>> tom: and as we continue our look at fixing the economy, we head to small town america. >> i'm diane eastabrook in belvidere, illinois. still ahead, i'll tell you what one midwestern town thinks the government should do for it. >> tom: it's "nightly business report" for wednesday, august 17. 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.

>> susie: good evening, everyone. another day of jitters here on wall street. investors still haven't recovered from last week's violent volatility, and, tom, looks like they just don't feel good about stocks. >> tom: lots of nervousness, susie, and that's why investors have been yanking billions of dollars out of stock and bond mutual funds. the investment company institute tracks the numbers. $40.3 billion pulled out of those investments last week alone. stock funds alone saw $30 billion in outflows. it was the biggest single week for withdrawals since the 2008 financial crisis. >> susie: now, investors may have doubts about stocks, but they are big believers in gold. the precious metal broke $1,800 an ounce overnight and, in new york trading today, settled at $1792, up about $9. so is this a boom or a bubble? as erika miller explains, investors and retailers have a

lot riding on the answer. >> this is approximately $30,000 worth of gold here. >> reporter: business is not just good for michael toback these days, it's golden-- up 400% in three years. his firm buys gold and silver jewelry, coins and scrap metal from anyone willing to sell. after x-raying the items to see how pure they are, toback melts it all down and turns it into bars like these to sell to jewelers. >> people are kind of, like, revisiting their jewelry boxes to say, "okay, well, i'm not really wearing this. it's broken, it costs too much to fix it. i might as well sell it and use the money for something that i need to pay for." >> reporter: his customers are drawn to the high price of gold, now near $1,800 an ounce. that's up 200% in five years. but there are concerns that gold may be in a speculative bubble. some analysts believe that buying gold now like buying tech stocks in 1999 and real estate in 2007. darrell cronk of wells fargo

private bank does not know when gold will peak or at what price, but, judging by historic precedent, he warns the end could be ugly. >> we saw, in 2008, gold went down in a short period of time of six months, 30%. in the 1980s, we saw, over a two-year period of time, gold moved down 60%. now we're not... we're not projecting those types of moves down, but we have concerns when we see investors look at gold as a cash-equivalent or a risk-free asset. >> reporter: but others, like gold trader anthony neglia, think the price of the yellow metal will keep rising. >> i'm looking for this to continue. i think we're stabilizing here a little bit, but once we get back over $1800, i feel that it's got another leg up. >> reporter: the reason, he says, is not just momentum; it's fear. >> i think it's a safe haven thing. a lack of confidence from the equity markets is really what's bringing a lot of people to gold. >> reporter: in addition, investors are worried about a european banking crisis, the u.s. credit downgrade, as well

as higher inflation down the road. some gold bulls think the metal will hit $2,000 an ounce this year. of course, that would be good for michael toback's business, but there could also be a downside. like many americans, he's also worried about his investment portfolio. >> all the stuff that i own, you know, too, takes a little bit of a beating. >> reporter: a beating, maybe, but hopefully not the meltdown he sees everyday. erika miller, "nightly business report," new york. >> tom: still ahead tonight, from job creation to funding small businesses, we head to the heartland for main street's ideas on "how to fix the economy." as we mentioned, stocks were mixed today, with the blue chips gaining just a little bit on some high-profile retail earnings. the dow rose four points, the nasdaq fell almost 12.5, and the s&p 500 was up a point. trading volume fell slightly from yesterday's pace; just under one billion shares moving on the big board, under two billion on the nasdaq. >> susie: two retail giants were in the spotlight today.

