this is "nightly business report" with tyler mathisen and sue herera. >> september selloff. stocks shred about 3% sending all three major indices into correction territory. all revved up. sliding stocks didn't stop customers from putting the pedal to the medal in the showroom. automatic though sa auto sales stopped expectations, but can they keep up the pace. anding active or passive shall whi? all that and more for tuesday, september 1. good evening and welcome. i'm sharon epperson. >> and after the worst month in years for stocks, it was a sour

start to september. stocks were pummeled to the tune of about 3% today as a new month did little to quell concerns about china and the federal reserve. you know that story. let's take a look at the damage. the dow industrials fell 469 points to 16,058. nasdaq shed 140 and the s&p 500 gave back 58. it's the worst start to a september in 13 years. bob pisani has more on today's selloff. >> we fell 2% in the open and we stayed down. you can blame it on china's pour manufacturing numbers if you want, but the number was this line with consensus. the whole market was down roughly 3%.this line with conse. the whole market was down roughly 3%.want, but the number line with consensus. the whole market was down roughly 3%. industrials down 2% to 3%. commodity names all have international exposure. but telecom and utilities?

they were all down 2% or 3% as well. they don't sell to china. and how about the regional banks? they're all down 3% or are more as well. sun trust doesn't have business in china. there is degrossing going on, where traders are taking down overall exposure. the fed is part of this. some argue the fed should remove uncertainty and raise ratings once in september and then say they're done if the year. others argue not raising would renew uncertainty. so what happens from here? it's normal to have a retest of the lows after the big rally at the end of the week. very normal. the low for the dow last week was 15,370. we closed today at 16,058. we're still a long way away.

>> boston federal reserve president weighed this on the potential for an interest rate hike in september. he didn't say when the fed would raise rates but said that the employment target needed to justify raising rates has been met. but other metrics like inflation are not as clear cut. he's not a voting member of the fed policy committee, and he also said global economic weakness is a wild card and could pressure inflation. art hogan joins us to talk about the concerns over global economic weakness and if it really matters for the u.s. market. and art, i've seen polls out there that show that individual investors don't think china matters necessarily that much. but what are they missing here? it matters a lot. >> well, it does matter and i think the direct linkage is not as tight. so think about the u.s. gdp being about 13% exports. only 1% to china. so it's not a big export market.

but china is very important to the global economy and whatever affects the global economy will affect the u.s. 40% of the s&p 500 does more than 60% of their business overseas. so whatever slows down the global economy, ie china, will adversely affect the earnings of the s&p 500. >> and we know it takes a long time to turn an economy around. so if this slowdown continues for who knows how long, what impact could that have on our markets here? what is the worst case scenario? >> worst case scenario, even is trying to cal cu trying to calculate. i think the market is trying to rice it price it in. worst case is china will have no growth but we think they will grow at about 5%. if that's the worst of it and if china does important things to stimulate their economy, the worst may already be behind us.

we won't know that for several months. in the meantime the market will do its job of pricing this worst case scenario until we find out the good news and then we'll bounce back again. >> and the other question is what about the federal reserve and what impact that is having on the markets. what is your outlook there? >> i think as an institution, the federal reserve would love to raise rates in 2015. i think they wish they had already done this. i think as they look at turmoil and global financial markets, it gives them pause, but i think held like to get at least one interest rate done in 2015. probably happens in december for sure if it doesn't happy in september. and by the way, i don't think that makes a big difference in this market whatsoever. i think the fed will be in a one and done scenario for the time frame. so whether september or december, i think that's the last raise we'll see for at least six months. >> so these are anxious times for a lot of investors particularly individual investors. we always hear the standard

stuff, i did verseity verse guy and stuff like that. but do you have any advice? >> the two best things to think about, not to pan i gic. worst decisions are made emotionally. if the recent volatility arguably for the entire month of august and heading into september here has got you to it a point where you're nervous, you probably have too much exposure to stocks. conversely if you've been waiting for quality names to come at a reasonable price, that is happening this fro thiing in. so it may continue to be cheaper during the month of september. so make a list of quality companies you've wanted to be invested in and you'll start to see bargains along the way here and it may be time to get involved. but the worst thing you can do is to panic. >> great advice. thank you. art hogan there.

