ptioning sponsored by wpbt >> paul: inflati, what inflation? prices at the wholale level fall tce as much as expected thanks to drops in produ prices and energ and that h inflation worries disappearing from the recove picture. >> susie: owing re than your home is woh-- its a growin problem leaving ny borrowers withew alternatives: stay put, rent, or sell at a ls. we look at the optns as home pricesontinue to tumble. >> pau hewlett-packard says its businesss stabilizing. t the maker of computers and printers still saw 19% drop in eaings as sales fell from year ago levels. >> susie: rget and home depot are also coping with saggi sales. but thretailers both boosted

eir outlook and that helped stocks return to rly mode. >> paul:'m paul kangas. susie: and i'm susie gharib this is "nightlyusiness report" r tuesday, august 18. "nightly business report" is made possib by: this program wasade possible contributions to your pbs station from viers like you. ank you. >> susie: goodvening, everyone u can cross inflation off yo worry list. a new reportoday from the labor departmenthows that producer prices, a msure of wholesale ination, fell almost

1% in july, ch better than excted. e so called core rate droppe unexpectedly by 1%. at least f now, the data is reassuring news for people concerned that inflaon could make a comeback. erika miller reports. >> reporter: salad greens e costing a lot ss green at the olesale lel. falling oduce prices are one reason producer prices fel sharply last mon. bueconomist steven whiting says most shoppers probly won't notice difference at the checkout. >> in food, 's very interestg, that the more your process it, the mo stable the prices are that you absorb food comdity prices in the margins. but thers a little bit of pass through, so we've en seeing me unusual if modest roll ba in final process food prices. >> reporter: one place where coumers may have seen a big difference was at thpump. wholesalgasoline prices fell more than 10% in july and briefly show up at the retailevel. falling pricesre clearly a

boon to businesses and consurs trying to saveoney. the trend is also good forome buyers and pple who buy things on credit. because e fed has greater leeway to hold off raising interest rates. but the is a downside. economist jonathan basile sa today's ta is bad for bunesses trying to boost earnings. >> you don necessarily have the pricing power to generatan awful lot of pfits. and to be honest, yoprobably don't ha a sustainable demand yet either. i mean, a lot of what's gonen in terms of imoving balance shts has been cost cutting. anlabor is taking the brunt of that. >> reporter: the big queion is where inflion heads from here. economists expect e government's msive stimulus efrts will push up prices, eventually. but theytress, that's way down the road. >> this is just noan environmt that's conduci to significant ck-up in inflatio it's way too ear for that. >> rorter: so for now, consumers may find low price are the "carrot" that entis them to buy a ttle something exa at the store. ika miller, "nightly busines

report", new yor >>usie: mixed news today from the housing sectorconstruction of n homes dipped in july. the commce department said housing arts fell 1%. economts expected a slight increase. construction of single famy homes rose a bit but mti- familynits and condominiums fell sharply. those projectsre more vulnerab to the credit cotraints facing some builders. applicationsf building permits an indicator of future activy were also down >> paul: fallingome prices have left me 16 million people owing moren their mortgages than their properties are woh. that negive equity situation is called being "underwate in the home. d as stephanie dhue reports, until home prices stabile, more mtgage holders are going to be drowning in debt >> reporter: rltor tony arko se first hand what negative equity does to homeoers. he sayfor many it has put an end to the idea ofoving up.

we're also seeing a lot of people w would normally sell theiproperty holding on to it, or renti it out, so now there are a flooof rentals on th marketplace presng the rental maet. >>eporter: renting isn't always an opti for owners who e underwater. some peoe can't afford to keep making payments, don't quali for a loan modication and raly have the cash to make up the loss in a sale th puts them in a tight spot. >> really ere's two options, if they haveo sell, it's either sling it short or tuing the keys over and going to foreclosure. those arreally only the two choices because cutting a eck for $100,000s just not an opon. >> reporter: nationwid deutsche bank pricts more homeowners will pulled underwat. 27% of mortgage hoers find themselv in that position now. but that number could climto nearly half bere prices stabile, which deutsche bank expects will happen in 21. research director karen weer says distressed propties aren't the oy thing dragging ices down.

>> in addition, we still hav some issues wi the availabilityf credit, particularly in the gh end, with whaare known as jumbo mortgages, wstill have high unemoyment, we still have low consum confidence and all of these are contributing tweaker housg demand in the face of rising supply. >> reporter: mark ndi of moody's ecomy.com thinks that prediction is too gloomy. he says home prices armore affordab, now in line with rents, and the swing of home consuction will reduce supply. >> by this time next yea when house pric stabilize, roughly 30% of homeoers will be underwater, toet to half, you have to e much more measurable price declines. >> reporter: realtor tony ko says property owners itrouble are figung out how to get their heads above water. >> if only 10%0% underwater, they see a futur so they are going to sy and do a lot more to stay in the property en soone who is 50% underwater.

