>> tom: worries about jobs, housing and the economy contitie buildiilngngs s e stock k rkrk contntueuedrdrping. stocks are down six weeks in a row-- their longest losing streak in three years-- knocking down investor confidence. still some see a buying opportunity. >> for long-term investors, i think this is a great opportunity to buy good, high- quality growth stocks at very, very reasonable prices. >> tom: where best to invest and what to avoid. this is "nightly business report" for friday, june 10. 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. captioning sponsored by wpbt >> tom: good evening and thanks for joining us. my co-anchor susie gharib is off tonight. we begin tonight with another tough week for the economy and for investors. the major stock averages have seen six straight weeks of losses. stocks tumbled at the open today and stayed there. the dow closed 172 points lower, the nasdaq lost 41 and the s&p 500 fell 18. the losses came on heavier trading volume-- just over one billion shares on the n.y.s.e., and just under two billion on the nasdaq. here's what the week looked like

for the dow industrials, falling almost 2%. the nasdaq had a tougher go, off over 3% on the week, and the s&p 500 lost 2% in the past five sessions, taking it to lows not seen since march. eaton vance's lew piantidosi say the downshifting economy is to blame for the change in investor sentiment. >> well, it's clear we need to see better economic growth, and i think a big catalyst for that economic growth is lower energy prices, which will spur some consumer demand and hiring, but we think that's coming, because when you look at corporate profitability-- that always leads hiring, it has in the past and we think it will in the future as well. >> tom: lew will be back with us later in the program with some investment ideas. he's tonight's "market monitor." in the meantime, what should investors avoid if the economy isn't going to pick up steam for a few months? suzanne pratt reports. >> reporter: the u.s. economy is in a big funk, and a funky economy can spell trouble for

the stock market now and down the road. experts say some areas will suffer more than others. financials is the one sector that most experts agree investors should definitely avoid. market strategist nick colas says that's because financials are facing a host of headwinds. >> not just regulatory, but also the consumer and the housing market. none of those three things work in financials' favor, and at least two of those three things have to be at least neutral or positive for financials to actually work. so, in the current environment it's a pretty tough place to make money. >> reporter: already this year, financial stocks have stunk up a storm, down a hefty 6.8%. sector guru sam stovall agrees investors should underweight the financial sector, but he also says watch out for consumer discretionary stocks such as retail and restaurants. >> i think right now the momentum, the reasons for concern, the eroding fundamentals are certainly there for financials, as well as

concern about the consumer discretionary should gasoline prices remain fairly high and debt levels remain a big concern. >> reporter: other market pros say investors should steer clear of companies that might already have a lot of debt. strategist jim awad explains those stocks will fall faster as the economy slows. >> i would sell stocks of companies that would suffer if the u.s. went into a double dip or a sustained period of low growth. so, you would sell cyclical stocks in the united states. you would sell small-cap stocks in the united states, you would sell companies with leveraged balance sheets. >> reporter: these recommendations are based on the assumption the u.s. economy is slowing down. if that forecast changes, experts say so will their advice to investors. suzanne pratt, "nightly business report," new york. >> tom: here are the stories in tonight's n.b.r. newswheel: oil prices followed stocks

lower, falling almost 3% to $99.29 on signs saudi arabia is boosting production. meanwhile, a tight supply outlook pushed corn prices to another record high, trading just shy of $8 a bushel in chicago. toyota figures its profits will drop 31% this year thanks to production delays from japan's massive earthquake and the strength of the yen against the dollar, but it sees production and sales rebounding in the second half of the year. the downtrend in financial stocks has ally financial delaying an initial public stock offering. ally is the former financial arm of general motors. the i.p.o. was expected to raise $5 billion. some of that money would have gone to pay off bailout loans from uncle sam. and, heavy demand has online radio company pandora media boosting the price range on its i.p.o. by $3. it now sees the shares pricing between $10 and $12 each. pandora will trade on the big board under the ticker symbol "p."

