>> susie: too hot not to slow down. china says its red hot growth will slow slightly this year, sparking worry in stock and commodities markets around the globe. >> tom: from slowing global demand to higher gas prices, we take the temperature of the u.s. economy. >> i'm diane eastabrook in houston, where global energy leaders are trying to figure out a way to keep fueling the future. >> tom: it's "nightly business report" for monday, march 5. this is "nightly business report" with susie gharib and tom hudson.

"nightly business report" is made possible by: captioning sponsored by wpbt >> susie: good evening, everyone. discouraging economic news from china and europe led to a down day on wall street investors got jittery about the outlook for the world economy. china said it expects its economy to grow at 7.5%. to thas thslowest raten several years. >> tom: susie, since 2005, china has targeted 8% growth, but no longer. on top of that europe reported a drop in business activity in february.

the dow lost more than 14 points. the nasdaq fell almost 26 and the s&p was off by five points. >> susie: meanwhile, investors ignored positive news about the u.s. economy: the services sector grew better than expected in february. today's data is one of a recent batch of improving signals about the u.s. economy. suzanne att report >> reporter: what's up or down with the economy? a few months ago, it was widely believed the u.s. would hit a speed bump in the first half of this year. but, lately there are fresh signs of life. we learned just today the service sector expanded in february at its fastest pace in years. on top of that, stocks are on firmer footing with the s&p 500 up nearly 9% this year. most importantly, the unemployment rate has fallen for five straight months, dropping to 8.3% in january from 9.1% in august.

and, experts predict friday we'll get more good job market data, when the government releases its latest monthly snapshot. so, while the economy isn't great, it could certainly be a lot worse. >> relative to what consumers had feared, things are definitely a lot better. so they feel much better. even though on balance we're still dealing with a pretty bad labor market. >> reporter: when americans start feeling better, you know what at least some do. >> it's funny. i was shopping last night. i bought two suits, a dress and a warm-up outfit. >> you see more people going out to the restaurants, to shows. there's an energy and it's growing. >> reporter: to be clear, growth expectations haven't budged much with economists still predicting g.d.p. will increase only at an annual rate of 2% in q-1.

but, most talk of the r-word has stopped. >> the risks for a double dip recession have really diminished. we would have to see some type of major, unexpected shock to tip the economy into recession this year. >> reporter: as far as shocks go, oil prices really only top that list. some economists expect higher prices at the pump will trim half a percent off of g.d.p. this quarter. >> we're getting to the point where we're getting a little worried that consumers might hit a soft patch because of these gas prices. >> reporter: for now, it appears the economy is at least growing, maybe not at a healthy pace, but moving nonetheless. and, while conditions feel better, they could stand to get a lot stronger. suzanne pratt, "nightly business report," new york. >> tom: still ahead, tonight's word on the street: dips. jill malandrino of thestreet.com joins us to talk about whether investors should buy stocks as prices dip from the recent rally.

>> susie: economic realities battled political risks in world oil markets today. when the trading session finished in new york, oil prices ended up slightly following a crucial meeting between president obama and israel's prime minister. the key issue: iran's nuclear ambitions. over the weekend the president urged an end to quote "loose talk of war," but as darren gersh reports, that hasn't reduced the odds of a conflict. >> reporter: the president promised the israeli prime minister that the u.s. would always have israel's back, but it's not clear the two countries now see eye to eye. but on the key issue of iran's nuclear bitions, the president argued for time to let economic sanctions force iran to negotiate. >> we do believe that there is still a window that allows for a diplomatic resolution to this issue, but ultimately the iranians' regime has to make a decision to move in that

direction. >> reporter: and just in case the iranians misunderstand, the president stressed his policy is to prevent iran from gaining nuclear weapons. at the council on foreign relations, michael levi says that is a message iran should not ignore. i wouldn't underestimate the degree to which this white house is worried about an iranian nuclear weapon and if it feels that it is losing the opportunity to prevent iran from gaining a nuclear weapon. then it would not be surprising for the u.s. to take action. >> reporter: but the israelis are clearly worried their military is running out of time to act. and if israel attacks iran's nuclear sites, it can count on economic support from some persian gulf nations. >> i would expect the saudis to try and pick up production. they don't like the prospect of an iranian nuclear weapon no more than we or the israelis do and so they'll do to everything th can to help the confrontation but the question is how much can they crank up supply and how much do they have to off-set. >> reporter: some analysts predict iran would retaliate to a military strike with rocket attacks on israel and saudi arabia and on u.s. troops in

