this is "nightly business report" with tyler mathisen and susie gharib. brought to you in part by -- thestreet.com. featuring stephanie link who shares her investment strategies, stock picks and market insights with action alerts plus, the multimillion dollar portfolio she manages with jim cramer. learn more at thestreet.com/nbr. dow drubbing the blue chip index falls more than 200 points as concerns overseas rattle investors here. what's driving the decline and how vulnerable is the market to more selling? the china factor. what's really going on inside the world's second largest economy in how much is it slowing and what does it mean for markets across the globe? power outage. the nation's entire electrical grid could be blacked out for months with just one small-scale

attack. in the wake of this new report, how safe are our utilities? all that and more tonight on "nightly business report" for thursday, march 13th. good evening, everyone. a massive and surprise selloff in the markets today. the worst day on wall street in more than five weeks. but it didn't start out that way. the major averages actually began the day higher after first-time jobless claims fell by 9,000 last week dropping to a three-month low. retail sales in february were better than expected with americans buying more cars, clothes and furniture. but investors got spooked over developments in the ukraine, china and the euro zoen. the dow tumbled 231 points, nasdaq lost nearly 63, and the s&p was down 21 points. bob pasani has more from the new york stock exchange on today's

market action and what might happen next. >> reporter: it was an ugly day for the markets, which were battered by events outside the u.s. in china, in the ukraine, and in germany. we saw first very poor economic news in china where industrial production and retail sales were both weaker than expected in february. that's confirming that china is slowing. we also saw rising tensions in the ukraine where the acting president there said he saw a risk of war with russia and there were reports that russia fired on a ukranian plane over crimea. finally strongly worded comments from german chancellor in which she warned of a catastrophe unless russia backed down saying it would change the european union's relationship are yuwithn yeah. here in the u.s. stocks were weak right across the board. everything from momentum names to consumer discretionary and financials. one positive standout was

utilities which was up as traders sought more defensive parts of the markets. in fact the yield on the 10-year treasury dropped about .10 point. that's a sign investors were moving toward more safe investments. little sense of panic. most traders noted we are still only 2% from historic highs in the s&p 500. for the "nightly business report," i'm bob pisani at the new yo new york stock exchange. >> concern that china's economy could slow dramatically perhaps sandbagging the rest of world with it. eunice yoon explains. >> reporter: for many years china was seen as a cushion for the world. chinese economy clocked double-digit growth while other countries struggled. now the economy is slowing. exports are falling. the currency is weakening. and the leadership seems comfortable with the slowdown even if the rest of the world is not. at the country's annual gathering of lawmakers, t the

premier -- >> investors believe china's growth rate this year could be slower and lower than the official rate of 7.5%. >> what is the slowest rate of growth that you would find acceptable without stimulating the economy? >> translator: there's no denying we may encounter a more complex situation this year. we set gdp growth tar get for this year about 7.5%. this quote unquote about shows that there is a level of flexibility here. you asked me what's the lowest possible gdp growth we can live with? well, this gdp growth needs to ensure full employment and increase people's incomes. we're not preoccupied with the gdp growth target. >> a slower china means less demand for commodities like copper. not only are investors worried about the pace of the economy but the health of it, too.

the financial system hasn't been able to keep up with the years of economic boom, fostering an underground banking sector here which many fear could threaten the world. china's premier said that some defaults are unavoidable but that the government would take steps to manage the risks. for "nightly business report," i'm eunice yoon in beijing. so what would a downturn in china, combined with slipping prices on commodities like copper, mean for the u.s. economy? and if prices start falling on chinese-made goods could that lead to a wave of deflation in our economy and across the globe? steve liesman has more. >> reporter: with china now the world's second largest economy slowing, the inevitable question being asked is, what does it mean for the rest of the world and in particular the united states? well, that depends on how it slows. a financial meltdown for china's banking system could ricochet around the globe, prompting fears of financial contagion that could lap up on america's shores. that's a worry, it's not seen as

the most likely outcome. most economists see a more orderly cooling that for such a big economy would have surprisingly little impact on the developed world. that's because while china imports a lot of stuff especially commodities, it exports even more stuff. it's a great big cog in the global trade engine, but it's just not consumer-driven economy. consumption in china is less than half of its total gdp. in the u.s. it's 83%. >> when china slows it hurts the rest of the emerging markets, hurts the commodity exporting countries and the u.s. feels that in terms of its export prospects. >> but that hit is cushioned somewhat by lower prices. >> in the event that china's weaker, you would see lower oil and gasoline prices but more broadly anything that's manufactured is going to be having some content in china and other emerging market economies. and you could see that reflected fairly broadly in the goods sector. >> reporter: this charts shows a strong connection between chinese export prices and prices

