captning sponsored by wpbt >> paul: inflation, at inflation? prices at the wholesallevel fall twices much as expected thanks to drops in produce prices and energy. and that has ilation worries dippearing from the recovery picture. >> susie: owing morehan your home is worth-its a growg problem leavinmany borrowers wi few alternatives: stay put, rent, or sell at aoss. we look at the optionss home prices connue to tumble. >> pl: hewlett-packard says its busine is stabilizing. but the maker of computers a printers still s a 19% drop in earnin as sales fell from year ago levels. >> susietarget and home depot are also coping with sagng sales.

but e retailers both boosted their outlook and that helpe stocks return toally mode. >> pau i'm paul kangas. >> susie: and i'm susie ghar. this is "night business reportfor tuesday, august 18. "nightly business report is made possle by: this program w made possible by contributions to your pbs station from vwers like you. thank you. >> susie: go evening, everyo. you can cross inflation off ur worry list. a new repo today from the labor departme shows that producer prices, aeasure of wholesale flation, fell almost

1% in julymuch better than pected. the so called core rate dropd unexpectedly b0.1%. at leastor now, the data is reassuring news for people concerned that inftion could make a comeback. erika miller reports. >> reporter: salad greenare costing a loless green at the wholesale vel. fallinproduce prices are one reason producer prices fl sharply last mth. t economist steven whiting says most shoppers pbably won't noti a difference at the checkout. >> in foodit's very intereing, that the more your process it, the re stable the prices a. that you absorb food cmodity prices in ose margins. but the's a little bit of pass through, so we'vbeen seeing some unusual if modest roll ck in final proceed food prices. >> reporter: one place whe nsumers may have seen a big difference was at e pump. wholese gasoline prices fell more than 10% in july and briefly shed up at the reta level. falling pric are clearly a

boon to businesses and conmers trying to sa money. the trend is also good f home buyers andeople who buy things on credi becausthe fed has greater leeway to hold off raising interest rates. but ere is a downside. economist jonathan basile ys today'data is bad for sinesses trying to boost earnings. >> you d't necessarily have the pricing power to genere an awful lot ofrofits. and to be honest, u probably don't ve a sustainable demand yet either. i mean, a lot of what's go on in terms of proving balance eets has been cost cutting. d labor is taking the brunt that. >> reporter: the big qstion is where ination heads from here. economists expecthe government'sassive stimulus forts will push up prices, eventually. but they strs, that's way down the road. >> this is just not an environment at's conduve to significanpick-up in inflatn. it's way too ely for that. >>eporter: so for now, consumers may find low pris are the "cart" that ences them to buy little something tra at the store.

erika miller, "nightly busins report", new yk. susie: mixed news today fro the housing sect: construction ofew homes dipped in july. the coerce department said housinstarts fell 1%. econists expected a slight increase. construction of single fily homes rose a bit butulti- fami units and condominiums fell sharply. those projec are more vulnerle to the credit nstraints facing some builders. applicatio of building permits an indicator of future actity were also do. >> paul: falli home prices have lefsome 16 million people owing mo on their mortgages than their properties are rth. that native equity situation is called being "underwar" in the home. and as stephanie dhue report until home prices stabize, moreortgage holders are going to be drowning in de. >> reporter:ealtor tony arko es first hand what negative equity does to homwners. he ss for many it has put an end to the idea moving up.

>> we're also seeing a lot o peopleho would normally sell thr property holding on to it, or renng it out, so now there are a fld of rentals on e marketplace prsing the rental rket. reporter: renting isn't always an opon for owners who are underwater. some pple can't afford to keep making payments, don't quafy for a loan mification and rely have the cash to make u the loss in a sa. at puts them in a tight spot >> reallthere's two options, if they ha to sell, it's eitherelling it short or rning the keys over and goin to foreclosure. those are rely only the two oices because cutting a chec for $100,000 is st not an option >> reporter: nationwide, deutsche bank predic more homeowners will be pled underwater. 27% of mortgage holderfind themselves ithat position now. t that number could climb to nearly half beforerices stabilize,hich deutsche bank expects will happen in 2011. search director karen weaver says distressed prerties aren't thenly thing dragging prices down.

