>> tom: the global fight against inflation. china hikes interest rates for the third time this year, hoping to slow down its red-hot economy and cool price hikes. >> susie: europe could be next, even as greece and portugal struggle with debt worries. what the interest rate moves mean for the global recovery and the u.s. economy. it's "nightly business report" for wednesday, july 6. 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. captioning sponsored by wpbt >> susie: good evening everyone. interest rates were the hot topic around the world today. china's central bank raised its key short term rate this morning, the fifth hike since october. tom, china is trying rein in inflation. >> tom: susie, the trend of higher interest rates could continue tomorrow when the european central bank is widely expected to raise its rates as well-- the second such move this year. europe also has a growing inflation problem. >> susie: should american consumers, businesses and investors be concerned about those higher interest rates? suzanne pratt reports.

>> reporter: for many of the world's largest economies, this is the direction that interest rates are going. central banks in china and europe are hiking rates to battle inflation pressures because that's their primary agenda. but, higher rates across the pond and in asia will also mean slower growth for those economies, and perhaps america too. don't forget china has been the world's economic engine at a time when the u.s. and parts of europe are still struggling. on top of the eurozone is a big market for u.s. multinational firms. so, it's no wonder that economist bruce kasman says it's really bad timing for a rate hike in europe. >> the euro area as a region delivers less in terms of growth as it could in helping the global economy, and then finally it adds risks and vulnerabilities to the really tough adjustments going on in greece and other peripheral countries right now. to be sure, a quarter of a percentage point increase in european rates tomorrow is

likely to have only a nominal effect on u.s. growth. the concern is that the european central bank will proceed down a path of tighter monetary policy. >> the step that will be taken tomorrow by itself is not that big a deal, but the signal, if it gets realized in terms of further movements over the next six to 12 months, could have an impact in making it a little harder for the u.s. to get growth than it otherwise would. >> reporter: the good news is that buyers of u.s. stocks don't appear to be troubled by higher interest rates in other areas of the world. equity strategist alec young says that's because the u.s. market is still attractive on a relative basis. >> u.s. investors that are investing globally should definitely be paying attention to the fact that monetary policy is tightening more quickly in international markets than it is in the u.s. we think it's one of the main

reasons that u.s. stocks have outperformed this year as we have easier monetary policy here at home. >> reporter: speaking of u.s. monetary policy, it's probably worth mentioning that the federal reserve is not expected to raise rates before 2013. experts say that's because the u.s. central bank continues to focus on job creation as well as inflation. suzanne pratt, "nightly business report," new york. >> tom: job creation is also a concern for the new head of the international monetary fund. at her first news conference, christine lagarde said the fund will focus on balancing policies to create employment around the world with efforts to ensure economic stability. lagarde got the fund's top job after dominique strauss-kahn was arrested for sexual assault in new york. as darren gersh reports, lagarde will have to convince critics she's not playing favorites. >> reporter: when she looks out at the global economy, christine lagarde, the new managing director of the international monetary fund, might wish she had a third hand to help her out. >> on the one hand, the issues of sovereign debt, and that concerns all advanced economies ranging from japan to the united states, but clearly with a focus on the eurozone and in

particular on the country of greece. on the other hand, when we look at the emerging markets, we have, in some corners, the risk of overheating and we have the risk of inflation as well. >> reporter: with the global economy fragile and the recovery uneven, lagarde will have little time to learn on the job. the i.m.f. managing director acts as both a kind of global umpire calling economic balls and strikes and a loan officer evaluating nations who have run out of other places to borrow. >> so basically, as the i.m.f., as the institution that tries to stabilize the international economy, they are going to have to face an increasingly adverse financial market crisis. >> reporter: economist jacob kirkegaard says lagarde's first decision will come this friday when the i.m.f. must decide whether to give greece another $3 billion. just days before, acting as france's finance minister, lagarde was arguing for a greek bailout.

