>> susie: stocks take it on the chin as the greek debt crisis heats up and the u.s. economy shows fresh signs of weakness. >> we have been saying for some time now that the u.s. recovery is a half-speed recovery. it's been about half what you'd normally expect for the united states one year after a recession ends, so it's not going to feel really good to most. >> tom: we put today's selloff in context and look at a potential shift in the labor market. one bright spot, a hot new tech stock. it's "nightly business report" for wednesday, june 15. 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 >> susie: good evening everyone. u.s. stocks got a one-two punch today: new worries about the u.s. economy and growing concerns about the greek debt crisis. there were violent protests in athens on government cutbacks to prevent a default on greek debt. tom, european officials also failed to agree on a new bailout package for greece and the country's prime minister proposed a new government and offered to step down. >> tom: susie, here in the u.s. investors also got disappointing news on inflation and manufacturing.

the consumer price index gained more than expected last month and core prices, which exclude food and energy, rose by the most in three years. also, a regional report on manufacturing conditions this month came in below forecasts, showing that new orders are falling. on wall street, the dow tumbled 178 points, the nasdaq lost 47 and the s&p down 22.5. in the bond market, prices rose, pushing the yield on the 10-year below 3%. >> susie: standard & poor's economist beth ann bovino says today's consumer inflation report could also rattle the federal reserve. >> of course this is something that's going to worry the fed, because you're looking at now-- year over year-- which is what they watch, particularly-- it's no longer transitory-- the fed can't really say the increase in core inflation-- is transitory-- which is of course what they've been saying with energy and food

prices. >> susie: bovino calls the u.s. recovery a "half-speed recovery," saying it's about half what you'd normally expect for the united states one year after a recession ends. joining us now for more analysis of today's market action, scott wren, senior equity strategist at wells fargo advisers. >> susie: nice to see you, scott. >> hi, susie. >> susie: as you assess what happened on the selling on the markets today which was more important for u.s. investors. what's going on in the u.s. economy or what's going on in greece with debt problems? >> well, susie while i think the european debt situation is a huge situation the data over the last few months has shown we've been in a soft spot. if you throw in home builder sentiment, industrial sentiment and everything today was below

expectations so really today i think it was a combination. it's important what's going on in the u.s. it's certainly important about what's going on in europe and it's hard for me to over weight one or the other but it's not good news on either side of the pond. >> susie: if things escalate in greece and if there is a default or a bailout package how will american investors respond to that? >> well, i think the problem is -- for one thing let me first say the e.c.b. is going to put together some type of package. i don't believe greece is going to default right way. two or three years down the road anything can happen but we're going kick the can down the road soon but i give it a low probability. the problem is what happens to the european banks holding the greek debt is the crux of the problem. really hundreds of billions of

dollars are out there in greek debt. lots are held by french banks and some were put on a negative watch and other european banks hold the debt. that's the problem. greece is a small fraction of the global economy and the debt held by european banks that will be the problem that would spook global investors, u.s. investors included. >> susie: now scott, we've seen over the last couple weeks since the beginning of may all american averages have been on the down swing. how serious was today's market sell-off. is the the beginning of a new bear market or a correct? >> i don't believe it's the beginning of a new bear market. i think we're only recovering mid-cycle and it would be typical after the big run. remember we were up 105% from the march lows so that's a

typical pullback. i think we're in a zone here where flat to muted returns are expected and we thought the s&p 500 would end in the 1200 range and we're in the range now not to say we're not going trade lower but we're volatile and in a time-out period wondering what the government's going to do and is the debt recovery going to continue. we're in a time-out period where the defensive sectors tend to do a bit better. a little bit of risk is taken off the table. so far i don't think we're in any sort of a risk of a major selloff and remember also i'm not the technical analyst here but the 1250 level in the s&p 500 big trend line off the march 2009 lows and the 200-day average comes in and we're close and going to test it hard in the

