>> tom: a jittery day on wall street. stocks suffer their biggest one- day drop since august as global tensions heat up. >> it definitely gives us a moment to pause and reflect and actually take stock of where value really is in the capital markets. >> stock prices dropping 2% today is just an opportunity to pick them up a little cheaper. >> susie: we talk challenges and opportunities in stocks with a market bull and a market bear. you're watching "nightly business report" for thursday, march 10. 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. captioning sponsored by wpbt >> tom: good evening. investors haven't seen a sell- off in stocks like today's since last summer. several worries were pressuring the markets today, violence in saudi arabia and renewed concerns about europe among them, susie. >> susie: tom, adding to the jitters-- worries about china's economic growth, and some disappointing news about the u.s. job market. the selling was broad-based-- the dow fell 228 points, closing below the 12,000 level; the

nasdaq lost 50, and the s&p 500 was down almost 25 points. >> tom: this stock selling comes as the bull market celebrated its second anniversary this week. could the rally be over, or just taking a pause? peter cohen is co-author of "capital rising," and he is with us from newton, massachusetts. lincoln ellis is the chief investment officer at the strategic financial group. he joins us from the cme group in chicago. welcome to nightly business report. nice to see both of you. >> thank you. >> thanks, tom. >> tom: peter, let's begin with you. time to buy more shares on these lower prices or to cut some of the losses you've seen recently and sell? >> i say it's time to buy. i mean it could go lower. i mean you could have a 5% correction can. but in general, the market is doing fan tasically. it's been up almost 100% since the low of march 2009. it's trading act a relatively low pe of around 15 which is much better than the pe of a typical bull market where it's about 19.7. and corporate earnings are incredibly strong.

1.66 trillion in earnings, record levels, 2 trillion in cash. just a very, very healthy corporate sector with wages going down. and workers sort of with their backs against the wall. i mean it's a perfect environment for corporations to keep beating expectations and earning great profits. >> tom: lincoln, how about it? are you buying the valuation in the market with the cheaper prices but still pretty good corporate outlookses? >> you know, tom, it's interesting. many of the things peter just described are reasons that we're less optimistic, at least for the balance of 2011. i think we're seeing ourselves very much at the top of this secular recovery with very tepid job growth and a global rebalancing scenario that is just really in the very early stages of playing itself out, from saudi arabia to wage pressures exerting them selves from china. we see many reasonses to be quite cautious about valuations in the developed economies and emerging

economies alike. >> tom: how about just that issue on global tensions. we're seeing high gasoline prices in the u.s. but elsewhere really dealing with pretty significant inflation providing for tensions in the media. why doesn't that make you more cautious? >> well, because first of all, i think that a lot of it is fear driven. for instance let's look at what is going on in libya. libya accounts for half of 1 percent of u.s. oil imports. i mean i would agree that if saudi arabia turn mood a civil war that is 25% of the u.s. oil supply. that would be a problem. but i really don't think that's goinging to happen and i really think what is going on is speculators account for the vast majority of the oil trading are using this fear and media attention to drive up oil prices well in excess of the supply and demand balance. which is creating a temporary blip. and i think will come back. >> tom: lincoln temporary blip or you see more longer-term temporary inflation that worries you. >> it's interesting. if you think in terms of

equity capital markets or other publicly traded security markets you could argue the same thing for those markets. with the fed and the ecb sort of backstopping investors, people have jumped in whole hog over the course of the last six months and have driven both bond and stock prices up to quite lofty valuations. certainly on current pe levels, things look moderate. but on trailing tension-year earnings, types of valuations you're still at 23 or 25 times. the forward ten-year earnings in cape markets of those types, you see investors only returning about 1% per year. >> tom: lincoln, lots of valuation arguments. peter, you like technology. we'll show the xlk, the spider technology etf which is up just off its highs. what makes you bullish about technology? >> well, for one thing, corporations have held back on upgrading their technology during the financial crisis. now they have this two trillion dollars in cash on

their balance sheets. i'm seeing companies upgrading their technology all over the place. another thing i'm seeing is big technology companies like ibm that have $20 billion in cash that slated to acquire software companies. you know, ibm makes a 33% net margin in software, by far its most profitable business. and it wants to acquire medium sized technology companies, particularly in the software yar. so i would go look at those, as real good acquisition candidates. >> you're bearish on small caps, rwm is essentially looking for the small caps to move lower. how low? >> i think this is simply just a play on relative valuation, and the normallized rate of return between large companies and small companies. and you certainly have begun to see that play itself out over the course of this pullback. people are going to find themselves in defensive names in larger multinational names so we think u.s. small companies settle back here.