>> in addition, we still he some issues th the availabili of credit, particularly in thhigh end, with wt are known as jumbo mortgages,e still have high unployment, we still have low conser confidence and all of these are contributingo weaker housing mand in the face of rising supply. >> reporter: mark zandof moody's economcom thinks that ediction is too gloomy. he says home prices e more affordle, now in line with rents, and thelowing of home cotruction will reduce supply. >> by this time next yr, when house pres stabilize, roughly 30% of homwners will be underwater, get to half, you have tsee much more measurable price declines. >> reporter: realtor tonarko says property ownersn trouble are firing out how to get their heads above water. >> if only 1-20% underwater, they see a fute, so they are going totay and do a lot more to stay in the propertthen meone who is 50% underwater.

>> reporter: in a housing st, itakes on average four years for home prices reach a bottomnd ten years to fully recover. econists expect the most severely underwar homeowners to give up long beforehat happens. stephanie dhue, ightly business rort", washington. >> paul: afterwo days to the downside wall street openewith a technical bound. some of thbuying was linked to better than expected resul from home depot d target. thatelped offset recent worries abouweak consumer seiment. so in a steady advance, the w posted a 74 pot gain by noon withhe nasdaq up 21 points. that report showing wholesale inflatn in july helped stocks hold their early gainsight on through the final bell.

>> susie: even though stocks rose today, many cporate exutives are selling their shares. thisptick in insider selling is often seen as an indicatoof market directi. joining us now to talk abo th and his market outlook, art hogan,hief market analyst at jferies and company. >> h right a.>> hi. what's your take on insider selling? is this a sig that investo shou lighten up a bit? >> it's interesting. we take that as a signal, an if you bow did back i history and ok at the markettiming, insider sales,t don't correlatvery well. what it does tell us, though.

is for the firstime in a peod of time there's a lot o insiders that feel they've gotten to aoint where they're not underwater, not underter on sharerices, meaning a lot insiders get their stk because compension. you know,magine, if you wil you receid stock as compensaon at $20 goes to $10, now it's a $22, and up the to make sale because you don't want to it go back to $10. that dsn't mean it will go to $10 or $25. typically th market sens a negative sigl. it's somethi to keep eye on. >> susieoverime, so many studiehave been done, the trends in sider selling mimics what's going to happen. inarch, insiders started buying up,hat was the beginning of the lly. now we're seeing themelling, people are saying thiss the beginning of a br market. should we take it seriously? >> yeah. ll, the combination of things we should take serusly certainly. insider seing is one piece of

that mosaic. certainly look the athe short interest that's ou there, you know, the entirety of e new york sck exchange and t nasdaq marketplace. that shortage has goneown. understand that thateans those folks who would have to cover those shorts are no longer in the maetplace as buyers. al understand we're heading to september, which is historically theorst month for the market. >>usie: right. >> think there's a lotf things to keep o eyen. the largest concern we have away from those three its is ceainly the consumeand how tightly the conmer's holding on to eir purse strings. >> susie: let me ask you, what's changed? there's been a sft in investor psychology it seems in theast week or s so whas cnged? >> whas changeds we've goen out o an earnings season, the second quarter tn earnings seaso which wases a plsant surprise. evybody was caught off-ard. i think people were underinvested in the market ming into earnings. there's aot of professional investors this market coming into earnings. i think the shorts t squeezed d people rushed int this market to catch momtum and to get involved, you know, when