next couple of days. >> susie: a lot of question marks over the markets. thank you so much, scott, for coming on tonight. >> thanks, susie. >> susie: we've been speaking with scott wren a wells fargo advisor. >> tom: here are the stories in tonight's n.b.r. newswheel: oil tumbles 5% today, hitting a four-month low on worries a struggling u.s. economy will cut fuel demand. july light sweet crude tumbled $4.56 to settle at $94.81 a barrel in new york. exposure to greek debt could trigger a ratings downgrade on france's biggest banks. moody's investor service today put b.n.p. paribas, credit agricole, and societe generale on review for possible downgrade. meanwhile, the head of the house budget committee wants to talk with standard & poor's about the health of uncle sam's i.o.u.s. congressman paul ryan tells reuters he wants to arrange that meeting before we hit the august 2 deadline for raising the debt ceiling.

still ahead, tempted to take a loan from your 401(k)? what you should ask before borrowing from your future. >> susie: unemployment is seen by many as the nation's most serious economic problem. many economists say it's just a but a growing number of experts are worried that the u.s. is facing a more serious problem, called structural unemployment, that could linger for years. erika miller reports. >> reporter: when the economy is weak, it makes sense that hiring would be weak too. but there's a growing concern that unemployment will remain high even after the recovery gains traction. economist lakshman achuthan says the issue is many workers looking for jobs lack the skills for the positions available. it's a condition known as "structural unemployment." >> it's a major problem because lets say roughly three quarters of the people who lost their job during the recession aren't participating in the recovery. >> reporter: a mismatch in skill sets is not the only reason economists believe the u.s. is

facing structural unemployment. economist troy davig says the weak housing market is making the situation worse. >> there's over 20% of households in this country with a mortgage that are underwater. and this makes it difficult for them to relocate for job-related reasons. >> reporter: davig is also concerned because the average unemployed person has been looking for work for more than nine months-- an all-time high. >> what happens is they suffer skill erosion. they lose their industry contacts. it's harder to integrate back into the labor market once the economy recovers. >> reporter: the question, of course, is what can be done. president obama wants to expand public-private job training programs. others want incentives. >> give incentives to the unemployed to go back to school- - retool, retrain. coming out of school, then there's a greater potential for them to find gainful employment. >> reporter: and some think the best cure will come from time-- if the economy can improve at a slow and steady pace.

>> when you have a long expansion-- not a fast one, but a long expansion-- the pool of workers is steadily shrinking. and so the private sector now has to get into the act of taking somebody and changing their skill sets so that they can do the new job. >> reporter: what this means is that there could be a "new normal" of higher unemployment. the jobless rate is currently 9% and many economists worry it could remain at 7% or more for years to come. erika miller, "nightly business report," new york.

>> susie: popular sure, but profitable? that's yet to be seen. shares of internet radio company pandora media soared at the open to $26, but it traded down through the day, ending at $17.42. the strong demand for pandora shares show there is once again great investor interest in hot internet companies. but as darren gersh reports, many analysts think pandora could be too hot right now. >> reporter: they have good reason to party at pandora. a few days ago, analysts had valued the company at just over $1 billion. but pandora ended its first day of trading worth around $3 billion. that's far higher than analyst anupam palit expected.

>> i think, based on my estimate for sales this year, my valuation gets to about four times sales, which i think is pretty reasonable and where we are seeing it right now is about 12 times sales. so i think we are getting into stratospheric valuations, which i don't think can be justified by the underlying fundamentals. >> reporter: users love pandora. punch in a song and pandora's music genome software will find similar artists and songs and create a custom internet radio station. pandora's popularity explains why palit likes the company. he expects pandora will bring in $295 million in revenue in 2011 and then grow almost 30% a year, hitting $1 billion in sales in 2016. >> i do think it's a very solid business. i think it's going to grow very well over the next few years, but to be honest, my valuation is $7.50 a share. i'm very comfortable with that. and based on where it is now, i'd recommend to investors to step aside and wait for it to

