>> tom: higher energy costs like oil, corn, and cotton. you're probably already seeing them show up in your finances. how much longer until corporate profits are affected? >> it is going to impact earnings. now is it going to destroy the earnings growth that we've seen out there? no. >> susie: despite the price hikes, some analysts are optimistic about the outlook for many s&p 500 firms. but other experts are concerned what rising prices mean for the stock markets. you're watching "nightly business report" for monday, march 7. 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. political unrest in the middle east is causing gasoline prices to soar. tom, they've posted their second largest increase on record in a two-week period. >> tom: susie, the last time we saw this kind of spike was right after hurricane katrina. today, the national average price for regular gas is $3.51 a gallon. that's up 33 cents in the past two weeks.

>> susie: the obama administration is considering all options to help ease prices. one possibility: tapping the nation's emergency oil reserves. the white house says the price of oil is only one factor in making that decision. >> tom: but those prices shot up again today, underpinning the prices at the pump. in new york trading, april crude futures rose a dollar to settle at $105.44 a barrel, the highest level since september 2008. >> susie: oil is not the only commodity surging these days. so are many agricultural and industrial raw materials. erika miller looks at how this trend could affect the bottom line at many american businesses. >> reporter: luxury chain coach, hershey's chocolate, and colgate-palmolive are three very different companies with one common concern. all are feeling the squeeze of rising commodities costs. and they're not alone. higher energy prices are hurting

profits at many firms by raising transportation and operating expenses. on top of that, many industrial commodities such as copper are surging in price. ditto for agricultural products like cotton, corn, and dairy. so it may surprise you that wall street firms are actually raising their profit forecasts for s&p 500 companies. s&p's mike thompson says this year's earnings forecast has gained almost a percentage point since the beginning of the year. >> the big picture is that the economy is obviously improving enough for the s&p 500 that it is actually outpacing the adverse effects of these higher costs, currently. >> reporter: part of the reason for the optimism on wall street is that many companies are passing along higher wholesale costs to customers. fast food giant mcdonald's, for example, plans to raise prices by about 2% this year. you can also expect higher prices at the grocery store.

kellogg, general mills, hormel, pepsi, and coca-cola have all announced higher prices. but analyst scott wren says the strategy is not without risk. >> i think these high energy prices here, especially if we get much above $4 or hit $4... i think that could put a pretty good dent in what consumers are willing to spend. >> susie: which explains why many firms are absorbing commodity price increases. costco, for example, is keeping gas prices low, hoping to entice shoppers to come into the stores. others, like coach, are trying to offset rising costs by lowering manufacturing costs but stock investors beware: rising raw materials prices are just one of many reasons wren has been warning investors about a stock market downturn midyear. >> we thought these second-half headwinds would kick in. the fed talking about raising interest rates in 2012-- they've been trying to obviously engineer some higher inflationary expectations. that tends to put a lid on

p.e.'s and generally makes the market a little nervous. >> reporter: how nervous? he's predicting the s&p 500 could end the year lower than it is today. erika miller, "nighty business report," new york. >> susie: here are the stories in tonight's "n.b.r." news wheel. those higher oil prices weighed on stocks. the dow fell 80 points, the nasdaq lost 39, and the s&p 500 off 11. as for trading volume, 1 billion shares here at the big board. at the nasdaq, volume climbed firmly above 2 billion. a top federal reserve official said today he may vote to stop the central bank's $600 billion bond buying program if he thinks it's threatening the u.s. economy. dallas federal reserve president richard fisher, a longtime critic of the program, said he's doubtful the purchases are doing much good. meanwhile, the fed says consumer borrowing increased in january. it was the fourth straight month of gains led by loans for automobiles and education.