well, oil prices followed the cue from stocks and prices fell and they fell hard following a three day surge, the likes not seen since 1990. prices for domestic crude fell nearly 8%. weak chinese manufacturing data was blamed raising concern over global oil demand. we'll talk more about it with founding at again capital. maybe you can make sense out of this crazy oil markets. is it about that china data or something else? >> well, for starters, the massive move up that we experienced the past couple days, this happens in commodi commoditi commodities. it's more fluid. the market was -- people were lined up on one side of the ball if you will and we had an implosion up went prices and everybody and their brother tried to cover their short position. now things are settling back down and the key to remember here and what art was talking about, if china's mixed bag for

u.s. stocks, its real bad for global commodities. and that's because the infrastructure got built up in a big way to supply china and its massive growth and supply south korea and japan. now all of a sudden that story is unraveling and you have this huge infrastructure ready to meet a demand that is not there and that forces prices down considerably. >> so how long will the volatility continue and how much depends on the global supply that we're seeing? >> this brings trading into it. these big price swings on a daily basis, they tend to beget more of that for a while. so we need the daily ranges to settle down for a bit and then see what the equilibrium hit wihitis. >> and you're predicting somewhere around $20 a barrel. that seems so very low.

>> well, we were just at $38. >> but $20 is a real dive down. >> and we haven't even hit the phase of this yet in the market timing perspective that i've been waiting for and that is the u.s. refiners going to a seasonal maintenance period. they retool their mix. deemphasize gasoline, emphasize diesel fuel and heating oil for the winter. but that causes them not to use crude oil like we saw last year, crude oil inventories will build up massively. almost to the point of filling up all the available u.s. storage. that causes prices to go down exacerbating the glut perception in the market. >> so the volatility, and we've seen a lot in stocks as we were talking about before, it's even greater in oil prices. what does that mean for consumers? when we look at the dow versus oil prices, it's a huge, huge amount of volatility that we're seeing. we're not the seeing exactly the same amount of volatility at the gas pump, but pretty low prices now. >> you'll see considerably low

prices. number of states have mostly sub $2 gasoline now. we'll see more of that. i saw that in new jersey this morning. this is going to be great for consumers. it will put more money in their pocket when they fill up at the tank. the back to school sales should be terrific. holiday shopping season should be terrific. the car sales are doing great because you can afford a higher monthly payment because your gasoline bill is lower. so it's really a terrific thing. i think really unequivocally, because the amount of jobs lost in the oil sector are terrific jobs, high paying. i don't want to diminish them in any way, but they are not necessarily material amount of jobs to affect the overall economy. >> what is the flip side of the low prices? not much incentive for big oil companies to go and explore and drill for oil. are we going to pay the price down the road for these really super low prices? >> i know it made me angry when they say no better cure is high

commodity prices. thanks a lot when you're filling your tank with $4 and $5 gasoline. the same is true. you are seeing big layoffs. russia, iran, others in opec, even the saudis will start to feel the pinch here. they will react. we're seeing already lessening amounts of crude oil being produced here in the u.s. you'll see lessening amounts in saudi arabia. at some point they will blink and get together, cut production and prices will go back up. but not until i'd say mid point next year. >> so if we see $2 gasoline, we'll pay for it? >> there will be a day of reckoning. the commodity cycle is a business cycle and it's here to say. >> thanks so much, john. always great analysis. the recent market moves are enough to make any investor's hair stand on end. so in these volatile times, which way makes the most sense, active or passive? we'll tackle that in just a few minutes.

growth in the manufacturing sector slowed in august to weakest level in more than two years. factory activity fell to 51.1 when compared to the month before. but a report on construction spending paints a different picture of the economy. spending surged in july to its highest level in more than seven years. up 0.7% to more than $1 trillion. the strong number was fueled by an increase in the number of homes and factories built. >> also strong numbers on auto sales. august sales came in better than expected even as the selling period was cut short. phil lebeau tells us what is driving the results and which brands outperformed.