afghanistan. it could also close down the strait of hormuz, choking off supplies, sending oil shooting above $200 a barrel. but raymond tanter, a self- described hawk on iran, is less concerned. he says iran has no allies and few good options. >> if iran wants the united states in the military fight along side israel, iran then escalates and expands the war. >> iran is isolated, so i think iran will be cautious in its response. >> reporter: for all the president's warnings about loose talk of war, those who follow iran closely say the odds of an attack later this year are high, perhaps as high as 50%. darren gersh, "nightly business report," washington. >> susie: tensions with iran have pushed prices at the pump to an average $3.77 cents a gallon nationwide according to triple-a. >>om: sing fuel prices could thaten a fledgling u.s. economic recovery and it's shaping up to be a huge issue in this year's presidential

election. it's all the talk in houston this week where global energy leaders are in town for a summit on energy security. our diane eastabrook is there as well, diane? >> reporter: tom, houston is the epicenter of big oil here in the u.s. this is a city that likes high oil prices but not too high, obviously, because high pump prices can strangle the u.s. consumer. this afteron i spok wi guy caruso who say senior advisor for the center of strategic and international studies. and i began by asking him if he thinks high oil prices will be a key talking point in this fall's presidential election. >> i think energy prices definitely are going to be an issue in this election. mainly because of the relatively slow recovery and continuing high unemployment. there will be a linkage between energy prices and the economy. and both sides will try to

eitherlame o take credit for anything that is happening. >> reporter: what do you think the potential is of us he ising $100 a barrel oil through the summer and possibly into the fall? >> well, i think prices will stay very firm. and what could change that would be any developments in iran that could disrupt oil supplies. that would send prices higher, it's hard to say without knowing the exact scenario. but certainly 10 or $20 per barrelighe prices could happen in a moderate disruption scenario. >> reporter: so how important is it that the government approves the keystone pipeline. >> i think that's definitely part of the medium term solution, 3 to 5 yearsment because even if it were approved tomorrow t would be 2016 before the first oil would flow. so it's part of the solution but it's medium term. and i think that's one of

the things about energy is most things take time. new production, efficiency standards, those are five to ten or even longer time frames. >> reporter: permits to drill in the gulf of mexico since the moratorium to drill there was lifted have been rather flat since they were before the bp accident. are the government rules to drill too onerous for oil companies? >> it's definitely slower now, because of the additional rules and regulations. and oversight that has been put in place by the new organization within the department of interior. so whether it's onerous or not i guess that depends on your perspective. it's much more stringent now and it is slowing permits down. however, most companies are willing to do what they k of course, to meet those rules

and get-- so it will take a bit longer. but it's necessary in my view. >> reporter: so it kind of sounds like in the short term we could see a lot of volatility with oil prices. >> we're in for a period of votility in the short to medium term. and by that i mean the next 18 months to five years. because the market is so tight with respect to unused capacity, any relatively small event, even a natural disaster tends to put upward pressure on price. >> reporter: tomorrow i'll be talking to the textives from alternative fuel companies about how that industry is changing and becoming more competitive. >> susie: b.p. shares rose to their highest level in more than a year today. the stock closed just shy of $48 per share just 48 hours after the company reached a settlement with thousands of people and businesses hurt by the deepwater

horizon oil spill. as sylvia hall reports, this settlement could turn out to be much more expensive than the headline price. >> reporter: if the latest settlement is approved, b.p. expects to pay out $7.8 billion to fishermen, restaurant owners, hoteliers and a host of other residents along the gulf coast. that's much le than the $20 billion the company set aside back in 2010. but with no cap on the deal, tulane law professor ed sherman says b.p. could pay out much more than forecast. this settlement is welcome news to a large number of plaintiffs who have waited for b.p. to compensate them, hoping a court- supervised payout will come faster. >> i think there's hope that they will get their compensation quicker and in larger amounts than previously. >> reporter: this deal isn't the end of b.p.'s gulf coast troubles. next up, a battle with federal, state and local governments over environmental damages and other costs. these could prove to be tough and wrought with uncertainty.

