>> tom: it took a day, but wall street finally warms up to the fed's plan to pump billions into the financial system. >> the confidence that's related to the fed actions will stimulate more loan demand, and therefore our loans that we make will go up. and that would be a very good thing. >> susie: we talk with top banker kelly king about how those fed actions will impact lenders and consumers. you're watching "nightly business report" for thursday, november 4. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:

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captioning sponsored by wpbt >> tom: good evening and thanks for joining us. call it the "fed effect." the major stock averages roared to two-year highs today. all this a day after the federal reserve announced its big plan to pump money into the economy. it was rally time here at the big board. the dow rose 2%. let's run down the closing numbers: the dow surged 220 points, the nasdaq rose 37, and the s&p 500 up 23. stocks have been rallying ever since august, when fed chairman ben bernanke started talking about buying more government bonds. suzanne pratt takes a look at whether higher stock prices can fix the economy and get americans back in a buying mood.

♪ >> reporter: remember the fun americans had last decade, spending money they didn't have? that was the so-called "wealth effect," and the result was people bought more stuff when their homes and investment portfolios rose in value. that's exactly what the federal reserve has said it's trying to engineer today. policymakers are looking to entice americans to go shopping by pumping up asset prices. still, economists like brian levitt doubt whether higher stock prices can boost economic activity all that much. >> for the u.s. consumer, for u.s. households that are in this de-leveraging process, inflating asset prices does help us move through this. but the united states consumer still needs to work off the excesses of the past cycle. >> reporter: and, boy, do they ever. many americans still face higher debt loads and smaller retirement accounts because they misused the ephemeral gains from sky-high home and stock prices.

nevertheless, strategist tom lee thinks the fed's plan will succeed precisely because of the wealth effect. >> by pushing up stock prices, because of u.s. household direct ownership of stock, every 100- point change in the s&p 500 is a trillion dollars of net worth. >> reporter: other market pros say there is no direct correlation between higher stock prices and g.d.p. but some point out that pushing up stocks is likely to boost the economy by helping corporations. strategist nick colas says share prices are the most fundamental barometer of how companies feel about their business. and don't forget-- the dow is up 13%, or 1,300 points, since the end of august. how's that for confidence? >> that's important, particularly in the fourth quarter, because a lot of companies go through budgeting in the fourth quarter of the year, thinking about how many folks they want to higher in 2011. if stock prices had been as volatile as they've been in the

past two years, i think a lot of c.e.o.s would say "i think we're going to put off hiring." >> reporter: colas also says higher stock prices wont be enough to get consumers to increase their spending in a meaningful way anytime soon. that's because their home prices are still in the basement. suzanne pratt, "nightly business report," new york. >> susie: here are the stories in tonight's "n.b.r. newswheel." today's market gains came despite an unexpected jump in new claims for jobless benefits. they rose 20,000 to 457,000 in the last week. gold prices surged to new highs on concerns of inflation heating up. december gold futures closed at $1,383 an ounce. a mixed bag of sales at the nation's retailers last month, setting the stage for the holiday selling season. macy's, target, and saks all posted solid october gains, while sales at j.c. penney and kohl's lost ground. tom will have more on the retailers in tonight's "market focus."

and a new price tag on uncle sam's bailout of fannie mae and freddie mac: $685 billion. that's what s&p is estimating the overhaul of the mortgage giants will cost taxpars. so far, we've shelled out nearly $150 billion to keep fannie and freddie afloat. >> tom: still ahead, it's "all in the family" at pritchard automotive. we look at how the next generation is gearing up to join the family business. >> susie: as we've been reporting, the fed plans to pump hundreds of billions of dollars into the banking system. so, will that change the way banks do business? that's the first question i asked kelly king today. he's c.e.o. of b.b.&t., one of the nation's top ten banks. >> i really believe that lower interest rates, the confidence that's related to the fed actions will stimulate more loan demand and therefore our loans that