they were underinvestein the marketple. so i think wee tten to a poinnow where we look at luations and say, wait a minute, ye, the secd quarter earnin were better, yet we still haven't en top line revenue. we've se corporate america's ability to cut costs. i thk wh's changed is we ne a maj catalyst to me us forwarhere or we we have to go rough a considating period. >> susie: what needs toappen fopositive buying? >> a few things. first of all, shift in psychology in thmarketplace righnow. i would arguthat right now people have been pricing ithe here andow, meaning we'll price exactly where we stand in terms oearnings growth and look at multipl as they pertain to the prese versus what the market hisrically does, which isorward-pricing, looking forward tohe first half of2010, expecting economic growth and earning growth, d art investing now for that growth looking forward. think what's happened, becau ofhis economic slow-down, is inveors have gotten used to

th okay, this company is not going bankru, i'll buy se now. ok, rnings were not as bad as expected, ll buy se of that now. that's living in the past and the present. investors have tstart looking at the future. that hn't happened yet, but that's the significant sft we'll se >> susie: all ght. gives your advice on what instors should do with their money right now. does it make sen to put n money into thearket right now? >> i would tell you three thin. first of all, ok at your investmentime horizon. if y've got a two-year investment time rizon or longer, it's goi to be a good time to get inhe market, but the's not -- there's not an immeacy, a rush. you don't have to rush into this marketple. take your time. make your -- make yr shopping list of stocks,uy on llbacks or iest graduly. the other thing i wod look at, too, look at your threshold for volatility, because we'll have more volatili, not just over the next two months, but over the next two years. if you don't have thetomach fothe kind of volatility, understanding yesterday we re down 2%, today up a percent, those are pretty big moves. >> susie: rht.

>> y might no to be overexsed. the third thg is look at what you think is goi to happen for the next 12 mths. we tnk 2010 will have growth, but slow growth. wh's important in a slow growth econo, what's going to do well? technology alws does well in a slow growth economy. weeed more technology to make us more productive. that's going to be aeader. >> sie: we ha 30 seconds. so followinghose guidelines at you just told us aut, gives one or two stockshat you think make sense t put money in right now. it's very interesting. look at chnology as the top 10 market capitalizion stocks in tenology could buy the next 90 in the top 100. that's how mh cash is on the p line. look at that bottom 90, and look at the viable takeoutandidate, twstocks w talked about today, emc and cisco. th're doing very well. th've got money to spend. they could me very srt acquisitns. >> susie: alright, emc and cisco. thk you so much for the tip.

thk you so much, art, for coming on the ogram. >> susie: guest tonight: art hogan chief market analystt jefferies and mpany. >> paul:ome depot's second arter earnings fell 7% as it cut costs to offseweak sales. excluding items, t home- imovement retailer earned 64 cents a share, bting wall street expectations. home depot alsraised its ouook for the full-year as its tal number of transactions i the u.s. increased year-ov- year for the fst time in five ars. saleof small items increased but ho depot says consumers are stilreluctant to spend money on major renovations.

>>usie: hewlett packard also reported better th expected quartey earnings after the bell today. excluding items earned 91 cents share, a penny better than analysts expected. revenufor the world's largest maker of personal compers fell 2% to 27 billion. sales of printer suppls, computers and rporate hardware e down. t hp sees some improvements its consumer pc siness. d paul, looking ahead, the company expects to en $1.12 a share in the current quarter mh stronger than alysts thought. >> paul: but sie, in after hour shares of hewlett packard dropped abou2%, when the c.e.o. said thfirm may face continuing weakness inurope. now, let's take a look at me other stocks ithe news tonight.