but consumers weren't using plastic. credit card debt fell by 6%. and the world's largest maker of luxury goods has a new crown jewel. french fashion firm l.v.m.h. will buy italian jeweler bulgari for $5 billion. still ahead, the economic impact of the n.f.l. "beyond the scoreboard" looks at how america's cities could be financially tackled if pro football is cancelled for the fall. >> susie: still no vote tonight on wisconsin's $137 million budget shortfall. the state's democratic lawmakers, who left for illinois nearly three weeks ago to prevent a vote on a controversial bill, asked today for a meeting with governor scott walker. they wanted it to take place in a location near the border of wisconsin and illinois, but walker called that idea "ridiculous." the big sticking point is a bill to strip most public employees of their collective bargaining

rights. that's ignited fierce opposition from labor leaders and their supporters. >> tom: tomorrow, ohio's legislature begins hearings on a similar bill affecting some 350,000 public employees. these state debates over collective bargaining come as government jobs are being cut while private companies are adding positions. last month, while private payrolls added 222,000 jobs, state and local governments cut 30,000 workers. bob bruno is a professor at the school of labor and employment relations at the university of illinois at chicago. james sherk is a senior policy analyst in labor economics at the heritage institute. gentlemen, welcome to nightly business report. bob, let me begin with you, how does allowing for collective bargaining impact job growth in states that okay it? >> collective bargaining can be used as a way to upgrade the quality of work, to attract skilled workers to the workplace by raising pay, and benefits. it can also rationalize the

way work is done. it can lower turnover. it can handle disputes. it can be a win-win for both workers and for the employer. and in that way, it can attract investment and jobses to the state. >> tom: james, do you agree? does it wind up attracting jobs and investment to states that okay it? >> just the opposite. the problem with government unions is they represent the interest of government employees. not those of the broader public. so what they want, because they've negotiating about how tax dollarses are going to be get spent is for higher taxes. have you have had low tax states like illinois recently decide to increase their business tax by 45%. their income tax by two-thirds, why? because the public sector one spent millions of dollars lobbying for it that is not good for the business climate and to the good for future job creation. >> tom: what about states that see large number of private employees unionized, does that help or hurt private growth, james? >> well, unionses are labor cartels. their function is to reduce the amount of labor in an industry in order to drive up the wages for everyone

else who still gets a job. so that's why states where you've got lower unionization have on average lower unemployment. it's because you don't have that cartel effect. >> tom: bob, do you see that in your studies with lower union rates, higher employment? >> no i respectfully disagree with james. if you take a look at states, for example, and i'm talking in the private sector which have passed right to work laws. the last one was oklahoma. and take a look at its unemployment rate and its unemployment rate over the last few years, and you compare it to its surrounding states, most of them, states that do not-- do not have right to work laws, you'll find that the unemployment rate is nearly identical. there are many variables that impact a state's unemployment rate. it's two simplistic to simply say because of this higher level of union density, you have one thing or another. but when you take a good look at work in comparison in nonright-to-work states, you see almost no difference,

particularly in a terrible economy like we've experienced in the last two years. >> tom: bob, going back to public worker unions, over the past year we're going to take a look at a chart, private payrolls, the blue bars on this chart, which are going up have rebounded significantly but state and local government hires have actually been declining, the red lines moving down. is this a result, do you think, of collective bargaining and some of the issues we are seeing debated in state houses? >> well, the job loss, of course, isn't a result of collective bargaining. the job loss is a terrible economy, fiscal insanity, malfeasance in the way the states in some ways are governed. wall street explosion that sent the states reeling. i mean these are really difficult times and as a result, there isn't the revenue. but i will tell you that you will find on many occasions collective bargaining agreements that actually make it possible for a government agency to reduce costs and in some cases, where necessary, reduce

labor. that's happened in illinois. that's happened in other states. frankly, it's happened in states which don't really permit a lot of public select are bargaining like texas, for example. >> tom: james, just less than a half minute left. the ohio unemployment rate where this collective bargaininging will be debated tomorrow, has clearly fallen over the past year. if it does away with collective bargaining rights for public employees, what do you think the unemployment rate will be in ohio a year from now? >> i don't think it's going to have a direct effect. the indirect effect it will have is that you weaken the poer with of the government unions, they've got less ability to press for higher taxes on private sector workers, private sector businesses. and keeping taxes low has a very good effect on businesses. >> tom: okay. we'll leave it there, james, we appreciate it. our guests james sherk with the heritage foundation and we've got bob bruno on the bottom there with the university of illinois out of chicago.