we make will go up and that will be a very good thing. >> susie: you know kelly we hear so many stores from small businesses that say it's so difficult to get loans and we hear from bankers that say that their customers don't want loans even at superlow-interest rates. do you see that changing now that the federal reserve is increasing the money supply? >> you know, i really do, susie. i think that businesspeople until really this week have been very reticent to step out and invest and make a commitments, especially when it requires borrowing additional money because of the uncertainty that they felt from kind of a global perspective but particularly the policies and issues coming out of washington. and so with with the political changes coming this week, with the quantitative easing of the fed, i believe businesspeople are going to be really enthused and

actually pretty excited about the changes. and i believe it will give them more confidence to invest in their businesses and that should create jobs and it will overall be very good for the economy. >> susie: have you heard from any of your customers that now that we are have this new day? >> as you know has been a very brief period of time but yes, i have talked it to several. and you know, from small business folks to some large business folks. and actually i heard one very large business c.e.o. say that after the election he felt just like a kid on christmas morning. and i must admit i felt kind of that way myself. i heard a small businessperson say that you know he had a new soft care company, he was getting ready to start. and it all hinged on how the election went. if the election did to the go well, he was not going to do it. if the election went well

meaning more conservative business oriented people in congress, we start the business the next day. so i think there are going to be a lot of people that will move off the center and make decisions. >> susie: how much of a pickup in loan demand dow expect at bb & c? >> well, it will take time, you know, for the businesspeople to decide that they're going to invest, to get their plans all ready. so and it will be, i believe, an increasing level of loan demand in the next several years, actually. you know, i doubt in all honesty in the next quarter or so you will see some kind of an immediate pickup directly associated with twh. but i think certainly as we move towards the next six to 12 months i believe you are see a material increase in loan demand. i believe it will come in small businesses. i think it will come in large businesses. i believe consumers will be

more confidence. i think they will go ahead and make those decisions to buy the homes, expand their kitchens and remodel and a lot of different activities that have really been put on hold while people were waiting for some additional certainty in terms of their future. >> susie: you mentioned a little bit about the elections this week so let's talk about washington, president obama says he wants to rebuild relationships with businesss so that they will spend more, hire more what is the most important thing that you would like to see the president and this new congress do that will help dow your business better? >> what i would like to see them do is start presenting a very positive tone towards business and the economy and business. i would like to see them develop some certainty around the tax structure in the lame duck session and i would like to he is them be very supportive in terms of businesses investing an hiring employees and rally arnged all of us and being excited about the future of america. >> susie: we'll leave it there. thank you so much for coming on the program.

really appreciate it. >> thanks a lot. see you later. >> susie: well, tom, a nice triple digit rally here at the big board and with with the dow now at 11,434, it's just about at the same level it was before the lehman brothers collapse back in september of 2008. >> tom: remember that week of that lehman brothers collapse and the tone of the market back then compared to the tone of the market tonight, as we are sitting at better than two-year

highs. so let's get it start here with tonight's market focus. strong gains were seen across the board, with stocks rallying the day after the federal reserve committed to a $600 billion stimulus effort. looking at the intra-day chart of the s&p 500, you can see how strong the opening was, and stocks never gave back that ground, adding to it throughout the day. pulling out to a three-year chart, with today's buying, the index broke above its april high, and its highest level since the week lehman brothers collapsed in september 2008. financial stocks led the way, with some big banks making some of the biggest moves. three of the four biggest percentage gainers of the dow industrials were financial companies. j.p. morgan put in the biggest rally, up 5.5%. bank of america jumped more than 5%.

each of them had heavier than usual volume. american express rallied 4%. the market seemed to have woken up today to the potential implications of yesterday's fed decision, including possible inflation. that meant a jump in gold prices, up to a new record settlement-- $1,383 and change. that's about five dollars above the previous high set three weeks ago. metal commodities across the board rallied as the dollar dropped. silver was up 6.6, platinum added 3.5%, and copper jumped more than 3%. with the dollar falling and commodities rallying, emerging markets have been jumping, too. the fed's action this week is seen as fueling more investment dollars into these faster growing economies. from the south korea exchange traded fund to the e.t.f.s focused on brazil and thailand-- these three all hit new multi- year highs. but pablo goldberg, head of global emerging market research, h.s.b.c., does not think emerging markets are in a bubble.

