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>> jobs jolt. an unexpectedly weak employment report raises doubts about the economy's health and sends stocks and bond yields lower. cuts coming. the president readies the budget proposal said to include controversial trims in social security and other entitlement programs. making his point. meet the quirky entrepreneur who earns money sharpening pencils. we have all that and more on this special jobs edition of "nightly business report." good evening, everyone. a miserable march for jobs and tyler, what a nerve-racking day for investors. >> it was way worse earlier and ended on a bit of an up note. a huge disappointment. that's how one investment strategist characterized the surprisingly weak job report. it was less than half as many as economists expected and less than third the pace in february. thep employment rateropped a tenth of a point to 7.6%, but only because so many people stopped looking for work.

the bleak report calls into question the health of the recovery, but investors didn't wait for answers. they sold stocks and bought treasuries. the dow did finish down 41 points at 14,565 and change. the s&p gave up roughly seven points, 1553 the close there and the nasdaq was off 21 points. the yield on the ten-year treasury closed at 1.71%. that's its lowest close this year hampton pearson has our report. >> reporter: the down turn in the retail sector was one of the biggest drags on job growth. in march, 24,000 jobs were lost and in an industry that had seen job growth average 32,000 per month for the past six months. leading economists point to the payroll tax hike and bad weather. >> we know same-store retail sales were very weak during the month of march with 20 to 30 degree below normal average

temperatures. ere you saw t j losses in clothing and apparel, many having to discount because they couldn't sell that spring apparel. >> reporter: in addition, manufacturers cut 3,000 jobs. after adding 19,000 jobs in february. the financial services lost 2,000 workers. the unemployment rate went down to 7.6%. but that's because at least half a million people simply gave up looking for work. people like debby graham. she went back to school and got a degree in human development. but one year later, she's not landed full-time employment. just lots of frustrating job interviews. >> i called it a waiting game. because you go on interviews and you wait for them to call you. no call. >> reporter: the postal service was the biggest government job cutter. losing some 12,000 employees. economists say we're just beginning to see the impact of the sequester, those across the board federal budget cuts.

some of the furloughs are going to start kicking in this month in april. so i think in coming months you'll see more of that. i think it's actually exactly the wrong medicine for an economy too waeak, but it's probably coming. >> reporter: even those with jobs are watching the spending, that's because wage growth is less than inflation. another potential drag on consumer spending and an economic recovery still moving at a snail's pace. for "nightly business report," i'm hampton pearson in washington. >> joining us with more analysis on the job numbers as well as the economy, michelle gerard, senior economist at rbs. so what's your take on this jobs report? is this a temporary blip or is this the beginning of more bad news of people looking for work? >> well, you know, i don't think that the economy and certainly the labor market is as weak as these numbers would suggest. but i do think it suggests that we, you know, the great numbers we had seen around the turn of the year probably not going to be, you know -- it's not going

to be the case we're going to see the labor market performing a lot better this year than last year. it's our view that we have seen this pattern, we get strong -- periods of stronger numbers and periods of softer numbers. looks like that's what we're seeing. the idea that we could have an upside breakout in growth or the labor market, i think this morning's report really dashed that. >> how could so many of the analysts have gotten it so wrong? >> my own forecast. >> halfway close. >> i'll tell you, this is what makes that march puzzling. i think this is why you have to take it with a grain of salt and like what we like to do, look at the trends. the truth is q-1 average, the average jobs we saw in first quarter are not that much different that what we had seen in the fourth quarter. i think that's again more signal of the things being the same than different.

but i'll tell you, like i was saying the number of people filing for unemployment benefits were down. we had some anecdotal evidence that firms are hiring in march. i mean, there was reason to think that the labor market was as strong as it was in february. that's why we had the numbers forecasting. >> but, you know, michelle, this headline is going to impact people. i'm talking about americans because there's been this perception that everything is coming up roses. jobs have been up. home prices have been up. stocks have been up. so what does this do to the feeling that wealth effect we talk about? does this undermine confidence? >> i think that's it. there was a feeling wow, maybe we're getting the kind of growth we have been waiting for for so long or getting the upward breakout and we can get better than 2.5%. the labor market will finally start to turn in the kind of performance we usually see in a recovery. that's what this morning's report i think said to me. all of that hope i just think was probably unfounded.