still ahead, building a better index fund-- a look at two very different strategies and how they've performed for investors. from the air and ground, thousands of firefighters continue battling growing wildfires in the southwest tonight. the biggest blaze has spread from arizona into new mexico, threatening electricity supplies. ted simons reports from arizona's pbs 8. he joins us from arizona arz. ted, crews got a bit of a break in the windy weather today, any closer to containing the fames tonight? >> well, we're at 5% containment right now. and they're thinking under the best of circumstance, it could take three weeks for full containment. >> tom: now in addition to the homes and the lives this fire threatens an important electric power line that runs had into new mexico. is also in the path of these flames. what you can tell us about this el paso energy line, what's the risk. >> the utility gets about 40% of its power from these lines which means 300, close

to 400,000 el paso customers apparently have been warned of rolling blackouts. the major concern here isn't so of the flames on these lines, it's the smoke could cause power to arc from the lines. that is the danger, that's the concern. we'll see what happens. >> tom: finally let me ask you about the impact on the economy, the local economy in these mountains during the summer tourism season. what will likely be the impact after the blaze is contained and hopefully put out? >> a big impact this area is about a five hour drive from phoenix, big area for vacation homes, recreation businesses. summer is when these places come alive. already seeing cancellations happening at cabins and resorts. for perspective the rodeo fire about nine years ago, the biggest fire in arizona history, it took five years for visitation numbers in many recreation areas to recover. so you have got the tourism industry hit. you've got the real estate market hit. arizona just now starting to come back a little bit from the housing crisis. the market for vacation homes up in the mountains

just coming around. this is going to hit awfully hard. >> tom: ted, our thoughts with the firefighters and families threatened here. ted simons with us tonight with arizona's pbs 8. >> tom: we saw the biggest sell- off of the week today as all the major stock sectors saw losses. let's get to tonight's "market focus."

the dow industrials and s&p 500 appear to be tumbling toward march lows. let's roll out the past 90 sessions of the s&p 500. the index is down more than 6% since the beginning of this month. it is now only about 14 points away from revisiting the low in march. here's the same 90 sessions for the dow jones industrial average. it fell below 12,000 today. the dow also is down more than 6% this month. it's less than 350 points away from its march low. leading the dow lower today was travelers, thanks to slowing its stock buyback program. shares fell 3% as volume more than tripled. over the past year, shares have been able to notch a series of higher highs and higher lows, but that would be threatened if it drops below the dip right after the japanese earthquake

and tsunami. it wasn't that natural disaster behind today's action, but rather the springtime tornadoes. travelers says the past two months of disasters will cost it about $1 billion. that puts it on par to the claims in 2005 with hurricanes katrina, rita and wilma-- leading to today's decision to conserve cash and cut back on its stock buybacks. the energy sector was the biggest loser today as baker hughes led the way lower. shares fell 3.5%. the stock continues to chop around the low $70 range. in addition to the economic concerns weighing on energy, the u.s. dollar has perked up in the past few days. this is the past 90 sessions of the dollar index. it has staged a three-day rally. positive trade data helped this week, but the higher dollar did hit precious metals and oil--

silver fell nearly 3% while oil dropped 2.2%. gold lost just a fraction. goodyear tire and rubber certainly knows about commodity costs. shares fell almost 7%. the company will sell its global wire business to a south korean company for about $50 million. shares have staged a nice rally as it has been successful in rising tire prices and selling higher-end tires. the return of the auto market has helped too. and finally, here are the first biotech gilead very active this friday, disclosed a department of justice supoena.