>> susie: tom this is the second anniversary of the bull market k march 6th, 2009, the s&p 500 has doubled in that time frame. but no celebrating on wall street for this birthday. >> tom: no, no much second birthday anniversary celebrations. instead we see market volatility begin to pick up. so susie, let's go ahead and get started with tonight's market focus. >> tom: the worry of higher oil and gasoline prices took their toll on stocks today as investors played defense.

we'll begin with the utilities exchange traded fund x.l.u., rising less than 0.5%, but still bucking the overall weaker tone to the market. many of these stocks pay dividends and tend to be seen as safe havens during troubling times. today, the utility sector was the only major sector to move higher. and it sits just below a 52-week high. the utilities may have gotten a bid as their cost of energy could be headed lower. coal stocks took a dive. patriot coal fell 3.5%. consol was down by 3%. and arch coal was off by more than 2%. one coal miner finding buyers: james river, rocketing higher by almost 15%. it is paying $475 million in cash for two private companies, expanding its exports and coal used in making steel. speaking of steel, it led the materials sector sell-off today. this steel-focused e.t.f. dropped almost 3%. this is the past 90 sessions.

it threatens to take out the lows from february and earlier this month. among those falling: iron ore producer cliff's natural. iron ore is used to feed the furnaces to make steel. shares fell more than 3%. a.k. steel shed 3% to a six-week low. nucor dropped 2%. selling hit semiconductors today, hitting the tech sector. this semiconductor e.t.f. dropped almost 3% on heavy volume. last week, j.p. morgan upgraded several chip stocks. today, wells fargo cut its sector opinion to market weight. the bank calls its position "moderate though still optimistic." the winner in tech today was disk drive maker western digital. this is the past 180 sessions. shares jumped 15% and volume quadrupled after buying the hard drive business of hitachi for $4.3 billion. fellow disk drive maker seagate

saw a nice pop, up 9% on heavy volume. but intevac slid 4%. it makes equipment to make hard drives. shares in teen retailer urban outfitters slid 9% from its 4:00 p.m. eastern close, dropping below $35 per share. it reported a shortfall in fourth-quarter profits. sales and margins were hurt by mark downs of holiday merchandise. a quartet of teen retailers are out with earnings this week, and each traded down today. american eagle outfitter was off a fraction. hot topic shed 2.5%. aeropostale was off almost 2%. and the buckle was off 1% as they prepare their earnings reports in the days ahead. >> in the past couple sessions we've seen market volumity-- volatility come to life again, this is the exchange rated note that follows the chicago board options volatility index. when stock prices fall this tends to go up as it did

today by about 2.5%. we can see the chopiness as it has perkd up as stock market bryces have gotten choppier lately. and that is tonight's market focus. >> tom: it's into overtime for the nfl labor talks this friday as the new deadline for the league and its players union to come to terms and keep next fall's season on the calendar. tonight's beyond the scoreboard our look at the business of sports takes a look at the stakes in these nfl talks, rick horeau back with us, nice to see you.

>> thank you. >> tom: the nfl is due to do about $10 billion of revenues next year f it were a public company this is how big it would be, rick, it would be as big as starbucks. it would be number 241 on the fortune 5 -- list f it were a public company. so what is this extra week five? >> bigger an ebay, than eastman kodak, bigger margin than campbell soup. they can't throw passes like the nfl can. with the weak buyses it is an ability to get to yes. the process is more important. they're not $9 billion apart. they are apart on two regular season games, and how to divide some money off the top and injured reserve and rookie wage scale. those are not insurmountable issues. and because that is such a big public company, symbolically, both sides have some momentum to try to make a deal. >> tom: and presumably they are making progress because they are still at the table. >> yeah. now i personally couldn't talk for a 100 hours and say nothing. even though the mediators claim-- the one thing that is interesting is that nobody has leaked any details about the substance of the talks. so if i'm an investor, if

i'm a deal maker, i feel pretty good about that. >> tom: i do think you probably could speak for a 100 hours. i'm not going to put you up to that challenge. 32 cities, though, are certainly probably pretty optimistic that they can get an nfl season next year because they want a positive outcome. what dow make of the economic impact on the nfl. >> some of the studies say $15 million per home game and there are a lot of other benefits attached to that as well. the big issue is what happens on those sundays if some games don't get played am but i know there is a contrary opinion. >> tom: there is that and we turn to alan sanderson, an economist from the university of chicago who studied these things and this is what he told us. >> these teams are very small economic entities. they may be important for psychological or emotional reasons in an area, but just the flat out economics, they're pretty small. an nfl team is much smaller than a major department store. and i don't mean a department store chain, i just mean one department store in the center of the city. in terms of revenues or in terms of employment.