and those arthe stocks in the news tonight, susie. >> susie: ul, the cash for unkers program is making a u turn. sales fell 15% last ek, according todmunds.com the car shopping website. edmonds predicts sales wildrop even more ov the next few wes. industry experts bieve shoppers intested in "cash for clunkers" have aeady participated in the prram and ambivalent consumers are steering away. well, despite th prediction, genel motors is boosting oduction at several of its factories. encouraged bhigher sales from the "cash for clunkers" progm. the automaker ys it will build ,000 more vehicles than planned fothe third and fourth quarters. two g.m. vicles, the chevy

malibu and the chevyobalt have been popul with consumers participatinin the gornment's rate program. since last monthdealers have reported shortagesf both. the move will ing more than 1,30laid-off workers in the us and canada back to t assembly lines. a plant in ohio ll add a shift, whi another in michigan will increase overtime. paul: ford motor is chargin ahead with plans to brg electric vehicles to theasses. it's wking with a dozen utility mpanies and the partment of energy on a smar charging system that willet electric cars talk to powe grids across theountry. ford says the system wl let owners control when they crge thr vehicles and for how long. its fit battery electric vehicle, the trans connect commercial vanomes to market next and a batteryowered ford focuis due in 2011. >> susie: mewhile, chrysler creditors are suing daimr ag for billionsf dollars. they're accusing t german automaker of strping chrysler

of assets before selling it cerberus capal management two years ago. the creditors claim daimledid that when it separated cysler fincial from its american car- making parent. now, cysler creditors want a jury to hear the case d decide damages. daler says the case is without merit. >> paul: tomrow, while this looks like a normal trading oor second market's making a market in things you can'trade anywhere els >> susie: the white houssays esident obama's pay czar wil review t $7-million pay paage being arranged for a.i.g.'s new.e.o. a spokespersonor the president id a.i.g. needs good compete leadership that n return the bail out insurer to ofitability. still, incoming o robert benmoschcould earn millions more in performance-based incentives. last fall, taxpayers paid $1 billion to bail t a.i.g. >> paul: just in te for the hodays, sony is cutting the

price its play station 3 by $100, to 299 bks. it's also launching a aller model with a 120 gigbyte hard drive xt month. play stion sales have fallen behind microsoft's "x-box"nd ninten's wii. but sony's c.e.o. thin nsumer reaction to the price cuts will be "enomenal."

>> susie: here's a lk at what's happeng tomorrow: >> susie: tonight'of mutual intere commentator says there's a chan underway in the mutual fund market with grth funds gaining vor. he's john waggoner mutuafund columnist atusa today." >> everything goes in cycl. in t spring, the swallows return to capistrano. in the summer, the perse meteor showers lht up the heaven and every ten ars or so, growthunds return to favor. this is onof those times. stk-fund managers fall into two camps: value androwth. value managers look fobeaten- up stockthat will return to wall street's graces. growth managerlook for stocks companies with potentially huge earnings grow. value has been the winner r a decade. t now growth stocks are on t rally, and there a good reason fothat.

grow stocks fare best with growth is hard to find. in a sluggish economy,nvestors adore thfew companies whose earnings are soaring. the economy is probably stting to grow now,ut few are looking for rip-snorting growth. and there are two very good reasons for that. the first is interesrates. when rates rise,orrowing becomes re expensive, and it becomes harder for compaes to borrow andxpand. short-rm interest rates are currently zero, or very ose to it. so it's a go bet that rates ll rise in the future, and that could keep econic growth muted. gin the soaring deficit and the fact that taxes e their lowest in decades 's likely that taxes will rise in the future, too. though paying the debt is a good thing, risingaxes typically daen the economy. and,n a rare alignment of investing, growth stoc are so cheathese days that even some value managers areooking at them. the drawback to growth funds when they fall, ey fall hard. but managent styles often remain in fashion for five yrs or more. yowon't have to wait until the next cycle to jump on. i'm john waggoner. >> pl: recapping today's market action stocks rebou after yesterday'selloff.

the dogained 82 points and the nasdaq added 25 pots. to learn more about the ories in tonight broadcast, to watch our streaming video and toake part in oudaily blog, go t "nigly business report" on pbs.org. you caalso email us at r@pbs.org. susie: that's "nightly business report" for tuesday august 18. i'm susie gharib goodnight, everyone. and good night to you, pl. paul: goodnight susie. i'm paul kangas wishinall of you the be of good buys. "nightly business rert" is made psible by: th program was made possible by contributionso your pbs

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