it is cooperating. and finally, here are the first new stock offerings for june. salt lake city-based data storage maker fusion i.o. went public yesterday at $19. nice rally there. lastly, taomee holdings ended the week above its initial price of $9 thanks to a late-day surge today. it's a childrens entertainment media firm based in china. and that's tonight's "market focus." >> tom: almost $2 trillion are invested in u.s. index mutual funds and registered index exchange-traded funds. the strategy behind them is to give investors exposure to a

broad array of stocks, usually based on the size of the company. but maybe there's a better way to build an index fund. that's the subject of a story in "bloomberg markets magazine" that hits newsstands tuesday. seth lobove is a senior writer for "bloomberg markets magazine." he joins us from los angeles. seth, most index funds are based on market capitalization. so how else are they building built. >> everything except market capitalization. in the case of something called a fundamental index they use such measures as cash flow, dividends, sales, book value. basically anything other than the market capitalization. >> tom: certainly a much different way to build an index fund and really a market contest that you write about between the strategy most notably used by john vogue elf vanguard and rob of research affiliates. what do they think of each other's strategy are not fundamental-based strategy versus the market cap weighting of index of vogel.

>> in a word vogel has called this witchcraft. he thinks that it's oversold, that it is basically repackaging of old conten content-- concepts such as value investing, are not counters that the problem with traditional market cap weighted indexes is that they overweight, overvalued stocks and that they underweight undervalued stocks. >> well, let's take a look at the tale of the tape and find out how the performance is comparing the flagship 500 mutual index fund which tracks the s&p 500 and the etf based on arnott strategy. clearly different differences where the power shares etf has outperformed year to three three year and five year compared to the index fund so how do you explain the difference? >> that's correct. and you know again, it's a short life span. this has been a certain type of market that the spo we are shares funds has performed in. hard to tell over the life

span like we've seen with market cap weighted indexes. the market cap weighted index fan was argue that this-- that those returns come at the expense of higher fees and more volatility. >> to the point of fees, because there is a price difference between the two. i mean the vanguard 500 index is pretty cheap, it's half the price essentially as the power shares etf. but still both of them are relatively low cost, below a half a percent. >> that's correct. and key word there is relative. even though the fundamental index fees might be about twice as much as the fees on a traditional market cap-weighted index, they're still half as much as an actively managed equity fund. >> tom: finally both fund does have exxon mobile as their top holding but they clearly differ from there the index fund has an el and chevron and of course the fundamental fund at&t and general electric. does this go to explain

entirely the performance difference? >> yes, that has that is a big difference there in. the case of, for instance, having apple as your number two most heavily weighted stock in the traditional market cap weighted index, if apple goes, you know, if a lightning bolt hits steve jobs tonight or tomorrow, so goes that entire index and there goes everybody who has invested in it as well. >> we have to leave it there. we appreciate the insights. nice article it is seth lobove with bloomberg market magazine. >> thank you. >> tom: here's what we're watching for next week: our friday "market monitor" guest is bernie schaeffer, chairman of schaeffer's investment research. we'll see may's reports on retail sales, housing starts, and both producer and consumer prices. lots of inflation numbers. monday, advice for baby boomers who are supporting their adult

children and delaying their own retirement plans. dutch bank and insurer i.n.g. group is selling its u.s. online bank. i.n.g. was ordered to do it as part of a restructuring agreement with european regulators. i.n.g. direct u.s.a. has nearly eight million customers. published reports say both capital one financial and general electric have made bids. i.n.g. has not said when the sale will happen. police in spain have detained three men in connection with the massive cyber attack on sony's playstation network. the men were part of a hacker activist network known as "anonymous." investigators think they also were behind attacks on spanish banks and government websites. "anonymous" claims it didn't attack sony, but says it's possible individual members could have acted on their own.

this month, investors have seen a big chunk of their gains since the beginning of the year disappear. concerns about a weak economy and the end of the federal reserve bond-buying program are among the worries. our "market monitor" this week is lew piantedosi. he is portfolio manager at eaton vance management. he joins us from boston. lew, welcome to nightly business report. >> thank you.

