tonight's "market monitor" guest says investors are facing a cliff of concern. robert stovall of wood asset management joins us. >> susie: that and more tonight on "n.b.r."! >> tom: the u.s. economy actually sped up in the third quarter, surprising economists and maybe you too. thanks to a pick-up in spending by consumers, the federal government and the housing sector, the gross domestic product grew at a 2% annual rate in july through september. that 2% pace was stronger than expected and much better than what the economy experienced in the second quarter. suzanne pratt takes a closer look at the data and what it suggests about the economy in the final months of this year. >> reporter: an economy growing at a 2% annual rate is hardly anything to celebrate. sure it could've been worse. but, clearly at three-years post great recession, it should be a lot better. experts call it a side-ways economy, one that is unable to

create enough jobs to bring down the nation's stubborn unemployment rate. but, people on the streets of new york have different takes on what a 2% economy means to them: >> it means first of all that anyone trying to look for employment is going have a tough time but don't give up. i myself was out of work for eight months, before i got my present job, but i just hung in there. >> right now, for us middle class folks, that probably doesn't mean much. what that will do is that will free up money on the upper end of the category. >> i think you have to be a little realistic and you take what you can get, so if it's a nominal rate of 2% that's fine. every step in the right direction is great. >> reporter: the weird thing about the latest snapshot of the u.s. economy, is the contradictions. consumers went on a shopping spree in the third quarter, shrugging off the threat of higher taxes next year. businesses, on the other hand, pulled back sharply on their spending, the first cutback in

business investment in more than a year. and that has some economists concerned. >> business spending in particular was sort of alarmingly soft. and, that's where we're starting to see the effects of the fiscal cliff and the uncertainty associated with it. >> reporter: it also suggests that the economy will slow in the final quarter of this year, as companies continue to postpone purchases of everything from software to new machinery. >> i think in the current quarter we could see growth that's a little bit softer, a little bit below 2%, primarily because it looks like business investment could be even weaker. and, this is based on orders for capital equipment. >> reporter: as for how the u.s. economy will fare in the first part of next year, that's really anyone's guess. estimates for q1 g.d.p. range from negative to positive numbers, and that uncertainty is due to the fiscal cliff. suzanne pratt, "n.b.r.," new york. >> susie: businesses are also back to cutting jobs.

just this week, dupont, xerox, proctor and gamble, dow chemical, and ford announced new rounds of layoffs. darren gersh looks at why corporate america is issuing thousands of those pink slips. >> reporter: looking at all the big companies that have announced layoffs recently, you might be worried the job market is heading south fast. high-profile publicly traded companies get headlines when they let workers go. but the companies traded on stock exchanges only account for about a quarter of u.s. employment. >> some of what's going on there could reflect the fact that global growth has been slower the past couple quarters and that may be feeding in to the hiring activity of large multinational corporations. >> reporter: the firm international strategy and investment estimates foreign earnings of u.s. companies are off 17% from their peak last year. but u.s. companies focused on services and manufacturing here at home, are doing pretty well. that relative strength is showing up in new claims for unemployment benefits which are not signaling concern.

>> if you think of two sides of the sort of labor market equation that we needed to see healed from the great recession, layoffs and hiring. layoffs actually are healed. they're back down to pre- recession levels. it's the other side of the equation that's a real problem. it's hiring. >> reporter: weak corporate earnings can lead to layoffs, but so far the results have been lackluster, not alarming. >> i'm less concerned that means we are going to start laying off people and more concerned that it's going to slow the pace of hiring. >> reporter: the overall employment picture is mixed. while some big companies are shedding workers, holiday retail hiring and home construction may pick up the slack. >> certainly consumer spending has held in very well and that could be a source of job growth. you know we have also seen some very good indicators on housing lately and home building so we could see a pick up in construction employment so i think those could be some bright spots that could offset some of the weakening we're seeing in manufacturing and things that are more globally exposed.