it really is going to continue to be a slow growth recovery whether we're talking about the labor market or the economy. it is kind of a disappointment for those of us who were hoping something more was going on. >> what do you think happened in march? some of the other data that had come out in recent days was checkered, ups and downs and sort of softening. what did you think happened? you think there's slow growth for the rest of the year. put a number on that for me. >> well, first of all, the firs quarter we'r looking at growth of close to 4%. and of course this is the same pattern that we have seen for the last three years. we come into the year a lot of optimism. the data surprises on the strong side. first quarter numbers look really good and then it fades in the spring. the fed was concerned about reading too much into the strength because they might get fooled again. i don't know why this pattern is so persistent, but that seems to be what's happening is once again the numbers are going to moderate here and as we move over the next couple of months

and certainly the sequesters makes it more likely. i think we'll see growth after the strong first quarter i mentioned of 4% settled back into the kind of 2.5% range. >> thank you so much. michelle gerard, senior economist at rbs. let's get a bit of market reaction. our market monitor guestsays the stock market is in a quote, corrective phase. he's a senior portfolio manager of huntington asset advisers. so pete, how much of a correction and when does it happen, how long does it last? >> well, i think we could really begin grinding out throughout the course of the earnings season. our view is that really the earnings growth started to slow last year and that the market had really started to get ahead of itself. we think a lot of cash came back in that had gone out for tax purposes. it wasn't the fundamentaling making a difference here.

so we think we could be in for a 10% percentage here. the market was getting close to the full year target. we think this could play ou uld be a gndingcrectn. we could see this go out over the next two to three months. >> let me ask you this, we saw a dramatic reversal in the dow today. it was down as much as 170 points. finally closed off 40 points. it seems like the stocks are resilient and the investors are kind of bullish. >> well, this is also a holiday week. this is unfairly light volume. i think people are still phoning it in from the beach at this point. no one wants to make huge bets because with we're coming into the earnings reporting season and if analysts get it wrong, then corporate earnings rebounded sharply. our view is that's not the case. nobody wanted to bet big this week on which way it would fall on earnings season. >> even though you think we're in a corrective phase, let's go down the list of the buying

opportunities. marathon, trading on the big board. now looking at this stock chart here, it was like $34 last summer. now it's up to $82. does it still have room to grow? >> yes, it was splitut. thi it ptur the drocbon renaissance. marathon is a great play to play that. that's a name that we think is not well understood. we want to own it on a dip. >> the other name you're talking about is general electric. the stock has been stuck in the $20 range for quite a while. why do you like it? >> one, they finished the divestitu divestitures. they have right sized ge capital. we think that's a potential upside in the health care sector now that we have the affordable re a iplac you get a 3% plus dividend, so we like that story. >> you have a tech story on your list. we know tech stocks have not

done well. cisco systems, it was hit hard today. >> they're getting out of the slow-growing business lines. they're buying businesses that have growth potential. if you talk to any businesses about where they're spending they're spending for productivity gains and they have continued to position themselves in the forefront there. as more goesver e ternet, they've tried to keep themselves in the sweet spot. we think any rebound is going to benefit cisco systems. >> all right. half a minute left, squeeze in're doiin dearing company. what's the story here? >> we think that's renaissance in agriculture and deere is the way to go that. farmers are spend on productivity, they're spending on equipment. and deere is a great global story in that particular industry and we think that's a greaplace t. >>ouoveredo man sectors including agriculture. thank you so much, pete.

do you have any disclosures to make? >> do not own any of those names personally, however we own all of them in our funds. >> excellent. have a great weekend. the obama administration is set to release the budget proposal next week and for first time the president's spending plan is said to include specific entitlement cuts, notably to social security. john harwood joins us from washington now with more. tell us about what the president is likely to propose. >> reporter: what he's doing, tyler, is embodying the last offer he made to house speaker boehner when they were negotiating around the fiscal cliff in december into his formal budget proposal. so for example, the so-called chain cpi for social security is in his proposal. that will reduce future payments and because of the effect on tax brackets cause some people's

ta taxes to go up to some degree. this is a president saying, see, i'm willing to compromise and all the flak he's getting only serves to underscore his argument. he's hoping to convince them to come to the table. >> will republicans go along with the idea that there's a revenue raise here as a result that people -- they'll be moved in the higher tax brackets? >> interestingly, republicans have said no more tax increases, but this is one set of tax increases they do support. this is a republican proposal which they pushed during the fiscal cliff talks. the question is going to be will they support additional revenue raisers which the obama administration says are necessary for them to go further on entitlements. this should not be seen as the last offer on entitlement reductions. more to come if we get into real negotiations this spring. >> john, address the whole timetable on this.