come down to earth before getting interested in it. >> reporter: pandora is also not a solo act. competitors include facebook- backed spotify. google, amazon and apple are all tuning up their online music offerings. >> there's so much competition. >> reporter: eric bleeker is a technology analyst for the motley fool. he says pandora is up against some deep-pocketed competitors. so you've got some big companies coming in here. you've got facebook, amazon, apple-- why is it such a strategic initiative for them to get into this space? >> with apple, the facility they built for this new icloud service-- it's a billion-dollar facility-- and they see this as a strategic end goal to get more people to use itunes, to getting them into the iphone ecosystem, and they are only going to create more competition for pandora. >> reporter: competition and innovation might be good for music lovers, but investors who pick the wrong company might end up singing the blues.

darren gersh, "nightly business report," washington. >> tom: most investors were singing the blues and get you updated with tonight's market focus. >> tom: the selling picked up steam throughout the day as the major indices slide to new nine- week lows. this is what the day looked like for the s&p 500. the index fell about 1% at the opening bell, fueled by worries about europe and the sluggish u.s. economy. let's roll out to this 90-session chart puts the selling in short-term perspective. we're still watching the march low. with the drop today, the index is less than 1% above that price.

material stocks and financial stocks led the way lower. the exchange-traded funds following those sectors were off by more than 2% each. we saw this happen for the dow. aluminum maker alcoa saw the biggest drop among dow industrial stocks. shares fell almost 3%. that takes alcoa below $15 per share for the first time all year. bank of america also continues to pressure the dow. look at this move. off almost another 3% today. b. of a. shares are at their lowest price of the past 52 weeks-- in fact, the lowest since may 2009. more on bank of america coming up in "street critique." life insurance firms saw the biggest loses in the financial sector, hit by their own falling stocks and the drop in the market hurts their investment portfolios. lincoln national, met-life and genworth fell between 4.3% and 5.3% each. we saw a strong move up in the u.s. dollar. this is just the past 90 sessions of the dollar index.

the weaker dollar trend has been around longer than that, but since may, we have seen the currency try to turn around. today popping higher. johnson & johnson is getting out of a business it all but invented. the company will stop making drug-coated heart stents-- the tiny springs that prop open clogged heart arteries. it's a $4 billion a year global market. j-n-j will take a charge against earnings this quarter to pay for the wind down, but it leaves the market up for grabs for its competitors. johnson & johnson shares fell 1.5%. boston scientific has a significant presence in the drug-coated heart stent market. it gained almost 3%. surmodics, meantime, has a royalty deal with johnson & johnson's drug-coated stent business. its stock fell hard, down 17% to a six-month low. also in medicine, drug developer regeneron got some good news. the f.d.a. said studies of its proposed medicine to treat vision loss from macular degeneration met its goals. the treatment has yet to be

approved, though. shares popped 5%. and we saw a series of earnings warnings. owens-illinois makes glass containers. its warning gets blamed on higher-than-expected manufacturing and delivery cost increases. lawn care company scotts miracle-gro says it can't make up for a slow spring, and steel maker nucor's guidance for the second quarter came in below forecast. and that's tonight's "market focus."

>> tom: it has been tough to own stock in a financial company. the group is the worst- performing stock sector this year. tonight's "street critique" guest finds some of the concern overblown, but not all. she's hilary kramer, editor of gamechangerstocks.com. >> tom: one area where you think it is overblown when it comes to finance is morgan stanley the investment banker. down 14% the past year at a 52-week low a week ago. why do you think the worries are overblown? >> morgan stanley has a diversified revenue stream and mergers and a acquisition and ts is a company morgan stanley that is more than 15% below tangible book value and tangible so it's undervalued. they don't own your car loan or mortgage. they may have asset-backed

securities with mortgages underlying them but it's a well managed risk-aversed company the baby is being thrown out with the bath water. >> tom: compare that with a bank that issues a lot of those loans where think the concerns are justified bank of america the lowest since spring of 2009. >> there's a lot of hair around that one as we say. bank of america has a lot of mortgages. they're trying to integrate merril lynch and you want to be patient but morgan stanley you can jump in feet first. >> tom: we've got viewer questions. stand by the first one from doug and says intel with the recent goldman sachs downgrade do you think it's a buy it's paying more money to shareholders and back in may goldman sachs called it a sell. do you agree? >> i disagree intel is a sell.