>> tom: we will leave it there. guys, we appreciate the two sides of the market. a buyer and seller, peter cohen of capital rising, lincoln ellis with strategic financial group. >> susie: here are the stories in tonight's "n.b.r. newswheel." weekly jobless claims jumped by a more-than-expected 26,000 last week. but they were still below 400,000 for the third week running, a sign of a slowly improving labor market. wisconsin lawmakers have voted to strip nearly all collective bargaining rights from the state's public workers, ending a heated standoff over labor rights. governor scott walker says he'll sign it as soon as possible. meanwhile, illinois' governor today signed into law the main street fairness act. that means online retailers with a physical presence in the state now have to collect sales taxes on purchases made by illinois residents. amazon and overstock have both threatened to stop working with

affiliates in the state so the law would not apply to them. still ahead-- the big ratings firms got a black eye during the financial crisis. so why would anyone want to jump into the business? we ask corporate security expert jules kroll why he's joining the ratings industry. >> tom: wall street's watchdog had its leash yanked today. congressmen grilled s.e.c. chairman mary schapiro about why she let a former top s.e.c. lawyer take part in the bernie madoff case, even though his mother had invested with madoff. as darren gersh reports, the issue comes as the s.e.c. is asking congress for more money to police wall street. >> reporter: the man at the center of today's hearing declined to testify today. former s.e.c. general counsel david becker inherited money from his mother that had been invested with bernie madoff. becker disclosed that fact, but was still allowed to make recommendations about which madoff victims should be allowed to file compensation claims. darrell issa, the chairman of

the house oversight committee, called that a mistake. >> i believe, as we look further into the becker matter, we're going to find the s.e.c. failed to have the highest level of care so that public confidence could be maintained. >> reporter: becker told s.e.c. chairman mary schapiro about the investment, and she said she expected becker would disclose the matter to an s.e.c. compliance officer, which he did. >> i did not... because the account was closed years before, i did not think that the account of a long-deceased relative would raise the issue of a conflict of interest. >> reporter: that was not acceptable to helen chaitman, a lawyer representing madoff victims. if she'd known about the investment, chaitman says she would have asked the s.e.c. to take becker off the madoff case. >> if i had to grade the s.e.c.'s performance with respect to its essential function of protecting investors, with respect to the madoff case, i would give the s.e.c. an "f." >> reporter: now, the s.e.c. chairman says she would have

acted differently. >> knowing those things now, i wish that we had done... i wish that mr. becker had recused himself, absolutely. >> reporter: the s.e.c. is now asking congress for ramped-up funding to better police wall street. but republicans argue the agency must change the way it does business before it gets more money. darren gersh, "nightly business report," washington. >> susie: you know it is a

bad day of trading when all the dow kpon ens that trade here were in the red except for one, and that was mcdonald's up by almost a dollar. other than that, it was all in the red. >> tom: broad-based selling as we mentioned off the top of the program, not too many places to hide at all either in the stock market or elsewhere. let's get everybody updated in tonight's market focus. no doubt about the weakness we saw today-- even as oil prices dropped, stocks still couldn't find buyers. here's the past 90 sessions of the s&p 500. the index has broken below its previous lows last month, and is below 1,300 for the first time since the last day of january. two of the best performing dow

stocks over the past two years were among the worst performing today. caterpillar led the dow lower today, sliding almost 4%. 3-m dropped more than 3%. energy was the weakest sector. the energy select e.t.f. continues to fall on this 180- session chart. prices are down more than 6% from last week's high. and we continue to see money come out of coal stocks. peabody energy was among the weakest today, falling almost 6%. after more than doubling from its june low, b-t-u is down more than 12% in a week. lower energy prices didn't help g.m., as shares closed at their lowest level since its i.p.o. chief financial officer chris liddell is leaving after just 14 months. he had been seen as a possible c.e.o. candidate.

classic defensive areas didn't necessarily see buyers. gold fell more than $17; silver fell from its recent generational high; and utility stocks dropped. there were bond buyers, though. the yield on the ten-year government bond fell below 3.4%, it's lowest since late january. as yields drop, bond prices rise. biotech firm human genome sciences bucked the weak stock trend, jumping 13% on huge volume. the fda okayed its drug to treat lupus. it's the first new medicine for the disease in more than a half century. c.e.o. tom watkins expects to see thousands of new customers. >> the market here is very large. we're talking about, in the u.s., we estimate 325,000 patients that are our initial target. so there is considerable interest in the area by

physicians and patients. >> tom: the medicine will cost about $35,000 a year, with many patients covered by insurance. analysts think the treatment will bring in more than $1 billion per year for human genome. also seeing big buying interest- - green mountain coffee roasters. this is just a 90-session chart, but look at this 41% spike, taking the stock to an all-time high. it will start selling starbucks coffee and tazo tea brands for its single-cup brewing system. starbucks got a jolt out of the deal, too, fueling this 10% jump. this brings starbucks to its highest price since late 2006. and that's tonight's "market focus."