but today, she declined to offer an opinion on greece one way or the other. >> so she basically did not take the opportunity to repeat what is still officially the position of the i.m.f., which is that greece will not default, which i would take to suggesting that she has already put on a different set of eyeglasses and is perhaps somewhat more flexible on this issue than she was before. >> reporter: greece has failed to meet the economic targets set as a condition for i.m.f. loans. former i.m.f. economist eswar prasad says a decision by lagarde to give greece more money will raise more questions in emerging markets about whether the i.m.f. plays fair. >> there is a perceptible sense among the emerging markets that they would never have been able to get away with what europe is getting away with. in this case, we see that there isn't an obvious path for greece to actually meet the conditions, and yet it continues to get money. >> reporter: to address those emerging market concerns, lagarde is expected to name former people's bank of china

deputy governor min zhu to a top leadership job at the fund in the next few days. darren gersh, "nightly business report," washington. >> tom: here are the stories in tonight's n.b.r. newswheel: stocks shrugged off weakness in the services sector. the dow rose 56 points, the nasdaq was up eight and the s&p 500 added a point. trading volume fell from yesterday's pace. 819 million shares moved on the big board, 1.6 billion on the nasdaq. the services sector is showing signs of slowing. the institute for supply management's non-manufacturing index fell last month to 53.3. still, any reading above 50 indicates growth. new rules for leaders of big banks: the f.d.i.c. now can take back two years of pay from execs responsible for a large bank's failure, or negligent in that failure. critics like university of colorado finance professor sanjai bhagat say the new rules only cover salary, not the

majority of a c.e.o.'s financial package, like stock and stock options. >> if most, or a good proportion, of a c.e.o.'s compensation comes from their stock and stock options, then the clawback feature might not have as much teeth as we would like. >> tom: and while there's much anticipation over the white house debt ceiling talks, the administration says it's unlikely a final deal will be reached at tomorrow's meeting. an administration spokesperson said a deal to raise the debt ceiling will likely need more sessions. still ahead, from buying a car to buying a house. tonight's "money file" on why your credit score is key to getting a good deal. >> susie: japan is talking stress tests. it's considering stress tests for its nuclear facilities to ease the public's fears about nuclear power. thousands of citizens have staged anti-nuclear demonstrations since the tsunami

and earthquake in march. they're concerned about the safety of japan's fukushima daiichi nuclear plant, which is still emitting low-level radiation. lucy craft reports from tokyo. >> reporter: darkened offices and aloha shirts-- japan is pulling out the stops this summer to cope with a drastic power shortage triggered by the nuclear accident. >> ( translated ): we're not forcing this on people. what we're saying is, "change your lifestyle, and work habits, so that you can keep thermostats set at 80 degrees." >> reporter: while conservative japanese businessmen have been less than enthusiastic about swapping their suits for tee- shirts, shorts and sandals, companies are stepping up to the plate, shifting work schedules to off-peak hours and weekends, and minimizing energy use to meet the national goal of a 15% cut in power consumption. the threat of blackouts has hot- wired demand for a quaint old appliance-- the electric fan. from $40 asian knockoffs to

futuristic bladeless fans costing as much as a computer, sales of fans overall are about twice normal and many stores can't stock enough. >> ( translated ): customers want fans with clickers that can be remote-controlled from a distance. they're asking for the new air- recirculation models, too. >> reporter: meanwhile, japan's biggest family restaurant chain is growing foliage. the creeping ivy, known as "green curtains," is said to lower indoor temperatures by several degrees. but the biggest benefit, the chain says, is the p.r. boost. >> ( translated ): shutting off our lights in the evening has hurt our late-night business, but customers like the greenery, so our daytime business is up and overall sales are higher. >> reporter: but analysts warn that even a draconian conservation campaign won't prevent blackouts if japan abandons nuclear power, which supplies a third of the country's electricity.

the economic impact of turning off all of the nation's 54 reactors, experts say, would be devastating. >> ( translated ): if all nuclear reactors are taken offline, you'll see a wholesale flight of production and wealth out of japan. if that happens, the damage will be irreversible. this is not just a temporary electricity crisis. this is a question of japan's position in the global economy. >> reporter: without atomic energy, the government estimates imported fuel costs would spike by about $40 billion a year. >> japan is isolated island, with no grid connection with overseas, like germany. if we cannot supply stable electric power, then we face serious shortages of electricity. that is very damaging for japanese economic activities and national life. >> reporter: analysts say japanese manufacturers are already talking about moving their factories offshore to

escape rising energy costs and the potential of more power shortages over the coming year. to preavent a hollowing-out of japan's industrial base and a surge in unemployment, japan says it has only one option for the coming decades: to keep its nuclear reactors online. lucy craft, "nightly business report," tokyo. >> susie: tom, decent gains on the market today. people not going crazy to buy.