target rang up better than expected profits in its second quarter and raised its outlook for earnings in the second half. the nation's second largest discounter credited its remodeled stores and larger selection of fresh food. target's sales averaged 3.9% in the quarter, their fastest pace in four years. meanwhile, abercrombie & fitch also posted a better than anticipated quarter, but the teen retailer warned of trouble in the crucial back-to-school season as it enters "a period of greater uncertainty." analyst brian tunick says he's most concerned about upscale retailers if the economy continues to slow. >> the high end could be the consume i remember spending that breaks. you now, we think the low end, middle class have adopted their spending patterns to this new world. the high end hasn't changed yet

their >> susie: separately, abercrombie is dealing with a "situation." the company has offered money to cast members of mtv's popular show "jersey shore" to stop wearing its clothes. the preppy retailer is concerned that the antics of michael "the situation" sorrentino could tarnish its brand. >> tom: president obama wrapped up his tour of the midwest today, announcing he will unveil a new jobs program after labor day. but he also said that washington cannot solve everything. so as we continue our series, "how to fix the economy," diane eastabrook tonight talked to small businesses in belvidere, illinois, about the best way to create jobs on main street u.s.a. >> okay, these are ready to go out. >> reporter: gary simon is barely able to keep up with the lunch crowd at his restaurant, the brick, in belvidere, illinois. still, simon thinks business could be a whole lot better. >> there's a lot of homeless people in belvidere. there's a lot of people on food stamps, and we don't get those people in here anymore. we used to. >> reporter: in belvidere, a scrappy factory town in northern illinois, jobs-- or the lack of them-- are a huge issue. unemployment here is nearly 13.5%.

at city hall, word that the president plans to propose a new jobs program got a muted response from mayor fred brereton. >> sure, it sounds good. i tend to fall on the side that government can't be creating those jobs. they need to create the environment that other jobs can be created by the private sector. >> reporter: the problems plaguing belvidere really aren't dissimilar from the ones plaguing every other community across the country, and many of the businesses here say the best thing that washington could do for them is really do nothing at all. that may seem odd coming from a town that's chrysler plant got saved a couple of years ago in a government bailout, but not to the owner of the world's second oldest ford dealership. kevin keesee thinks if washington wants to create jobs, it should lower taxes and let businesses decide what jobs should be created. >> technology changes everything on a daily basis, so we don't know what jobs we may need two days from now, ten years from

now. for the government to think they have the ability to create a program knowing what jobs people need i... i find detrimental. >> reporter: terry orcholski, president and c.e.o. of orbital tool technologies, goes a step further. his company makes components and provides service to power generators. he thinks the government needs to either stop piling emission regulations onto utilities or allow them to raise rates. >> it's hundreds and hundreds of thousands of jobs that make the utilities work. now if you want to shut these power plants down, what are you doing, ultimately? you're shutting down hundreds of thousands of jobs. >> we have boston baked beans. >> reporter: tom snyder, owner of the sweetery company, has an entirely different take. he thinks if washington really wants to create jobs, it should prod banks into lending more to small businesses. >> they just don't want to lend money out anymore unless they

have a guarantee that they're going to get it back. >> reporter: many of the businesses along belvidere's state street are confident the u.s. economy will improve in time if only washington would get out of the way. diane eastabrook, "nightly business report," belvidere, illinois. >> susie: our next guest says the weak economy is also scaring off would-be entrepreneurs. the number of start-up businesses is now at its lowest level in 25 years. a survey by outplacement firm challenger gray and christmas shows that just 3.3% of job seekers decided to start their own businesses so far this year. that compares to about 8% on average over the past decade. john challenger, c.e.o. of challenger gray and christmas, joins us now. >> susie: hi, john.hi, susie. >> >> susie: well, as you knowwe're economy. what do you think are the fixes that would help small businesses and help innovators and aunt preupentrepreneurs? >> entrepreneurs need access to capitol. they use to go to famlies, dip

into savings accounts, credit cards or get a home equity loan. it's hard to do. people are opting for safety. even with high unemployment they're going back into the job market and stay ago way from the extra reugs can of trying to start a business. >> susie: what would they needts and feel confident about going out and starting a new company? >> well we need -- easier access to and lighter regulations for companies and entrepreneurs to get licenses quickly. we need bankers and ways for the government to help community banks support the lending that they do on taking chances, like they use to do, for local businesses. we need to open up our export market. it's crucial that the u.s., if we think about the 21st