>> reporter: that leaves us with a tale of two toledos. if your job depends on sales to toledo, ohio, you should have more job security than someone selling to toledo, spain. darren gersh, "n.b.r.," washington. >> tom: wall street wrapped up the week with a see-saw session of trading, as that better than expected economic growth report outweighed sour earnings reports, just enough. the dow rose three points, the nasdaq gained nearly two points, the s&p fell one point. for the week, all of the major averages lost ground, again. the dow was down the most, off 1.8%, on the week. >> reporter: i'm diane eastabrook in chicago where hundreds of consumers have turned out for $15,000 housing grants. i'll have details coming up. >> susie: businesses and homeowners are bracing for hurricane sandy, as the storm

heads for the northeast. it's being called "franken- storm," and with heavy rains expected, it's on track to be one of the costliest storms in history. sandy has soaked florida's east coast, and is expected in the new jersey, new york area by monday. in the path of the storm: several of the nation's biggest cities, travel hubs and several major gasoline refineries along the new jersey and delaware coasts. financial centers like the nasdaq and new york stock exchange, say they'll have contingency plans in place. electronic trading is expected to continue as normal. michael barry says insurance companies are already mobilizing to deal with damage from hurricane sandy. he's vice president, with the insurance information institute. >> what are insurance companies doing to be prepared? >> well, right now they're trying to figure out exactly where this storm is going to make landfall. as indicated they have mobile catastrophe units sent to the scene so that the insurers can

go out and cater to their policy holders, help them file claims after the storm hits. right now, the big question is where is this going to hit? i saw a modeling company saying delaware, maryland, virginia, and moving west into populated cities like philadelphia. >> susie: it's covering a wide swath of states, and we're hearing there will be heavy floods and strong winds. so, you know, what's covered and what's not covered once it's all said and done? >> well, the good news for policyholders is wind damage and of course a hurricane, tornado, wind damage, that's a covered event. so what does a hurricane do? is knocks your roof off. it collapses your garage. these are covered events. so the other thing you have to look at, is what are we talking about in terms of floods. flood is excluded from a standard home insurance policy.

those who have national flood insurance program policies will be covered for flood event. again, wind, fire, theft-- these are your core coverages in a standard home and business policy. >> susie: so what kind of shape are the insurances in to handle this kind of damage? taking a look here, we're talking about companies like allstate, chub, travelers, state farm-- there are others listed here on the screen. who is in the best shape to deal with all of this? >> well, i would say cumulatively, the industry is very well capitalized. i mean, one of the reasons that they have been able to build up their reserves this year is 2012, compared to 2011, has been comparatively light in terms of natural disasters. 2011 you had the tornado in tuscaloosa andiop len. you had hurricane irene in 2011. this year, you look at june 2012, you had the colorado wildfire. you had hurricane isaac which hit louisiana. what we're looking at with sandy

is multiple states across some of the most heavily populated states on the east coast, and that's why this has caught everybody's attention for good reason. >> susie: what about businesses? to what extent are they covered through all of this, or is there a deference being a homeowner-- we have heard companies have closed operations for the next few days. >> well business insurance policy coverage is comparable to a home insurance policy, they're going to cover you for wind damage. most business insurance policies have a provegz in them called bi, or business interruption coverage. so if their property is hit directly and it causes them to shut down for a period of time, oftentimes they can file a claim and be covered for the business they could have potentially had, had there not been a hurricane that hit their property. >> susie: everybody is hoping the storm goes out to sea and doesn't do much damage. thanks a lot. mike berry with the insurance information institute.

>> tom: governor mitt romney today promised big changes if he's elected, in a speech billed as his closing argument in the campaign. he accused president obama of shrinking from the major issues facing the nation. romney promised to offer policies that matched the scale of today's economic challenges. he again touted his five point plan for economic growth, including promoting small businesses, cutting the federal budget, and keeping taxes low. >> this is not the time to double down on trickle down government policies that have failed us. it's time for new bold changes that measure up to the moment and that can bring america's families the certainty that the future will be better than the past. >> tom: the obama campaign pushed back against the speech, a spokeswoman today said while governor romney is promising change, it's change that will lead us back to the same failed policies that crashed our economy in the first place.

>> tom: in cities across the u.s., the biggest mortgage lender, wells fargo looking to mend its image after accusations it steered minority homebuyers into sub-prime loans. the bank's strategy is to help certain home buyers with their down payments. as diane eastabook reports cities like chicago are hoping the grants could be a first step in turning around distressed neighborhoods. >> all of you out there probably know what your numbers are. >> reporter: these chicagoans are lining up for what could be a chance of a lifetime. they're applying for $15,000 grants to be used for the purchase of a home. the money is coming from wells fargo and it's part of multi- million dollar national fair lending settlement between the bank, the u.s. justice department, and several states including illinois. >> the programs desire and intent was not only to spark not