but there's a sense of buying on the dips, and positive >> tom: no doubt about it. it continued last week into this week over the holiday. volumes decent. but you're right, the positive tone to the market has clearly been improving. no doubt about it, susie. let's get to it with tonight's market focus. >> tom: stocks squeezed out small gains despite higher financial stocks were among the laggards, hit as global interest rates are rising even if the u.s. federal reserve remains on hold. this is the past 90 sessions of the s&p financial sector exchange-traded fund. despite rallying from its low that we saw from last month, it has been unable to get over $16 per share since mid-may. big banks j.p. morgan and bank of america held the dow industrial gains in check.

j.p. morgan slid more than 1%. bank of america fell more than 2%. the worst dow stock today. investment bank morgan stanley dropped almost 2%. 1.8%. concern is building among analysts that quarterly earnings expectations will be down from last year due to a drop off in trading revenues. trading activity has been hit by the greek debt crisis, the drop in commodity prices from earlier this year and new regulations. morgan stanley stock is only about $1 off a 52-week low hit in early june. transportation stocks were a standout in today's market. this e.t.f. follows the dow transport index, and it hit a new high today-- up more than 1% on heavier-than-usual volume. this is an all-time high. trucking stocks especially helped the sector. arkansas best jumped 10.5% after raising its freight rates.

some optimism there it will stick. con-way and old dominion freight saw some ripple-effect buying-- more more than 5.5% and 3.5% respectively. a lot of those trucks can be headed toward retailers, and store stocks saw buying interest today. costco was the best stock in the best sector today, up more than 1.5%. 1.7%, as a matter of fact. shares have made up what they lost in late may after a disappointing earnings report. costco and other retailers are due to report june sales tomorrow. we saw buying interest developing ahead of that. more talk about apple today, and the likelihood of a new iphone sometime this fall. that would make it the iphone five. apple stock rallied a fraction today, but is up more than 11% from this june low and at its highest price since late april on this 180-session chart. omnivision makes image sensors for camera phones, but there are analyst concerns it may not be the primary supplier for the new iphone due to manufacturing delays. shares fell 3.6%. wireless carrier sprint gained more than 2%. there's analyst talk it may be the next u.s. carrier to be able

to sell the iphone. meantime, microsoft is going online with its latest communications strategy. microsoft is buying internet video chat service skype, and today facebook announced it will integrate skype when it revamps it social network chat service. the partnership further links microsoft and facebook. remember that microsoft owns about 1.6% of facebook. how about shares of m-s-f-t? microsoft share saw a bit of a boost-- up more than 1%. this is microsoft's highest close since late april. with buying interest developing strongly lately. global media owner newscorp saw a big spike in volume as shares fell 3.6%. british authorities have launched an investigation into alleged hacking into cell phone voicemails by employees of a u.k. tabloid newspaper owned by newscorp. and finally, watch health care research products maker affmetrix. shares fell more than 17% below this closing price after

dropping its forecast for quarterly revenue. if that drop holds, shares would fall below $7 per share. and that's tonight's "market focus." >> tom: as a group, health care stocks continue leading the stock market this year. tonight's "street critique" guest is shopping for a specialized drug maker. she's hilary kramer, editor of gamechangerstocks.com.

gamechangerstocks.com back with us from the nasdaq. you mike pharma >> shares have rocketed higher since april, climbing just shy of a new all-time high. what is the catalyst from here. >> it has a novel approach to hepatitis c, and will hiv, and three compounds. it's really a breakthrough company. and even at $126, it's still worth it. >> tom: were you even buying. >> i was buying today >> tom: back in march, you were bullish about satcon. how do you see it going forward? >> it's a power inverter maker for alternative renewable

energy. it moved down considerably yesterday as it cut the forecast due to project delays. are you still holding on after what is clearly a drop in the trend? >> i'm holding on to my shares. the problem is inventory glut. the number one solar and maker in the world, tom. you have a problem fundamental positions model if solar right now. anyone holding on, there's better places to deploy money right now. >> tom: but you're still holding on to your shares right now, right? >> i'm going to hold on. they have backing with a well respected private equities fund in washington, d.c. they have everything going for them. it's juf that when the business intrinzically runs into a rut and hits a wall, sometimes you want to bail.