century become again the shop keeper to the world. we provide our goods and services to the rest of consumers around the world. we kind of lost that position or think we're losing some of that position. >> susie: as we reported earlyia is expected to announce a job package on labor day. tax breaks for businesses that hire new employees, tax cuts for the middle class, support for struggling sections of the economy. and he also talked about infrastructure investments. these sound like very familiar ideas. do you think they will create jobs? >> certainly some of the tax cuts will put money back into peoples hands. we want the monday a to g moneyo consumers to spend and put it back in the economy. we need to move away from

spending, unfortunately supports all of the safety net programs. we have to make decisions today in our country, do we want to invest the limited funds we have in education, in infrastructure like technology, better airports, better sea ports to allow business to compete and take advantage of that better infrastructure. again to compete with businesses around the world. we're really in a competition for jobs in a global economy with people all over the world. >> susie: all good ideas.lots t. thank you, so much for coming on the program. >> thank you. >> susie: and we have beenspeakr ceo of challenger gray and christmas. >> john: now our series how tofs tomorrow evening. dow chemicals ceo joins us as >> tom: our series, "how to fix the economy," continues tomorrow. dow chemical c.e.o. andrew liveris joins us as we turn to

big business. the fortune 500 c.e.o. tells us what his company needs to kick start hiring. certainly it was a mixed day at the close. let's get you updated with tonight's market focus. >> tom: this is one of those days when the closing numbers on the stock indices belie the price swings during the session. so let's start with today's chart of the dow jones industrial average. the morning started off strong thanks to strong earnings from retailer target. by mid-morning, the dow had a triple-digit gain, but other earnings began weighing on investors and the index sank through the early afternoon, ending with a small gain. but we saw a 200-point trading range today. technology stocks were the drag on the market after dell's disappointing outlook last night. that stock fell more than 10%. hewlett packard was the leading dow industrial loser, falling almost 4%. semiconductor company advanced micro devices fell by more than 3%.

look for tech to be in focus again tomorrow. data storage firm net-app's earnings came in as expected, but revenues were light. the firm's outlook failed to come in better than estimates, and that hurt shares after the close. the stock was already weak before the results, losing 3% today. it was a big loser in after hours action, falling another 15%. that kind of selling takes shares to around $35 per share. i mentioned how target helped boost market confidence this morning by increasing its outlook. shares fought the weak market today to close higher by more than 2%. volume almost tripled as shares fight to regain levels before the sell-off this month. john deere continues growing profits. earnings were two cents more than estimates last quarter thanks to better farm equipment sales.

still, the stock couldn't catch a bid today, falling more than 1% on heavier volume. the company did not release a financial forecast for its next fiscal year, which begins this fall. shares have been trending lower since april as worries have grown about a slower economy. by the way, the investment vehicle for microsoft co-founder bill gates is the largest single shareholder in deere with 5% of shares. we did see several commodities stage a nice rally. sugar, coffee and cotton each popped. each of these had sold off over the past month from their recent highs. there was concerns about a smaller sugar crop in brazil. finally, another area of strength in the market: cigarette makers. lorillard, vector group and reynolds american each rallied. they are among the u.s. tobacco companies filing a joint lawsuit, fighting against new required graphic warning images

on cigarettes. and that's tonight's "market focus." >> tom: the combination of a slow economy and last week's federal reserve pledge to keep interest rates near zero for two more years has led to a rally in bonds. that rally has forced down bond yields. a ten-year government bond pays less than 2.2%. that leaves our "street critique" guest looking for

dividends. hilary kramer, editor of gamechangerstocks.com joins us. >> tom: one thing you're looking for not a big multi national but small cap socks such as sinclare broadcast group owns and runs 50 tv stations yielding over 6 percent. what do you like about it? >> we're going into another political cycle, tom. sinclare makes a lot of money on the cloak al and state level selling advertisement in the political arena. they make money in the auto industry. those are their two big drivers. both are coming back strong. revenuees were very flat this year. the guidance was slightly down before the big political cycle hit. but a profitable company. they were able to dispose of $130 million of debt since 2009. i like the balance sheet. but i like the dividend yield. that's why i brought a few over the past few weeks to you. because you can't make any money