>> there is concern about trying to determine exactly what the long term environmental impacts are of the oil spill. and that would have to be comprehended by the government actions to compensate for that. >> reporter: sylvia hall, "nightly business report," washington. >> susie: a federal judge has >> susie: a federal judge has cleared the way for alabama's largest county to proceed with

its bankruptcy. jefferson county, home to the city of birmingham, can move forward with its $4 billion bankruptcy, the largest municipal default ever. the ruling allows the county to restructure over $3 billion in debt tied to a sewer system overhaul marked by political corruption. creditors like j.p. morgan chase had argued jefferson county wasn't eligible for bankruptcy, because it had no bond debt. instead the debt was in the form of warrants. tom, here on wall street, pretty choppy day and it will probably be like that all week long as investors and traders wait for friday. it's a big day, you know why. that's when the jobs report comes out and everyone wants to see if things are improving in the jobs market. >> tom: we have to guy test those-- digest the game gains we saw in february. let's get you updated with tonight's market focus. the major stock indices climbed

out o a morning sell-off to end with more muted losses. after china reduced its economic growth target, u.s. stocks fell with added pressure coming from europe. but throughout the afternoon, the selling abated in the s&p 500, ending down a fraction. the losing sectors reflects the worries about a slower growing china. the materials sector dropped more than 1.5%. info tech stocks were down 1%. semiconductor stocks, specifically, weighed on the tech sector this trio fell by at least 5% each. chip makers advanced micro devices and micron technologies and chip test equipment maker teradyne. with worries about china in the headlines, its no surprise two do industrial stocks doing a lot of business in china pulled that index down. first, alcoa. shares dropped more than 3.5%, falling blow $10 for the first

time since the middle of january. and caterpillar fell more than 2%. this is cat's lowest price since the last day of january. one industry feeling the china ws, steel ocks about half of the world's steel appetite comes from china, so a slower chinese economy fueled worries about slower steel demand. a.k. steel dropped more than 5.5%. u.s. steel fell almost 5% and nucor was down about 2.5%. while gasoline prices continue to be in focus, natural gas has cooled to new decade lows. prices are below their late january lows as the warm winter is forecast to continue. new sources of natural gas have been filling up storage sites while demand has been weak thanks to the mild winter. the warm winter also has meant less electricity demand, hurting coal demand by utility companies. alpha natural resources was down 6%.

arch coal fell more than 5%. and peabody energy shed more than 4%. the relative calm winter has been good news for travelers: fewer delays for some airlines. u.s. airways credits the mild winter with a record low flight cancellation rate in february. still, shares fell more than 8% to a six week low. venue r available se mile, which is a key measure of growth was up in february by its smallest amount since june. meantime, onetime flights are improving at united continental three days after the merged airline combined its flight reservation systems. during the switch over, there were flight delays and problems with airport check-ins. shares dropped more than 2%. more americans seem to be putting money into their mattresses, really buying mattress. a trade group says mattress sales numbers were up 17% in january with revenues up almost twice that, meaning shoppers were buying higher priced mattresses.

select comfort shares continue to rally ending over $30 per share for the first time ever. stifel nicolaus was encouraged enough to increase its earnings and price target on the stock. finally, we saw some volatility with a trio of new dot-com stocks. online music firm pandora received an analyst upgrade. shares shot up 5.4%. online gaming company zynga fell 5% as a separate analyst downgraded shares due to their recent rally. and in its second day as a public company, online review website yelp cooled, falling 14.5%. and that's tonight's market focus. >> susie: shares of yahoo fell slightly today, they're off over 14% in the past year. but new c.e.o. scott thompson is working to change that. the all things digital blog reports major layoffs are on the way for the struggling web giant. they're part of a massive restructuring expected to be announced by the end of the month. motley fool analyst joe mayger

says with the turnaround, th new c.e.o. is following the lead of yahoo's very big competitor. >> scott thompson's pulling a page from larry page's playbook at google, where he's basically come in and he's looking at all of the parts of the business and shifting money from the ones that aren't working to the ones that are and larry page puts it as putting more wood behind fewer arrows. it's a really smart move and i think exactly what yahoo needs right now. mayger says the key for yahoo is unlocking its assets in china. he thinks that as soon as the company can sell its stake in alibaba, the sooner yahoo's stock price will turn around. >> tom: stocks have been