only the market, but to spark people's imagination to get them interested in buying a home again. >> reporter: the $8 million set aside for the chicago grants could help revitalize neighborhoods hard hit by the housing crisis. to be eligible for the grants, potential buyers must first get pre-approved for a mortgage either here or before the event. that means having good credit and employment. then they must get eight hours of buyer counseling. >> it's understanding it's not just the mortgage payment, it's also the insurance, it's also the real estate taxes, it's also setting away some money for emergencies. if something breaks in the home. >> chicago is actually stop number 13 for wells fargo on a 20 city tour and some markets have been more successful than others. in philadelphia eight borrowers were able to close on homes in just a couple of weeks, but in las vegas there's been a shortage of available properties. that's not a problem in the chicago area. in fact, at chicago's city lift event potential borrowers could view videos of area homes for sale or go on a bus tour to see

properties. while 1,200 people made reservations to apply for the chicago money, there's only enough for about 550 grants. mexican immigrants abigale and linnett richards got a letter today, approving them for a grant. now the mother and daughter must find a home. >> we came here looking for the so-called american dream and that's the first step to form a real household, a real family. >> reporter: the richards will have 60 days to close on a home. if they don't, someone else will be eligible for the grant money. diane eastabrook, "n.b.r.," chicago.

>> susie: spain's unemployment rate hitting a new record high today. the rate topped 25% for the first time ever during the third quarter. that means one in four adults is out of work. and there's no improvement on the horizon, as spain's economy prepares for nearly $80 billion in spending cuts. >> tom: in italy, the verdict is "guilty" for the former prime minister silvio berlusconi. a milan court says he committed tax fraud a decade ago in a case involving the purchase of rights to u.s. movies and t.v. shows. berlusconi was given a reduced one-year sentence. he was also banned from holding public office for three years. earlier this week berlusconi said he would not seek another term as prime minister. he was forced to resign from that post last year. berlusconi maintains his innocence, he has three months to appeal. >> susie: citigroup showing wall street today, it takes disclosures seriously. the bank fired its top internet analyst today.

mark mahaney, was let go for allegedly giving a magazine reporter his unpublished revenue estimates on google. and a junior researcher on mahaney's team was also forced out for allegedly disclosing confidential non-public details about the facebook i.p.o. to a tech blog. the dismissals came after the state of massachusetts fined citigroup global markets $2 million for those improper disclosures. >> well, here ons with the, you know, pretty lame day of trading and everybody is worried about this hurricane sandy we were talking about and what it's going to mean for the financial markets on monday. it could be either a slow day or no day depending on the damage and of course that's not going to be good for the markets overall. >> tom: we didn't see much price action although trading volume picked up slightly today. not everybody was getting out of town early on the east coast, certainly.

>> tom: after a week of some big drops, the major stock indices ended with a whimper today. the s&p 500 didn't see any reaction at the opening bell to the stronger than expected economic growth report. instead, the index sank to its low of the day just after noon eastern time, only reverse the losses in the afternoon, ending with a loss of just one point. trading volume was a bit heavier on the big board with 737 million shares trading. 1.84 billion traded on the nasdaq. the worst performing stock sector was the financial sector, down 0.6%. the telecommunications sector provided the boost, up 0.5%. there was plenty of focus on apple today after its quarterly earnings came up short of expectations. first, here's today's trading in apple stock. it sank below $600 per share for the first time in three months, but quickly recovered to end low by only 0.9%. here's the past 12 months of trading. you can see the stock has been trending down since hitting an all time high in mid-september, just days after announcing its newest iphone.

amazon is another stock that was poised for a sell-off after reporting its own disappointing results last night. but instead, shares jumped 6.9% on heavy volume. some analysts came to the defense of amazon and its spending on expansion plans will improve profit margins in the future. cable and media giant comcast hit gold with the summer olympics on its n.b.c. channels. comcast is the parent company of n.b.c., and the summer games brought in more than $1 billion in extra revenue in the third quarter. comcast's earnings per share matched wall street estimates. it lost fewer cable t.v. subscribers than expected, while adding more internet subscribers. the news helped comcast shares jump 3.3% to a record high. the company's n.b.c. broadcast business had been a drag, but with some ratings wins, comcast today said it believes it's seeing the beginning of a turnaround at the network. meantime, the summer olympics hurt business at coinstar, the

operator of the red box d.v.d. rental kiosks. new movie releases slowed during the olympics, hurting its d.v.d. business. third quarter revenue was disappointing and its forecast was weaker than expected. still, shares were able to shake off the discouraging news to rise 2.8% on heavier than usual volume. add drug giant merck to the list of big companies with sales coming up short of estimates. earnings per share were able to top expectations by three cents per share despite the disappointing sales. one of merck's biggest sellers, asthma drug singulair, saw sales drop more than anticipated as it began facing generic competitors in august. shares didn't have a big reaction, though, down just 0.3%. some of merck's newest medicines for diabetes and h.i.v., saw double digit sales increases helping reduce the sting of the drop in singulair sales. verisign is the company that assigns internet addresses.

but it's waiting for the federal government to approve its contract to register .com web addresses. with that deal expiring at the end of november, shareholders are getting nervous. the stock fell hard, down 15.5% with the company warning the government may not finish its contract review before it runs out. four of the five most actively traded exchange traded products were lower. the nasdaq 100 tracking fund was the sole gainer among the group, up 0.3%. and that's tonight's "market focus."