intel is an excellent well-managed company. you have the dividend yield and the concern is more short-term. it has to do with inventtory starting to increase, competition from the rm processors as they're called and people don't want the net books they're going i pads and intel is still an 800-pound gorilla and cisco with other big tech companies are real bargains now. >> tom: speaking of dividends one of your choices was telefonica. a recent choice. he writes the current dividend is 9% and the payout ratio is 159% how can it keep paying the dividend. the pay out ratio one way to cal late is look at the yearly dividend per share divided by the annual if it's over 100 it's paying all earnings plus some earns to shar shareholders.

>> telefonica can pay it it's like the verizon of peru, czechoslovakia and having a competitive edge in its home base. they can pay the dividends but an excellent point he made. >> tom: disclosures ownership position in anything. >> i own morgan stanley and cisco. >> tom: there we go. e-mail our questions at: streetcritique@nbr.com. or you can send us a note via twitter at my feed, @hudsonnbr, or n.b.r.'s feed. and facebook too. we'll feature some of your questions next wednesday. our guest this evening on "street critique," is hilary kramer with gamechangerstocks.com. >> susie: here's what we're watching for tomorrow: we'll get a check on the pace of home construction with may's housing starts and an update on weekly jobless claims. also tomorrow, what tuscaloosa

and joplin can learn from another tornado-ravaged town. our "planet forward" heads to greensburg, kansas, to see how it's rebuilding better, stronger, greener! more evidence that the internet is changing the way we live-- a new survey from neilsen, the big television ratings firm, shows americans who watch the most video online tend to watch less over-the-air television. that goes against the previous belief, that heavy web video users watched content over several devices. neilsen also found big differences in how different ethnicities watched programming. african americans watched the most traditional television, while asians watched the least tv and more video online. >> tom: in a deal with federal regulators, banking giant j.p. morgan chase will pay $2 million to settle claims it used high- pressure tactics to push auto loan customers into buying un- needed credit protection. the bank has stopped selling the contracts and it has paid $25 million to reimburse affected customers.

in the settlement with the office of the comptroller of the currency, chase neither admits nor denies wrongdoing. >> susie: in the "money file" tonight, do you really need that loan from your 401(k)? eric schurenberg has some questions to ask yourself before tapping your retirement nest egg.

he's editor-in-chief at cbsmoneywatch.com. >> people are worried about 401(k) loans. more than a quarter of 401(k) participants has a loan out, and senator herb kohl of wisconsin has introduced a law to reign them in. but honestly? a careful loan against your nest egg is not necessarily bad. it's an inexpensive way to borrow regardless of your credit score, and since you pay interest back into your own account, you could end up with more money socked away than when you started. but before you do it, ask these questions. first, will you keep saving in your 401(k) as you repay the loan? you don't want to simultaneously pull money out in a loan and stop funding your retirement-- unless you want to work until you're 90. second, is your job secure? if you leave work with an outstanding 401(k) loan, you'll have to repay it immediately or face taxes on the balance, plus possibly a 10% penalty. finally, do you really need a loan? is it for something that will make you better off-- like a college education?

or for a splurge vacation? a dumb loan is a dumb loan whether it's from your 401(k) or not. i'm eric schurenberg. >> tom: that's "nightly business report" for wednesday, june 15. i'm tom hudson. good night everyone, and good night to you too, susie. >> susie: good night tom. i'm susie gharib. good night everyone. 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. 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". to order this dvd, call 1-800- play-pbs or visit online at shoppbs.org. >> be more. pbs.

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