paid by u.s. consumers. over the past several years declining chinese export prices have kept a lid on u.s. consumer prices. while a china slowdown worries some u.s. investors and companies with business takes in its economy, it would come with a financial meltdown, not just a slowdown in chinese growth. for "nightly business report" i'm steve liesman. it's not just the u.s. and china raising flags about the risk of deflation. the strength of the euro along with years of ultralow inflation in the currency block prompted mario draghi to announce the bank is taking measures right now to fight possible widespread price and wage declines that could send the entire eurozone sliding into inflation. chief market strategy at convergex, you heard all the reasons for what was going on in the markets today? what concerns you the most?

and is this the beginning of a correction? >> certainly the problems we're having in the ukraine with russia were top of mind today. because while the economic data was very sloppy out of china, it was better in the u.s. the selloff really came as the issue in ukraine began to come to the fore. as far as the beginning of a correction, i do see a lot more volatility for u.s. stocks this year. we're coming off a long period of very low volatility. but i don't see the creation of the fundamentals for say a 10% decline. i think we're going to be stuck in more a 3 to 5% decline. >> is deflation a worry of yours? >> it has been for years. a slow economic growth around the world combined with chinese exports has made monetary policy very different. the nightmare policy, japan has had ten years of deflation and is still trying to work through the problems. it's certainly a concern. >> we always hear about inflation worries especially from the federal reserve, and now we're talking about

deflation in europe and in china. to what extent can that impact the u.s. economy? >> deflation is a funny thing. because you would think that lower prices would encourage consumers to buy. but in fact the opposite is true. and the reason policymakers worry about it is because it can really slow down a recovery. bottom line is it's a big concern for the fed, and that's why they've been so easy with low interest rates and a lot of money printing over the past couple of years because they really dread the notion of becoming japan. >> more volatility, possible deflation on the screen. yet you think the market will end higher this year. how do you get there? >> the anchor that we use to understand the stock market is corporate earnings. the bottom line is, u.s. companies have done a fantastic job generating very strong levels of earnings in a very lackluster global recovery and even a lackluster u.s. recovery. so ultimately our confidence comes from the fact the u.s. companies can continue to make very good profits even in a slow growth and somewhat troubled global economy. >> nick, you always talk about diversification and why that's important for investors.

so as you look around the globe, is the u.s. the place to be in a portfolio or should you have stocks in other international markets? and also what about gold? >> yeah. the bottom line on diversification is of course it's very important to have both bonds and stocks in a portfolio. you've seen that this year. the stock market is fed on the year, the aggregate bond index up a percent and a half. the u.s. is the best place to be. if you look at europe for example, russia is a huge exporter of oil. germany takes 9% of all of russian oil production. so the european economy is going to be very very troubled as we go through the problems in the euk. as far as gold goes, i think it's a very efficient way to help diversify a portfolio. we believe a 3 to 5% weighting in a portfolio is an appropriate amount of gold for a standard diversified portfolio. >> so much good information. nick, thanks so much. >> thank you. >> nick colas, chief market strategist at convergex. a rare show of bipartisan

support in the senate its giving hope to the nation's long term unemployed. hampton pearson joins us now from washington with more. what deal, hampton, did the senate agree to and what are the chances that it's going to pass? >> reporter: well, tyler, first of all late this afternoon there was a bipartisan group of ten senators announcing an agreement to reauthorize long-term unemployment benefits for five months. and if passed by both houses and signed by the president, those benefits woulden paid retroactively back to the end of the year when they expired. an estimated 2 million americans have lost those emergency unemployment insurance coverage. the key sticking point in breaking a political logjam all along has been how to pay for the extension. this agreement does that by extending some customs fees that were part of the recent budget deal and also making some changes in federal pension programs. now fact that it is a bipartisan agreement is the key to getting past of course that 60-vote filibuster-proof threshold that you always have to deal with in the senate. now the senate, however, is about to take a ten-day st.