>> tom: with worries about corporate earnings and the threat of gas hikes and government spending cut early next year, investors are climbing a cliff of concern. that's the assessment of tonight's market monter. robert stovall is back with us, bob, it's always great to see you. why do you think now, given all these worries out there, now is a good time to buy stocks? >> i think because the worries are pretty well disseminated. we all know what they are, and there's a great deal of if he were out there. so the market tend to absorb these things. it is a discounting mechanism, you know. so i think we look ahead and say, gee, the earnings are good. they could be topping out a bit, but dividend increases are still very common. they've been about-- about 70 companies have raised their dividends recently in receipt quarteres, a major increase in cash, to the investors.

earns are fairly strong, and i think fears of a recession have been put to rest because of the pickup, finally, in housing stocks. and real estate turnaround-- >> tom: isn't what we've seen, though, in the past couple of weeks, at least the last six sessions, preissing is a bit of concern of slower corporate profites, slowing corporate sales? >> there has been a fear of that. that's right. and all the corporate forward momentum is not stopped. it's just stalled a bit. i don't think we've reached stall speed, though. we're still creeping ahead. and some of the data we received just this week has been a little better than i expected. so as a result, i think if you tech with dividend growth paying companies and realize that stocks are not expensive in terms of valuations, and there's more wreck in the bond market-- i think you get wreck without reward when you buy bonds. i'm scared of them. so that's why i think stocks still look pretty good.

>> tom: dividend growth is what you're looking at, sdrl, a deep water drilling rig operator and rent oleasor. what headaches you like this stock? >> they have a dividend return of over 8%. it's operated and managed by a group oil industry people, mainly from scandinavia. they drill all around the world. their rigs are very modern, and all leased out with a waiting list. so i think they have a good pattern of rising earnings. >> tom: that's in petroleum energy. you also like utility energy, xcel energy, based in the land of 10,000 lakes in minnesota classic, isn't it here? >> that's right. it's a classic dividend. the dividend return is over 4%. it operates in the upper midwest, good regulatory body. so far they seem to be having a rather straightforward relationship with the

regulators, and their economy is doing pretty well. >> tom: that's always important with the regulated energy utility companies you also like dow chemical which got hit this week in part because of its competitor did you popt having a less-than-expected outlook and she also announced some job cuts. it's been trending lower. any concern here? >> i'm not truly concerned about it. no, we reached a point where laying off people, unfortunatelying is what happens when you reach a slow-down in growth, and the dow is spread around globally with mod etchemicals primarily. so if you think that the world is going to pick up a little of momentum here or there gradually, it's a good one to buy when it's weak, and it certainly hasn't been too strong lately. >> tom: energy disprlz utilities there. back when we last spoke with you in the meantime you lobbied general electric, up about 10%. johnson an johnson, 14% run, and

eaton up 4%. do you still like this trio? >> yes, two out of three have double-digit against. that ain't bad for old bob. i think here again you have industry leaders all three of them and they're in good areas. >> tom: are you eating your own cooking here, bob? do you have positions in the stocks. >> yes, we have positions in all of these stocks. clnc stocks. >> susie: next week on "n.b.r." hurricane sandy is on track to hit the northeast, and stick around a few days. from business closings to home damage, we'll have the latest on the monster storm's economic impact. and finally tonight, peyton likes pizza! denver broncos quarterback peyton manning today, inked a deal to buy 21 papa johns pizza franchises in the denver area. manning called it a smart investment for now and long after he's done playing. peyton and the pizza chain aren't strangers, he's been starring in their commercials

for the past year. but the strategy isn't new, dunkin brands cut similar franchise deals earlier this year with dallas cowboys owner jerry jones and former q.b. troy aikman. so, a lot of dough, tom. that's nightly business report >> i wonder if they're eating ther own cooking as well. >> susie: there you go. that's nightly business report for friday, october 26. have a great weekend everyone, you too tom. >> tom: goodnight everybody, we'll see you online at: www.nbr.com and back here tomorrow night. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org

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