>> in emerging markets, where you have the growth, where you have the good fiscal accounts, where you have the good banking. so the consumer is not being very leverage, these emerging market consumers are going to continue spending. >> tom: you can see our entire interview with pablo about emerging markets on our web site, nbr on pbs.org. material and energy stocks jumped along with commodity prices like metal and oil. miner freeport mcmoran popped 7% on heavy volume to more than a two year high. asphalt maker vulcan materials is at a three-month high thanks to its 6.3% jump. in the energy sector, denbury resources was up 7%. profits and daily production in the last quarter were up. and coal company peabody is at a new 52-week high with today's 5% increase. it's never too early for retailers to start talking about the holidays. if october is any indication, it may be a decent season. the best october same-store sales came from luxury stores,

followed by wholesale clubs and apparel retailers. looking at the biggest stock pops within each of those areas. nordstrom was up almost 7% with better than expected october sales. b.j. wholesale was just ahead of estimates, and its stock added almost 4%. teen apparel shop zumiez rocketed 13.5% higher, with october same-store sales coming in three times better than forecast. finally, for-profit education stocks took a dive today, including apollo group. the department of education is looking at its online university of phoenix and its federal student loan program. apollo shares fell 8% to a four- year low. the for-profit school industry is under pressure as the government looks to make sure schools are preparing students receiving federal loans for gainful employment. and that's tonight's "market focus."

they could pull the particulars after the on-line web site. amr has threatened to do just that in a dispute over how orbitz gets flight details and ticket prices. the company is still negotiating and amr says customers can still buy american airlines tickets on orbitz. here's what we're watching for tomorrow: jobs-- we'll find out how many were lost or gained with october's employment report. we'll also talk quantitative easing with former federal reserve vice chairman donald kohn. our friday "market monitor"

guest expects dividend-paying stocks will lead the way to new yearly highs. he's robert stovall, managing director of wood asset management. two of the biggest names in private jet travel are uniting. net jets, the private jet company owned by berkshire hathaway, is buying marquis jet. marquis will become a net jets subsidiary, but no financial details were disclosed. both companies offer partial ownership of air craft, helping businesses save on the cost of owning and operating a private jet. >> tom: royal dutch shell leads a list of oil services and shipping firms paying $236 million to settle a u.s. investigation into overseas bribery. it's the latest move by the justice department and s.e.c. to crack down on companies paying bribes to foreign officials. other companies in the settlement include pride international, tidewater, transocean, noble corp., and global santa fe. "

>> susie: now that the uncertainty surrounding the midterm elections is over, tonight's commentator thinks it's time the u.s. government ended uncertainty in the housing market. she's gillian tett, u.s. managing editor of "the financial times."

>> this week, many markets commentators are transfixed by the question of political gridlock in d.c. but there is another type of gridlock that investors need to watch in the housing market. in recent weeks, revelations have emerged about abuses in the foreclosure process, including the role played by so-called "robo-signers". that could end up costing the banks over $100 billion. but it might also affect the outlook for deflation in some subtle ways. the scandal has essentially forced many banks to slow, if not halt, foreclosures. and while some politicians might cheer at that, it also makes it that much harder to get any sense of economic resolution to america's housing problems, let alone establish any real clearing prices in the market. this matters, as i know from personal experience. back in the late 1990s, i was working in japan, and everybody knew that the japanese banks were sitting on bad loans that were unresolved. and since everybody also thought that prices were being artificially propped up in ways