why is this release of the president's budget so -- we have the house and the senate who have passed their budgets and are we really going to get a deal? >> i don't know if we pe'll get deal, but this is lowering the temperature and part of doing that is for the president to do that himself who is a polarizing figure to step away from the discussion. let the house do its budget which they have done. the senate do their budget which they've done and now the president's trying to come in as peacemaker at the end. that's why they delayed the budget. >> john harwood, thanks very much. following up on a story from a few weeks ago, the federal aviation administration says it will delay plans to close air traffic towers. the funding including this one at frederick, maryland, was cut because of the sequester. the shut downs were to begin this sunday. and now the date is set for june

15th. ray lahood says it will allow more to prepare for the changes. now lahood said today that boeing has a good plan to fix the battery problem on its dreamliner jets. but he still wants to make sure that the boeing 787 are safe before he gives the final okay to fly again. they conducted the tests with the federal aviation officials on board to show them the new battery system is safe. 50 dreamliners had been grounded since january. now looking at the stock on a down market day as we have been telling you, shares were up nearly 1.5%. and coming up earnings season kicks off next week. we'll take a look at the likely leaders and the laggers. but first, a look at how the international markets traded today.

and to our market focus now. the worst performer in the s&p 500 today was netrk gear maker f-5 which warned that the revenues and earnings are going to be well below estimates. it was down more than 19% and pulled other networking companies down with it. juner the, siena, uniphase, all lower by as much as 3.6%. as you see there. about 3.53. drillers and energy explorers led the gainers as they hit the ghest levesince august o 20. ighborindustry, cabot oil and gas and neighbors gained almost 6%, cabot and wpx gaped

more than 5% on the day. on a day with a lot of red ink in the market, one company having trouble was in the green. j.c. penney, the shares rose as they roll out the new goods home boutique. the shares are up more than 2% today at $15.42. then after the close constellation brands says it's reached a deal in principle with the justice department. they had seeked concessions before allowing the mergers. constellation shares rose, gaining more than 3%. the stock had been down during the regular session. anheuser-busch down, but unchanged after hours. well, the corporate earnings brigade kicks into gear next week. alcoa will be the first to report and that's on monday. we'll interview the ceo after the results right here on monday's broadcast.

meantime, analysts have a tepid view of earnings season overall. they say results among s&p 5 firms will edge up about two-thirds of a percent compared to a year ago. that's all, however, our next guest has an upbeat outlook. good evening, christine and welcome. you think that earnings might go up something on the order overall of 4%. what do you see that the rest of the crowd doesn't? >> well, i think, you know, anyone who's followed earnings season we really start the season before alcoa with a conservative estimate from analysts. we looked over the past eight quarte and fod that on average from the week before alcoa reports to the time that earnings season is through, we see estimates go up by about 3.8%. so if historical trends are upheld, we can see between 4 to 5% growth. >> and yet, that is relatively slow. where will the standouts be? it won't be the cyclicals, will it? >> well, we're looking at a

couple of leaders this quarter. one is telecon. only eight companies within leco spnt and nexl haduc a terrible year in 2012, they're expected to do a little bit better in the first quarter. we're seeing metro pcs doing well. at&t and verizon. i think the real story is consumer discretionary, expected to be up 8.2%. similar to the fourth quarter, we are seeing the strength in the home builders there. so what sard beat estimates and reported growth of 225% when they reported. we are expecting dr horton to follow suit. we are seeing strength in the textiles and luxury goods sector afrme and a lot of the retailers expecting to post year over year growth. >> and one of theson categories is the home builders. does that sort of skew the numbers in a way that overstates how good those numbers might be?