>> tom: so the downtown j.c. penneys is doing more business than the packers or the broncos or the chicago bears. >> well, indirectly the people who stay downtown and who eat downtown and go to the games, that's not taken into account, in that equation but allen does add might the psychological and emotional benefit of not having those games is paramount as well. >> tom: it would be big. meantime the golden egg in all of this talk, of course, the broadcast and the cable television contracts for those games, week in and week out. directv has the nfl sunday ticket. it said in its annual report recently, in the near term a strike or lockout could have a material adverse affect on our cash flows from operating activities. how big of a problem is no season for the nfl next year for directv? >> well $4 billion for overall, a billion nor directv. they don't get it back. and the risk they took is that they could sign up subscribers and keep them even if there is no season. and the stock price went up as we know b 40% when the deal was announced. so they get the credibility from the deal itself. but they certainly have a risk if there is no season. >> tom: and the stock is still near 52-week high even

though it admits to a material possible negative affect. >> and the partnership and brand building between those two entities is paramount as well. >> tom: we'll leave it there. rick harrow back with us, harrow sports ventures. >> susie: here's what we're watching for tomorrow. the trial starts for the largest hedge-fund insider trading case in u.s. history. galleon group founder raj rajaratnam is accused of getting and sharing information about companies in which his fund invested. also tomorrow, our word on the street is "growth." we'll have a trio of smaller stocks that may be poised for gains. another loose end wrapped up in the bankruptcy of general motors. the company holding the unwanted assets of the old automaker will pay just over $50 million to the federal government to clean up hazardous waste sites. getting those environmental problems solved was part of the package plan that got the automaker out of chapter xi. the deal gives the environmental protection agency cash, and stock in the new g.m. >> tom: if you use internet

phone company skype, get ready for some commercials with your conversations. starting this week, skype plans to run ads, with some big names signing on, including nokia, visa, and groupon. with 145 million users a month, the service is a tempting target on which to promote brands. skype's display ads will also feature what's dubbed a "click and call" button, so users can get instant access to an advertiser's products.

>> susie: these days in washington, it's rare to see any kind of bipartisan agreement. but it seems everyone's on the same side when it comes to overhauling mortgage giants fannie mae and freddie mac. tonight's commentator thinks it's important when and how those changes are made. he's richard dekaser, economist at the parthenon group. >> the obama administration recently announced plans to reform the mortgage market and shut down bankrupt fannie mae and freddie mac. the proposal reduces the governments role in mortgage finance, and has been warmly received by republicans. but if adopted too soon or implemented too quickly, it may cut short our tentative housing recovery. after bumping along the bottom for the past two years, home sales have only recently improved without the support of generous tax incentives, and continuing this momentum is critical to the broader economic recovery. rising house prices will lift wealth and spending while also

trimming bank losses and encouraging lending. and since the government now insures or guarantees practically every mortgage originated, a hasty government pullback presents serious risks. the administration acknowledges the need to go slow, of course, but its arguably already moving too fast. for example, the insurance premiums and fees on new mortgages are far higher than they used to be. but with home prices so low, the risk of falling prices and rising defaults is almost certainly lower than usual. that's like rushing to shut the barn door after the horse has already gotten out. and come october 1, the dollar limit on what qualifies as a conforming loan will be sharply reduced in high-priced housing markets, driving up interest rates for many buyers in these locations. maneuvers such as these make sense. but rushing them through while the housing market is still struggling is the wrong time for otherwise terrific ideas. im richard dekaser. >> tom: that's "nightly business report" for monday, march 7. we want to remind you this is the time of year your public television station seeks your support. >> susie: support that makes programs like "nightly business report" possible. >> tom: thanks for joining us.

and don't forget to support your public television station. i'm tom hudson. good night, everyone. you too, susie. >> susie: good night, tom. i'm susie gharib. we'll see all of you again tomorrow evening. "nightly business report" is made possible by: 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