>> tom: stocks have been treading water over the past week or so, unable to find a eady direction. that brings us to tonight's word on the street: dips jill malandrino is with street.com. are are are jill, we're talking about dips as in buy on the dips, so a very common strategy but with the market marking time how do you know if this is just a pause in the rally or a reversal. we may see even lower prices, jill, you can hear us at the nasdaq, jill malandrino at the nasdaq again some of our technicalssues do continue he on nightly business report, we do apologise and as soon as we are able to make con toss-- contact with our folks in new york as in new york stock exchange with susie and at the nasdaq we will bring those details to you. in the meantime let's tell you about what is coming up tomorrow on nightly business report. no major economic indicates or earnings reports are on

the calendar. but supertuesday is coming, and from alaska to idaho to vermont, we'll see republican presidential primaries in ten state, supertuesday in-- supertuesday, we'll have some coverage. finally tonight, a major milestone for apple's app store. 25 billion downloads. it came over the weekend in china. a user there downloaded an ap called "where's my water?"-- a game from disney and won a $10,000 itunes gift card. the 25 billion downloads have happened on 315 million iphones, ipads and ipod touches and all in just four years. apple created the aps industry. it's paid out more than $4

billion to ap developers. interest rates may be great if you are trying to buy a home or borrow money but not so great if you are trying to save money, it can make it tough. what do you do when banks are paying next to nothing for the cash that you stash in their vaus? we recently spoke with financial planner larry swedroe that the spot that savers are finding themselves in. >> if you have cash in the bank, earning interest, you are luckly to be getting 25 cents for every 100 dollars on deposit. that's the impact of these record low-interest rates. larry is the director of research at buckingham asset management, he is with us again, nice to see you. >> pleasure. >> so how can savers maximize their cash in this era of low-interest rates for the next couple of years. >> that's a really important question. one of the ones i am getting asked the most. as soon as i hear that my first response is you are telling me you need more risk in your portfolio, is a no, i want more yield.

>> i want more reward, larry not risk. >> and it's really the same thing generally. and we think it's much better to take the risk on the equity side where you can diversify more effectively and you get the higher returns in a tax-efficient way. on the bond side you want to keep them safe. we don't want to be taking lots of risk because the risk in things lake junk bonds or other things like preferred stocks that brokers-- the risk can show up at the wrong time like in '08. so with the banks now what do wdo with our money. >> with the cash. >> with the cash. so the first thing i tell people is you need to kep disciplined, batt on the credit side, you don't want to be taking the risk because if we get another recession, those assets could get hit hard and you need this to be safe money. >> right. >> second thing is you have to keep discipline in keeping say your average maturity at five years. and that means not keeping everything short. >> uh-huh. >> people listen bill gross, for example, and said get short, rates can only go up, have you ever ised, missed out on that opportunity. >> so when we're talking about cash and you've got a

certificate of deposit coming due, for instance, is it essentially you're just going have to deal with the low-interest rates but go out maybe five years to try to get a little bit better bang. >> right, and i would say five areas is a good average maturity. it balances the reinvestment risk if rates fall. you still keep some of that yield and you don't take too much inflation risk on the other hand. >> tom: always go with f.d.i.c. insured. >> 100% of the time go. shop on-line, find the bank that happens to pay more. we work with a couple of banks now. about a half to three quarters of 1%. >> tom: a lot of folks want their bank in eir neighborod in their city but you can get higher rate if you go with an electronic bank. and that is nightly business report on monday march 5th. we apologise for so technical difficulties we have had. we'll see you on-line and of course right back here tomorrow night, have a great evening, susie. >> susie: thank you, tom. you know, it's live tv so just be patient with us. we'll be back tomorrow with a better show. good night everyone, hope to see you all of you again tomorrow.

"nightly business report" is made possible by: captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> tom: i'm tom hudson with a "nightly business report" news brief. china says its red hot economic growth will slow a bit. this year, it's aiming to grow its economy by 7.5%.

for the past six years, china's official economic growth rate has been 8%. the dow finished down 15 points. the nasdaq lost almost 26. the s&p 500 shed five points. the changes continue at yahoo. it's getting ready for a huge restructuring, which included thousands of layoffs, according to the "wall street journal."