patrick's day recess so the jobless package won't be taken up until after the senate returns. but again, this measure calls for those jobless benefits to be paid retroactively, then of course onto the house of representatives. >> all right. a big development. what are the prospects over in the house? >> reporter: well, the fact that the republicans on this bipartisan group found a way to pay for it, that was the real sticking point for both republicans in the house and senate. and it also doesn't hurt that among the leaders of this group is ohio's rob portman, john boehner of course the speaker of the house, fellow colleague, leading the charge again. and it's also you've got people in high republicans in high unemployment states like ohio, illinois and nevada were part of this group that crafted that extension. >> all right. hampton, thanks very much. hampton pearson reporting for us tonight from the nation's capitol. still ahead, what would it take to cause a national

blackout? a new report says not much. so how safe are our utilities? that story next. . will the trouble for general motors worsened today. the automaker now admits thought knew about ignition switch problems in some of its compact cars as early as 2001. now, that was three years earlier than previously reported. those faulty switches resulted in dozens of accidents and 12 deaths. phil lebeau joins us now from chicago with more on the deepening crisis at g.m.

you know what's questionable here, phil, if g.m. knew about the ignition all the way back to 2001 why didn't they do more about it? >> reporter: what's unclear when you look at the documents is whether or not this was looked at as an isolated incidents. the 2001 incident was actually a preproduction model, saturn ion that a technician saw stall. they looked at it, did some analysis, filed a report. there wasn't another report until 2003 when a dealership had a technician realize that there was a saturn ion that had a stall. another report was filed. so the question becomes, did they look at these as isolated incidents or did they look at this and say, this could be the tip of the iceberg of something bigger here? that's what investigators are still trying to determine. >> seems like they did fail to put two and two together or one and one together in this particular case. why i guess is really the story here. phil, the transportation secretary was up on the hill today and he was getting questioned about the recall. right. >> did the government drop the ball on this at all? >> reporter: a lot of people in

washington seem to think so. you had three accident investigations that were done by the national highway traffic safety administration, and there was no recall. in fact, there wasn't a recall until february of this year after they had a chance to analyze a multitude of more cases and examples. here's the transportation secretary defending how ntsba conducted itself over the last ten years. >> over the last decade there were complaints related to this particular vehicle, and despite three crash investigations and other research, the data was inconclusive. it just didn't point to a formal investigation. >> reporter: now, i know what a lot of people are going to say. you had more than 240 complaints about vehicles stalling an average of two per month. how could you not connect the dots here? that's the main question that's going to national highway traffic safety administration. >> that's a question that a lot of customers are going to be asking as well. what do you think customers need to hear from g.m. at this point?

and how forgiving can g.m. customers be? >> reporter: a lot more forgiving than you think. what do they need to hear from general motors? i think when it's all said and done whether that comes out in the next three weeks or two months from now when the investigations are over, they want to hear everything. not partial, not we think, not, well, there were some incidents but we looked the other way or we misjudged things. everything. get it out there. and i believe that mary barra, the ceo is going to take that approach. throw it all the out there, in effect saying we made a mistake here. they will be forgiving to a large extent, susie. remember what happened with toyota? they still had a lot of customers come back even after everything. >> that was some four years ago with the floor mats in the car. phil lebeau, thank you very much. things still troublesome at target. still feeling the effects of last year's massive credit card data breach that affected millions of its customers. published reports now say that a team of indian security experts working for the discount retailer and using a new malware

detection tool alerted target about a possible data breach on november 30th but that officials blew off the warning that. same team found more evidence of a hack attack on december 2nd and again there was no action taken at corporate headquarters in minnesota for weeks to come. investors, however, did take notice today. they sent shares of target more than 2% lower. shares of fire eye up about 3% on this down day for stocks. and here's another crucial security issue that poses big risks to the u.s. we could suffer a national blackout that could last for months if attackers knocked out the country's electric transmission substations. that warning came from a frightening new report from the government. so just how vulnerable is our electricity grid? eamon javers takes a look. >> reporter: a relatively small attack on u.s. electrical substations could render the country powerless for as long as 18 months. the u.s. government report was first revealed by the "wall street journal" this morning.

anytime the government estimated that a strategic physical attack on just nine of the country's nearly 60,000 substations on a hot day could cause an epic economic and social disruption. but industry representatives say they're already taking steps to shore up the system. >> we are facing new kinds of threats. i don't want to suggest we're complacent at all. what i do want to stress is that we are continually looking at ways to enhance physical security. >> reporter: last year, unknown gunmen fired weapons at this substation in san jose, california. the attackers fired for 19 minutes and knocked out 17 transformers. the attackers fled and have never been caught. although it didn't cause a blackout last year, the attack rattled power industry experts. >> the day after that attack we had companies on the phone talking to pacific gas and electric about what happened, how they dealt with it, sharing information. so we worked together in mutual assistance type approach in these sort of situations.