>> tom: let me ask you, is this sell-off we've seen here in the month of june any different than others we've seen in what otherwise has been a two-crer plus stock market rally? >> it really feels very similar to where we were in the spring of 2010. you had the european debt crisis rear its ugly head, similar to where we are now. you had the end of-- or the potential end of the fed's quantitative easing program a year or so ago, similar to where we are now. and you also had energy and commodity prices spiking at the same time which were having an impact on economic growth. so all those things are still in place or have kind of come back into place right now, it is causing a little bit of fear in investor's minds. >> susie: so with that in mind, those trio of concerns, how do you rank those in terms of the biggest uncertainty for investors? >> well, i think in the short run the end of the quantitative easing program, i think is a huge overhang on the market. no one really knows how that is going to play out. but i think the biggest concern towards our domestic economy is the price of

energy. you know, recently the price of a barrel of oil spiked up to about 110-- 110, 120 bucks a barrel which caused gas prices to rise over four bucks a gallon. and that really puts a crimp on economic growth. it curtails consumer spending and certainly has an impact on the economy and we've seen that in some of the data. >> tom: let's talk about some of your new picks because the first two are in technology, presumably sheltered by the high energy prices. apple, the share price has been chopping around in the mid 300 dollar range. what do you think the catalyst is to push apple up to the next level? >> well, i'm not sure what the short-term catalyst is. but we look at the long-term prospects for this company. and we see a lot of growth ahead of them. again, it's uncertainty as to what the stock will do in the next three to six weeks but i can feel very, very comfortable on the growth trajectory of this company in the next three to five years. they have less than 2% share of the global cell phone market and that's growing

rapidly. their new i pad which was launched 14 months ago is now a $20 billion business for them, in 1 year's time. that's pretty impressive and we think they have a huge runway for growth. add to that the valuation, not demanding, trades less than the market and with a huge cash position gives them a lot of cushon in a difficult market. we think that it has both offensive and defensive characteristics and will be a great long-term holding. >> tom: you mentioned cell phones, smart phones when it comes to apple, qualcomm clearly is a big piece of the global mobile o phone market. the stock in the mid $50 range. again, is this as much a technology play as it is a consumer play? >> it is both. i mean when you look at 3g penetration rates here in the united states, we're still less than 50% penetrated but globally that number is less than 20%. so we try to think about what do we know for certain. when we look at those penetration rates, and they are increasing from 25 percent three years ago in the united states to 50% now. we know that's going to 75, 80, 90% over time.

globally similar. 15% now, 15, 20% now that was 5% three years ago. that is going to 30, 40, 50% over time. and qualcomm will be a huge beneficiary of that 3g penetration. >> tom: lew, i want to take a look at the previous picks from your colleagues at eaton advance when they were with us back in late 2010. like voning, clearly you guys still liked technology. the spider technology fund down about 1%. health care has been the big winner here, up almost 10%. dow still like health care? >> yes, it's-- it has been the best area of the market and that's because of its defensiveness. when investors get nervous, they flock to the more defensive sectors of the market. and health care certainly qualifies. going forward, though, we think it does have some offensive characteristics as well and the valuations are still reasonable. >> tom: all right, apple, qualcomm and etf, how about disclosures. any disclosures. >> we do not own etf but we do own the stocks mentioned in our growth portfolios. >> tom: it's lew piantedosi

a long with us, our market monitor from eaton vance management. finally we're just getting word from the white house that president obama will nominate martin grewenberg to be the next chairman of the federal deposit incorporation. if approved she will relays sheila bear when her turn as the top bank regulator in america expires next month. he has been the f.d.i.c.'s vice chairman since 2005. he briefly served as acting chairman before bear took the helm back in 2006. that's "nightly business report" for friday, june 10. we want to remind you this is the time of year your public television station seeks your support-- support that makes programs like "nightly business report" possible. i'm tom hudson. good night everybody. have a great weekend and don't forget to support your local public television station. "nightly business report" is made possible by:

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