>> i think almost every industry within consumer discretionary is expecting some year over year growth. but certainly home builders expecting 40% growth and textiles and luxury growth are expecting 50% growth. th're heavily weighted so that's bringing the overall sector higher. overall, all the industries within consumer discretionary are looking strong for the first quarter. >> the fourth quarter of 2012 was soggy, frankly. is that going to show up in the numbers that some of the industrials and the materials companies report this quarter when we get underway? >> well, analysts think so. especially for the industrials. they're expected to be the biggest lagger, down 2.5% is what the current estimate is. again, like i said, same story wi the frthquter. seei wkness withi machinery. that sector -- that industry expected to be negative year over year. you know, if you look at some of the numbers, caterpillar last

quarter did pretty poorly and they're expected to be down 40% in the first quarter. we saw fedex come out with some pretty poor numbers a couple of weeks ago. missing estimates by 15 cents. so we're expecting air freight and logistics to be down year over year. industrials being, you know, one of the biggest laggers. a second biggest lagger is energy. really that has to do with year overear energy costs although they're quite high right now. in the year ago they were higher. it's difficult to compare to first quarter in 2012. >> thank you for being with us. christine short of s&p capital iq. coming up next, the first in our series on entrepreneurs and we'll introduce you to this man who started his own business sharpening pencils. but first, a look at how treasuries, commodities and currencies did today.

finally on this jobs day, we begin a weekly series we're calling "bright ideas." stories about entrepreneurs who often turn the simplest of ideas into moneymakers and tonight it's all about positioning. as brian shactman tells us, if you can convince your customer your product is good, really good, they might just pay for it. even a well sharpened pencil. >> you want to do it with the knife? oh, that scares me a little bit. that's good, that's a good sign. >> reporter: sharp wit and sharp pencils have been very good to david reese. >> maid $20,000 sharpening pencils last year. >> reporter: lucrative hobby, run like a business, sound crazy? listen closely, there are

methods and a little bit of madness. >> i was a professional cartoonist, which is an amazing job. i was lucky to have it. but once its became my actual job it couldn't become fun and then i quit it. >> reporter: in 2010, he took a temp job knocking on doors for the u.s. census bureaus. his kit included a pencil and a sharpener. you don't use this anymore? >> no. >> reporter: when reese realized he liked sharpening pencils, he had an idea. >> i thought people would send me the pencils and i'd sharpen and then they'd send me the pencil. >> reporter: soon after, he launched a website. $15 for pencils including shipping and a signed certificate. it wasn't long before reese had to erase his business plan. don't you find it oddly i guess ironic that most people buy these and don't use them? >> yeah. i mean, frankly, it has been

a -- it was a complete refutation of my original business model. they keep them in the display tube as like a novelty item or a litt strange lite ar work. >> reporter: but he sold about 1,600 pencils in three years. is it disappointing that that's the case? >> it wasn't i did a good job with sharpening the pencil, but the real value i added, i was the guy that people paid to sharpen a pencil. it becomes like very conceptual. like a snake eating its own tail. >> reporter: reese is even particular about his pencils. remember these? reese says generals are the last number 2s made in america. jersey city, new jeey. he'll overanalyze the simple act of sharpening a pencil. a point he makes in his pack and teachings. >> i'm enjoying it. i don't know -- because you have to be mindful of this weird thing that you have done without thinking about it. you're trying to achieve some

certain aesthetic ideal you have in mind? >> reporter: hand made simplicity. an idea he got at hudson valley where lots of people sell food and wine that they call artisinal. >> that's like a marketing decision. that's how you convince people to spend $40 on a jar of pickles. >> reporter: he is charging $35 a pencil. >> this is what i love about my job. >> living in a dream land. >> seriously. this is my pencil. >> reporter: for "nightly business report," brian shactman, beacon, new york. >> i love that story. i'm told that business has been booming, that he's been raising his price -- raising his prices to push it. >> $20,000 he made sharpening pencils. nice pencils. >> simple ideas, you make big money.

that that's "nightly business report" for tonight. have fabulous weekend. >> thanks for joining us this evening. i'm tyler mathisen. see you back here on monday. remember to check in on nbr.com. "nightly business report" has been brought to you by -- >> the street.com. interactive financial multimedia tools for an ever-changing financial world. our dividend stock adviser guides and helps generate income during the period of low interest rates. options profits. helps educate beginning and seasoned options traders. action alerts plus is a charitable trust portfolio that provides trade by trade strategies. online, mobile, social media. we are the street.com.