>> as expected, august turned out to be a red hot month for auto sales with almost every automaker reporting better than expected sales. take a look at the largest automakers and while these numbers may not seem impressive, a gain of 5.4% from ford was actually double what most were expecting. and even toyota, a decline of 8.8%, many were expecting sales to drop 12%. what was selling last month? same thing that has been selling basically for the last six months. trucks and suvs. jeep sales up 18% last month. and you look at general motors, this is a perfect example of a company that is in the sweet spot of the market right now. truck and suv sales both up double digits last month. and the average transaction price up $660 for general motors topping $34,000. one reason why jen not togenera has been posting strong numbers,

expected to continue following the report of august sales being relatively strong. it sets up what many are expecting to be a strong fall and winter for auto sales. the pace of sales being above 17 million for the year. nobody is forecasting that the overall sales will top what they were in 2000 when they hit a record of 17.4 million. but again, august auto sales better than expected with a pace above 17 million vehicles. phil lebeau, "nightly business report," denver. stocks have been selling off because of fears that china is slowing. if that's true, what might it mean for those strong auto sales? michelle, thanks for being here. and so how big a deal is china to auto sales? what do you think will happen for the fall and winter as phil mentioned after the strong august we've seen? >> well, right now we're not seeing any impact of china on u.s. car sales. as phil said, we had an amazing month way above forecasts.

and that sets up september nicely because there is the labor day holiday and the lots of row motipromotions will be g. so we're look at a strong finish to 2015 in terms of u.s. car sales. >> could there be a delayed reaction that many of the big automakers will see things are slowing down in china, they will take their allocations and sell them here? is that a possible scenario and how might it play out? >> i think that that is an interesting question. i think it will wait and see how -- how long this lasts in china. but i think there is certainly a lot of talk that we're building these vehicles, where can we put them. north america is hot. maybe some of the allocations originally planned for china may come to the u.s. and that poses some interesting questions for automakers here because they have been very restrained and very disciplined on maintaining certain levels of inventories, not going too crazy

on enacceincentives. we'll see if they stick with that it is plain. >> disciplines. >> a number have markets in china. will they be the hardest hit? >> clearly a general motors and voks wag on that are tlkswagen there, so there is a chance they will be hurt. ford is just getting a foothold there. it's early to see who will be impacted and in what way and we also don't know what kind of strategies are being put into place. but that is certainly something we will be watching especially as earnings come out for the next quarter. >> and let me switch gears real quickly. what about the stock market jitters? to what extent could that knock down buying confidence here in the u.s.? >> certainly the stock market all the volatility can cause consumers to have jitters with confidence. and that is an important key in

the auto markets. but there are a lot of other strong fundamentals, employment, construction housing business, that feeds pickup truck sales. a lot of other good indicators to drive car sales. >> michelle, thanks so much. and more job cuts in the oil patch is where we begin tonight's market focus. conoco phillips will cut about 1800 as the company deals with low oil prices. shares fell nearly 3% to $47.75. and a lawsuit settled that charged with lending bias. the firm accused of practicing discriminatory lending practices. they will upgrade its policies as part of the settlement. shares were down almost 5%. dollar tree was the worst performing stock in the s&p 500 today. on mixed quarterly results.

the retailer beat estimates on the bottom line, but revenue and same store sales came in low are are than expected. the chain's recent acquisition of family dollar was blamed. the stock tumbled more than 8.5%. chipotle is being sued for deceiving customers. this announced they would no longer serve foods with gmos. but a new report says its meat, cheese and sour cream is made from animals fed with sgchgmo c. shares fell a fraction. amazon prime may soon be less convenient. amazon is testing a new program called ship by region which means items will only be available for free two day shipping in certain regions. shares fell 3% to $496.54. and hilton is teaming up

with uber. hilton guests will be able to set up automatic notifications to request a car from the ride sharing app to go to and from the chain's location. also members of hilton's honors program will be able to use a digital guide of spots frequented by other uber riders. shares tumbled almost 3% on the news to 24.$24.10 sfloop al. so what is better? active or passive investing? our next guest has a treasure trove of performance data to help us answer that question. he's jeff holtz. thanks for joining us. >> thanks for having me. >> this is a controversial issue. when you look at all the data, is there a right way or wrong way to go about this? >> you know, there is no clear cut answer for active or passive investing. both have a role. the key is to be confident in what you're investing in, that