>> tom: check p.m.i. what is hillary's current take on p.m.i. you liked this in the fall of 2010. it has gone from $4 to 1.50 as home suprises shrink. are you still holding this one? >> i'm holding p.m.i. it was one of the number one movers today on the upside of movers or 30 cents. it wasn't a dead cat bounce. p.m.i. may have bottomed out. for anyone who hasn't gone into p.m.i., now might be a good time to pick up a stock really cheap that has a chance to deal. >> a note questioning about metals. would silver be a good investment for 3 to 5% of one's portfolio? silver traded close to $50 before settling in the mid-30s. what do you make of silver? >> it's a commodity trade that

is dead right now. it's really fast smart money has exited. it's still pushed by a lot of brokers and financial institutions. you're better off buying diversified commodities. companies, some kind of diversefied global miner, even freeport mcmoran, gold, silver, platinum, paladium, and get the diversity that way. don't try to play on the wrong side of the trade. >> tom: so you don't like silver. due own all the other stocks we mentioned tonight? >> yes, die own them. >> tom:viated to critique, the address, you can senld us a note at my twitter hudson nbr and on facebook. more questions and commenteds next. street critique this evening, hilary kramer, gamechangerstocks.com. >> susie: here's what we're watching for tomorrow: earnings from bank of the ozarks, helen of troy and international speedway. and two key reports on jobs-- weekly unemployment claims and a.d.p.'s private payroll numbers

for june. also tomorrow, speaking of jobs, we'll look at how the bad housing market is making it tough to find and relocate new employees. >> susie: more fallout from the phone hacking scandal engulfing rupert murdoch's newscorp. now many advertisers, including ford and virgin, are bailing on the "news of the world" tabloid. the paper is under fire for intruding into private voicemails of sports and film stars, politicians and even a murder victim. murdoch said today he will keep the paper's c.e.o. rebekkah brooks in her job, despite calls for her resignation. >> tom: it took almost two decades, but the u.s. and mexico have finally signed a deal to let each other's trucks have unlimited access to each other's highways. this provision was originally part of the nafta agreement, signed back in 1994, but both countries argued for years over safety and financial issues. and there's still opposition. the teamsters union says the deal is probably illegal and opens the border to dangerous

trucks. >> susie: in the "money file," making your good credit score work harder for you. here's donna rosato, senior writer at "money magazine." >> got a good credit score?

you do if you've got a score of 740 or higher. just one third of americans are members of that elite club. if you're one, you already know that a good credit rating will nab you the lowest rates on a home or auto loan. but it also gets you access to some pretty good deals elsewhere too. credit cards have notoriously high rates, averaging more than 14%. but many credit card issuers seek out top credit score holders by offering significantly lower rates and lucrative cash-back deals. having a high credit score will also give you more leverage negotiating a car purchase. car dealers make the most on financing. dealers are typically locked into preset rates, but if you say you can get a better loan deal elsewhere, you may be able to knock a few hundred dollars off the car's sticker price. a good credit score can also make the difference when you're applying for a rental apartment or a vacation home. a solid credit score is a sign that you'll be a responsible tenant and gives you room to negotiate on price. that's something you can really enjoy when you're kicking back at the beach. i'm donna rosato. >> susie: you can find more of donna's tips for building and maintaining good credit on our website. just go to nbr on pbs.org.

>> tom: that's "nightly business report" for wednesday, july 6. 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: this program was made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org

>> more information about investing is available in "nightly business report's" video "how wall street works". to order this dvd, call 1-800- play-pbs or visit online at shoppbs.org. >> be more. pbs.