>> susie: there's a new player in the business of rating the credit quality of companies and financial institutions-- kroll bond ratings. jules kroll is best known for doing investigative intelligence work for corporations. but now, he wants to shake things up in an industry that's been blamed for the financial crisis. i him asked why he decided to get into the ratings game. >> it is a system that is at the heart of the capitalist system. there is 11 trillion-- 11 trillion dollars worth of bonds that are out there in terms of mortgages. and we have to, to get the system going again, we have to find a way to have those

properly financed and traded. >> susie: how is your approach going to be different than let's say s&p and moody's. >> to sum it up in two words, due diligence. we are actually going to look, we are going to accept the idea that you need to look under the hood. understand was's really going on and not simply run bode el-- models. >> susie: what special expertise does kroll have that supports the idea that will you do a better job? >> we have a 40 year history of doing due diligence investigations and our other business there be doing that for the bond rating business. and we brought other members of the capital markets on to our team, quance and others who have the expertise in the areases that we're looking at. so we've got a small team, but it's a very experienced team. and it's makeup is quite different than the established three. >> susie: but to some extent

you're still going about thing the the old way, the fees are you charging are coming from the very companieses that you are rating. that is no different than what the big three rating agencieses are doing right now. >> well, we are charging in a way that is somewhat different. we're being paid a portion of our fees in front. we're being paid a portion of our fees along the way. and we're being paid the balance at the end. it's not whether somebody likes our rating or not. that's a big difference. >> susie: your critics question why should someone trust the kroll ratings. you don't have a track record in financial services. how do you respond to that? >> well, we have been doing due diligence work for wall street and the banks for well over 30 years. we've got the experience. we have the talent. and we don't have the baggage. >> susie: this is a very tough business to break into. how will you know if you are's a success? >> we already know that we're going to be a success. we are getting wonderful

traction from people who are investors, who are ready for something new. they are beyond up set with what happened in recent years. and even the issuers indicate that they're willing to have a fresh voice. they're willing to undergo much greater scrutiny because they feel it's in their interest after all, they need to reestablish trust. the sands have left the stadium. they don't trust the scorekeeper and they don't trust the referees. and if they want them back in, we will be part of helping to reestablish that trust. >> susie: all right, jules kroll, thank you so much for your time, pleasure talking to you. >> thank you am. nice to see you. >> tom: here's what we're watching for tomorrow: possible protests in saudi arabia. a day of rage rally is expected in the capitol of riyadh. we'll also see february retail sales along with business inventories for january. and will high prices at the pump fuel a downward spiral for

stocks? our "market monitor" weighs in. he's jack ablin, chief investment officer at harris private bank. >> susie: expect to pay more for your next flight. american airlines has increased fares by an additional $10 per round trip. if the price hike sticks, it'll be the seventh one so far this year by u.s. airlines. carriers say they need more cash to cover rising fuel prices. other major airlines are watching american's move, but haven't decided if they'll raise prices, too. >> tom: a.o.l. will lay off about 1,000 employees, 20% of its total workforce. the move comes after this week's purchase of the huffington post. a.o.l. will cut 200 jobs in its u.s. editorial and technology units, including journalists and support staff. the rest of the job cuts are in india. as part of the restructuring, a.o.l. says it will rely less on freelance writers, using more full-time journalists.

>> susie: washington is closely watching the nation's farm belt. the head of the federal deposit insurance corporation, sheila bair, says rising farmland values could create a credit problem for farmers. prices for crop land have doubled in the last decade.

but as diane eastabrook reports, there's little fear of a price bubble in the midwest. >> reporter: 65 miles west of chicago, 179 acres of prime farmland are up for grabs. the asking price-- just under $8,000 an acre. >> it has almost a mile-and-a- half of frontage that curves around this way. >> reporter: land broker ray brownfield says farmers and a few investors are among the interested buyers. >> we've got some really good prospects looking at the ground, so we're hoping that we'll get it sold by spring. >> reporter: a few years ago, brownfield probably would have been showing this land to home builders, who were snatching up parcels in chicago's rural collar counties. but while weak homes sales pushed those buyers out of the market, farmers are jumping in because of hot global demand for grain and land to grow it on. >> it's really created a good old supply/demand theory that we have more demand than we have supply, to some degree, and that raises prices. >> reporter: by the end of last

year, illinois farmland values were up 11% over the previous year. other farm belt states like north dakota, minnesota, iowa and nebraska saw even bigger gains. that has economists at the federal reserve bank in kansas city concerned about a possible bubble, so they're keeping an eye on land values. but agriculture economist dan basse doesn't think there is a bubble. he says many of the farmers buying land are paying cash. >> they are relatively free from debt. grain prices are high, and their balance sheets are really pretty fluid. >> reporter: land broker brownfield thinks illinois farmland will keep appreciating at least 5% annually for the foreseeable future. and he believes, when the housing market improves, developers will join the bidding in this area, boosting values even more. >> it's a beautiful area, a lot of rolling terrain. some day, people are going to like this to live on. >> reporter: diane eastabrook, "nightly business report," newark, illinois.

>> tom: just a reminder-- you can catch us online at nbronpbs.org. there you can comment on our blog or watch any programs that you may have missed. or you can follow us on twitter at "biz report," or my personal feed at hudson n-b-r. if tweeting isn't your thing, "friend" us on facebook at "biz report." that's "nightly business report" for thursday, march 10. we want to remind you this is the time of year your public television station seeks your support... >> susie: ...support that makes programs like "nightly business report" possible. >> tom: thanks for joining us, and don't forget to support your public television station. i'm tom hudson. good night, everyone. you, too, susie. >> susie: good night, tom. i'm susie gharib. we'll see all of you again tomorrow evening. "nightly business report" is made possible by:

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