they couldn't measure, they also feared that these prices might fall in the future. that created a stealthy, corrosive unease, a recipe for deflation. many americans like to think the u.s. will avoid that path, but many policy measures are still preventing the market from finding a floor. now, don't get me wrong-- i am not arguing that banks should simply proceed with aggressive and sloppy foreclosures. modifications could be justified. but the key point is this-- whatever policy is imposed-- blanket foreclosure or modification-- it needs to be imposed swiftly and credibly. gridlock is very corrosive, in the real economy, as in politics. >> susie: a college diploma may prepare you for work, but it may not prepare you for the challenges of working with your family. anyone who's worked in a family- owned firm knows this. so emily pritchard is getting a head start in college before possibly going into her family's auto dealership. diane eastabrook introduces us to her in tonight's "all in the family."

>> reporter: at the university of st. thomas in minneapolis, senior emily pritchard is getting a lesson on divorce from professor john buri. >> the second most common time for divorce is? >> empty nesters. >> yes, when the kids are gone. >> reporter: why would a business student like emily need buri's course on the psychology of marriage and family? because it's a requirement for family business majors. >> it's heavily based on the relationships between a husband and a wife. i can transfer that relationship to a family business setting, and see how the relationship grows and how it develops with a husband and wife who work in a family business together, or they're dealing with family business issues. >> reporter: a lot of colleges and universities have family business centers that provide counseling for family owned firms. but st. thomas is one of the few that actually offers a family business major. the university started the

program last year to better prepare students for the unique challenges of working with their families, or perhaps somebody else's. ritch sorenson heads the program. he says it explores issues like succession, and helps students talk candidly with their families about working together. >> they come into the class saying, "i've never had a conversation," some of them, "with my parents about working in the business. they never introduced the conversation. i'm not sure if they want me in the business." >> reporter: you wouldn't think emily needs to be schooled in working with h pritchards have been doing just that for nearly a century. her great, great-grandfather, walter, started pritchard family auto stores with his five sons in northern iowa in 1913. in the following decades, the chain of dealerships got handed down to three more generations of pritchard men, including emily's grandfather bill, and her dad joe. growing up, emily and her three siblings were immersed in the family business, taking part in

parades, and appearing in tv ads. today, emily's 24-year-old sister, angela... >> schmitty. hey, this is pritch... >> reporter: ...and her 26-year- old brother ryan oversee the family's suburban minneapolis fleet business, which leases mid-sized trucks to a variety of companies. it's the first time in several decades two pritchard siblings have worked together, and it's created some new issues. >> he is the only son in the family, so the natural progression is that he'll take over the family business, even though i've been in the company for a longer period of time. so, it definitely was a unique transition. >> reporter: sitting around a conference table, the pritchards talk about emily joining the business and how her major is helping them plan for the future. >> it's really opened the communication up and exposed some interest levels that the next generation harbored for the

business. >> it's a big deal to have a structure down so that we can really hone in on our family relationships without having any hard feelings. >> reporter: does it make you confront conflicts that you have with each other? >> i'd say, not necessarily confront, but more how to deal with those conflicts, because they're there. ( laughter ) >> reporter: for now, emily is more focused on her studies than on what she'll do after graduation next spring. she's still trying to decide if working for her family is right for her. >> maybe i want to do marketing, or maybe i'm entrepreneurial and should do sales and come up with these new ideas. and i just need to figure that out. i hope, by the time may rolls around, i'll know what i'm doing. >> reporter: diane eastabrook, "nightly business report," minneapolis.

>> susie: that's "nightly business report" for thursday, november 4. i'm susie gharib. good night, everyone, and good night to you, too, tom. >> tom: good night, susie. i'm tom hudson. 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. thank you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> more information about investing is available in: to order this dvd, call 1-800- play-pbs or visit online at shoppbs.org. >> be more. pbs.