on treasuries or cds or money markets, nothing no more. >> tom: you have been talking dividends for many weeks. sinclare is a small cap group. among the viewer comments we received in the e-mail was this from joel. writing, if you're going to write in spec aou la tiff small stocks that ms. kramer favors, what exit strategy do you use when prices decline sharply. >> when it comes to the really small stocks, which by the way they're very risky. it's very important to make this a small part of your portfolio. a lot of fun and exciting, sometimes you can hit it big but it's part of a diverse portfolio including cash and fixed income. for me i don't put a stop in because you can see incredible volatility. in the last few weeks some of my small cap stocks had 25% fleck

stew station where the big stocks were at 15%. >> tom: the idea is limiting your risk in the spec aou la tiff areas oppose to putting a stop loss in. >> that's right and being picky in the ones you like and doing your own homework in them. more diversification in a lot of companies out. there. >> tom: some e-mails here. citigroup you liked in september. now it's below 30. do you still own it. >> i still own citi group it's a longer story. same with the morgan stanleys and jp morgan. eventually they will go from unloved to be loved and which will see it removed. >> tom: that's painful enough how about pmi. the pry mat mortgage insurer. you liked this before the last election. now it's be lie 50 cents. you like that one?

>> that's a real tragedy. i'm holding mine in case there is a miracle and coming back. hofplt how about disclosures hillary, you own what you mentioned tonight. >> tom: you can email us, 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": it's hilary kramer with gamechangerstocks.com. >> susie: here's what we're watching for tomorrow. a closer look at the consumer-- we'll get a check on inflation with july's consumer price index, see the latest home sales data and get the weekly totals on jobless claims. also tomorrow, why jobs of the future may look more and more like this and less and less like this. the battle over bratz dolls drags on. a federal judge ordered mattel to post a $315 million bond as the toymaker appeals an award of

almost that much to bratz doll maker m.g.a. entertainment. the companies have been locked in a battle over the pouty-faced dolls for seven years. both sides claim they came up with the idea for the dolls. the appeals process could last another two to three years. >> tom: while fitch ratings is keeping the nation's credit rating at aaa, it's not sold on new jersey. fitch cut garden state bonds today by one notch to aa-minus. it believes new jersey will struggle to meet pension and worker-benefit liabilities. still, fitch notes the state benefits from a wealthy population and a diverse economy.

>> susie: in the "money file" tonight: getting creative in tough money times. here's nancy trejos, personal finance columnist at the "washington post" and author of "hot broke messes: how to have your latte and drink it, too." >> in this economy, we've all got to channel our scrappy inner selves. the stock market is behaving like a pinball machine. many of us are watching our salaries stagnate. to indulge in our occasional guilty pleasures, we've got to find ways to supplement our incomes. get creative and use your skills and talents to generate more money.

get a part-time job, and it doesn't have to be a traditional gig. tutor students. if you're a good cook, do some catering. if you sing, get paid to do it at weddings. maybe you can start a business. there are other ways to make money or get things for free. try bartering. sell possessions you don't need. a friend gathered all the gold jewelry she never wears and sold it. participate in online surveys such as e-rewards.com for free magazine subscriptions. try online giveaways or troll for freebies. there are actual web sites such as heyitsfree.net that track free items offered by companies who maybe just want people to sample their products. on freebirthdaytreats.com, you can find out which restaurants give free or discounted meals to people on their birthdays. if you have kids, hit kidsmealdeals.com to find out where kids eat for free with a paying adult. one more thought: sell unused clothing to thrift shops or consignment stores or online. a friend once bought a designer

dress for $120 and sold it on ebay for $130. getting paid to wear a dress is one addiction i can get used to. i'm nancy trejos. >> finally tonight how to fix the economy has stirred up the conversation on-line. on our facebook site marlene posted there are two easy ways to fix the economy. one, tax the waeulgtly and stop giving former government officials pay checks for life. palsiepaul sighs an up side, dil stocks on sale. there are ways to reach us on that's "nightly business report" for wednesday, august 17. 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:

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