it's a good approach for you. >> when you look at the performance of funds, how have they doneoff the last year or so and really what does better? >> in the past few year, we've seen pass siive strategies particularly in the large cap space. over the five year period through yesterday, the s&p 500 was up about nearly 16%, whereas the average u.s. large cap blend fund was up just over 14%. so it has been a period where passive traders have outperformed active strategies. but that can always reverse. >> and there are cases where some of these active funds do rather well. but you have to to your homew k homework. so what are some of the things that you can tell our viewers what they should to when they do their research? >> well, we analyze over 1,000 funds and on a forward looking basis on gaining confidence in how they will do going forward. a few things that we emphasize are management team who is

running the portfolios, the process that they have and is that process repeatable. and also looking at other factors like performance and fees. because fees make it a lower barrier for future outperformance. >> a lot of investors are scratching their heads thinking i don't know which way to turn. i just want someone to do it all for me. and they're turning to target date fund which is of course get more conservative, hold less stocks as you get closer to your target, usually retirement. how do those fair? >> target date funds really depends on how the asset al will he allocation decision. the mix between stocks and bonds. so different target date funds have different exposures. those that were heavy in bonds and have an eye toward protecting capital, they held up pretty well in the recent market downturn in august. but some of those that had are more equity and are more long

term in trying to combat longevity risks fell significantly. >> as sharon was saying, nobody wants do all of this research, they want the easy answer. and we asked you to name active fund and passive fund that have done relatively well on the morning star ratings. so we have it up on the screen. tell us a little bit about each one of these. you have the van guard 500 index fund and then the dodge and cox stock fund. which is which. >> so the vanguard index is a large cap stock fund and investors that just want cheap broad exposure to the u.s. equity market. being that it has low fees, it's a very good option in that space. dodge and cox stock on the other hand is an active fund and it requires a little more patience from investors. there will be times when it will lag, but over the long term, it has approach to deliver for investors. >> we'll have to leave it there. thank you so much, jeff.

>> thanks for having me. apple revolutionized music with itunes and now it might be looking to do the same with television content. we'll tell you how coming up next. here is what to watch tomorrow. the federal reserve will release its beige book so we'll get a glimpse of how policymakers view the u.s. economy. adp employment report is out, a read on the health of the labor market ahead of friday's big job number. and also a read on productivity and labor reports. we'll also get factory orders released. and that's what to watch wednesday. and google has a new look. if you were on google.com today and noticed a different logo, it wasn't one of the one day doodles that the company does. the search giant has unveiled a

new corporate logo saying it's more mobile friendly and easier to read on small devices. here is a look at how the logo has changed over time. as apple gets ready to launch its new operating system a week from today, reports are flying that it's exploring a move into original programming. julia boorstin looks at why apple might be making this move and what it will mean for the tv landscape. >> at the big event next week, it's expected to introduce a new apple tv box. the question is whether it wants to eventually offer its own exclusive programming on that box. that's what it is exploring right now. it also tries to pull together a bundle of streaming video channels for major media companies which has been in the works for months. >> they need to get more entrenched in the consumer living room. that's why the apple tv the next gen, that's tip of the iceberg because then it ultimately will lead to more streaming, more of an entertainment to where apple

will build itself. s >> it would put apple into direct competition with netflix. along with amazon's prime streaming service plus hulu, which is owned by disney, fox and comcast, and of course traditional pay tv bundles. while apple's first foray into music with itunes may have revolutionized the music industry, it failed to stay on the cutting edge and was late to the game with beats. and it hasn't been part of the streaming video explosion led by netflix. so apple's content play may be less about generating significant revenue from selling content and more about securing a powerful place in consumers' living rooms. >> they're trying to build that ecosystem out. they cannot be left behind when it comes to programming. but when you look at the broader set, what they're working on in terms of augustmeof augustmentm

entertainment, they need to make sure they're not missing any of these trends. and that's really why they're focused on entertainment and programming. content is key. >> the question hollywood and investors are watching, whether they make a bold move into creating content or just license what is already out there. i'm julia boorstin in los angeles. and that is figis "nightly business report" for tonight. >> have a great evening, everyone. we'll see you tomorrow.

tonight on "quest" -- hundreds of different species of gelatinous animals make their home in the waters of monterey bay. "quest" meets two northern california researchers who are working to unlock the secrets of these mesmerizing creatures. and solar power. wind power. the bay area is an alternative energy mecca. but there's another movement that harvests power from some unlikely places. >> major funding for "quest" is provided by the national science foundation. additional support provided by --