this year or early next. >> tom: not a big fine, but a big victory for small investors. british bank h.s.b.c. will pay $375,000 to federal regulators to settle charges it sold incredibly complex mortgage securities to people who didn't understand the risks. the bank did not admit or deny the charges. federal regulators say h.s.b.c. didn't properly train its brokers on how to explain those risks to customers. euqutuu@

>> susie: with china moving up to number two on the list of the world's biggest economies, american businesses are paying attention. but how's it playing in the american heartland? tonight's commentator thinks its time mom and pop warmed up to the global economy. she's chrystia freeland, global editor at large at thomson reuters. here's the good news about china's emergence as the world's second largest economy-- u.s. business has figured it out. and here's the bad news-- while u.s. companies can go global, most u.s. citizens can't. the result, in this age of globalization, is a growing tension between the interests of america's business leaders and

the interests of much of its middle class. indeed, the most important fault line in american politics may not be between democrats and republicans, it is between those businesses and business people who are succeeding in the global economy and those who are not. this clash of values and interests upends our usual ideas of left and right. consider immingrants. c.e.o.'s are less thrilled about the democrat-driven imposition of more regulation and the promise of higher taxes. the irony is that the globalization of american business is surely a good thing- - imagine how much worse things would be if us companies hadn't figured out how to play and win on the world stage. but the equally important truth is that the twin revolutions of globalization and technological change are disproportionately benefiting the global super- class and the middle class in emerging markets like china and india-- while leaving much of

america behind. america's business leaders need to figure out how to help america's middle class join the global economic party, or face a populist backlash which will make barack obama look like milton friedman. i'm chrystia freeland. >> susie: and finally, usually we report the news-- tonight we're making some. our program, "nightly business report," has a new owner! we've been bought by a company called n.b.r. worldwide, giving us a bigger footprint in the world of business news. so our owner has changed, and that's our news. we are, as always, committed to bringing you the best business and finance news we can-- making it meaningful to your life, and your money. as always, tom and i will be right here every weeknight on pbs, with coverage and analysis you can't get anywhere else. and tom, i know you share this with me, a lot of exciting opportunities for us ahead. >> tom: absolutely and the mission remains the same, empowering the you voot the viewers to maker financial decisions.

>> susie: that's nightly business report for tonight, thursday october 19th. i'm susie gharib. thanks for watching. >> tom: have a great night, susie, thanks for joining us. i'm tom hudson. we hope to see you right back here tomorrow night. "nightly business report" is made possible by:

this program was made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> more information about investing is available in "nightly business report's" video "how wall street works". this dvd, call 1-800- play-pbs or visit online at shoppbs.org.