>> reporter: today the federal energy regulatory commission responded to the disclosure calling the "wall street journal's" reporting a sensitive information, highly irresponsible. he also said just last being it had issued new mandatory security guidelines for certain facilities. for "nightly business report," i'm eamon javers in washington. coming up, general electric is making a big move to focus more on its industrial business. we'll bring you the details up next. if you are an amazon prime subscriber get ready to pay more. starting in one week, the online retailer will raise the price of its popular service that offers free shipping and streaming

media for the first time in nine years from $79 a year to $99. the higher prices higher earnings. amazon was one of the few stocks ending the trading day a fraction higher. and if you sign up for amazon prime in the next week, you will lock in that cheaper rate for the year. general electric files for an initial public offering of its retail finance unit. that's where we begin tonight's market focus. the spinoff is the first step in the company's previously announced plan to exit the lending business and refocus on its industrial operations. g.e. named the new company synchrony financial and plans to sell 20% to the public. the rest will be distributed to g.e. shareholders. g.e. shares fell more than 1.5% to $25.34. some good news about pfizer's blockbuster vaccine. a major trial showed that the vaccine helps prevent pneumonia and other infections in elderly patients. the vaccine is already on the

market to treat children and adults. some analysts say if it's approved to treat patients over 65, sales could increase by $1 billion or more. despite that on this down day shares of the drugmaker were down more than 2.5% to $31.12. an update on zojenix. an ongoing story we've been telling you about. the head of the food and drug administration is defending the agency's approval of the controversial painkiller zohydro saying the drug offers a unique option to treat pain. but experts still oppose it, saying drug is too powerful and potentially addictive. zojenix rose 4.5% to $3.67. sotheby says its board rejected three directive candidates nominated by activist investor third point. the company's largest stakeholder. the auction house instead put up two names of its own. third point has been pushing for management changes at sotheby ess. shares fell to 34.79. >> general dollar's earnings

match estimates but revenue miss to the company issued guidance it fell well below estimates. it blamed the miss and the weak forecast on you guessed it severe winter weather. shares off about 3%, $57.64 there. new rubbermaid's graco brand adds more than 400,000 child seats to last month's recall of 3.8 million seats. the buckles on the problem products can jam. government regulators aren't satisfied. they warned graco to add 1.8 million more infant seats to the recall because they have the same buckles. shares of new rubbermaid fell about 4% to $29.58. and the hollywood studio lion's date will pay $7.5 million to settle s.e.c. charges that it misled investors during a hostile takeover battle with the activist investor carl icahn. the s.e.c. says the company participated in a complex debt equity swap that put company shares in the hands of a management-friendly director without shareholder approval.

the stock was down 3% today to $32.20. and finally tonight, a different kind of investment honoring the nation's national pastime. the san francisco mint announced plans to produce new commemorative coins featuring a baseball on one side and a baseball mitt on the other. the new coins have come out later this year as we celebrate the 75th anniversary of major league baseball's hall of fame. you can spend them. they come in $5, $1 and half dollar denominations. but don't use them in vending machines or toll booths. the coins are going to be curved. the first time of the mint will make a kind of bowl-shaped currency, giving new meaning to the word curveball. >> i hope everybody realizes how fascinated you are by this point. and when your birthday comes up, i'm getting it for you because that would be a home run, wouldn't it? >> a home run, right. >> that's "nightly business report" for tonight. i'm susie gharib. we want to remind you this is

the time of year your public television station seeks your support to make programs like this one possible. >> and i'm tyler mathisen. thanks so much for joining us tonight. and on behalf of your public tv station, thanks for your support. have a good evening, everybody. we'll see you back here tomorrow night. "nightly business report" has been brought to you in part by -- >> thestreet.com. founded by jim cramer, thestreet.com is an independent source for stock market analysis. cramer's action alerts plus service is home to his multimillion dollar portfolio. you can learn more at thestreet.com/nbr.

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