>> reporter: in a housing bu, it tes on average four years for home prices toeach a bottom a ten years to fully recover. economts expect the most severely underwatehomeowners to give up long bere that happens. stephanie dh, "nightly busine report", washington. >> paul: aer two days to the downside wall street oned with a technil rebound. some othe buying was linked to better than expected rults from home det and target. at helped offset recent worries out weak consumer sentiment. so in a steady advance, e dow posted a 7point gain by noon th the nasdaq up 21 points. that report showg no wholesale ination in july helped stocks hold their early gns right on throh to the final bell.

>> susie: even though stks rose today, ma corporate executives are selling their shares. is uptick in insider selling is often seen as an indicator market direction joining us now to talk about thatnd his market outlook, art hogan, cef market analyst at jefries and company. >> hi,ight a.>> hi. >>hat's your take on insider selling? is this a sign that investors shouldighten up a bit? >> it's interesting. take that as a signal, and if you bow did back in history and lo at the market ming, insider sales, i doest correlate ry well. at it does tell us, though.

is for the first te in a peri of time there's a lot of siders that feel they've gotten to a pnt where they're not underwater, not underwar onshare pces, meaning aot of insiders get their stoc because of compensatn. you know, igine, if you will, you receive stock as compensati at $20, goes to $10, now it's at $22, and up the to make a le because you don't want to it go back to $10. that doe't mean it will go to 0 or $25. typically the market senses negative signa it's somethingoeep anye on. >> susie: er te, so many studies ve been done, the trends in inder selling mimics what's going to happen. in mch,insiders started buying up, tt was the beginning of the rally. now we're seeing em selling, so people are saying is ishe beginning of bear market. should we take i seriously? >> yeah. well, the combination o things we should takeeriously certainly. insiderselling is one piece of

that mosaic. certainly look t at the srt interest that'out there, you kn, the entirety of the new yo stock exchange and the nasd marketplace. that shortage has ne down. understand that that means those folks who would have to cover those shorts areo longer thmarketplace as buyers. also understand we're heading into september, which i historicallyhe worst month for the market. >> susie: right. >> i think there's aot of things to kee our eye on. the largest concern we he awa from those three item is certnly the consumer d how ghtly the consur's holding on to thr purse strings. >> susie: let me ask you, there's been a shift in investor psychology it seems inhe last week or so. sohat's changed? >>hat's chaed is we've gotten o of an earnings season, the second quart than earnings sson, which wases a pleasant surprise. everybody was caught f-guard. i thk people were underinvested in the market coming into earnings. there'a lot of professional investors this mart coming into earnings. i thinkhe shos got squeezed and people rushednto this market to catchomentum and to ge involved, you know, when

ey were underinvted in the markplace. so i thinkwe've gotten to a int now wherewe look at valuations and say, wait a minute,yeah, theecond quarter eaings were better, yet we still havet seen top lin revenu we'vseen corporate ameri's ability to cut costs. thinkwhat's changed i we ne a major catalyst to mov us forward reore we have to go thugh consolating period. >> susie: what needs to hpen for sitive buying? >> a few things. first of all, a ift in psychology in the rketplace right w. i would argue at right now people have been pricing in e here and n, meaning we'll ice itxactly where we stand in terms of rnings growth and look at multiples as they pertain to the presentersus what the market histocally does, which is fward-pricing, looking forward to t first half of 10, expecting economic growth and earnings growth, an stt investing now for that growth looking forward. i ink what's happened, because of ts economic slow-down, is invests have gottenused to

the,kay, this company is not going bankrupti'll buy som now. ok, eaings were not as bad as expected, i' buy somof that now. that's livingin the past and the present. investors have to art looking at the future. that hast happened yet, but that's the significant shi we'll see. >> susie: all rit. give uyour advice on what inveors should do with their money right now. does it make sense to put new money into the mket right now? >> i would tell you three things first of all, lo at your investment te horizon. if youe got a two-year investment time hozon or longer, it's goingo be a good time to get in t market, but thers not -- there's not an immediy, a rush. you don't have to rush into this marketplac take your time. make your -- make you shopping list of stocks, b on pubacks or invt gradual. the other thing i woul look at, too, look atour threshold for volatility, because we'll have more volatilitynot just over the next two months, but over e next two years. if you don't have the smach for e kindf volatility, understanding yesterday we we down 2%, today up a percent, those are pretty big moves. >> susie: rig. >> you might not toe

overexpod. the third thinis look at what you think is goingo happen for the next 12 mons. we thi 2010 will have growth, but slowrowth. what important in a slow growth economy what's going to do well? technology alwaydoes well in a slow growthconomy. we nd more technology to make more productive. that's going to be a lder. >> sus: we have0 seconds. so following tse guidelines th you just told us abo, give u one or two stocks tt you think make sense to put money in right now. >> it's very interesting. look at tenology as the top 10 market capitalizatn stocks in techlogy could buy the next 90 in the top 100. that's how muccash is on the toline. look at that bottom 90, and look at the viable takeout cdidate, two ocks we talked about today, emc and cisco. theye doing verywell. theye got money to spend. they could mak very sma acquisitio. >> susie: all ght, emc and cisco. thanyou so much for the tip. thanyou so much, art, for

coming on the prram. >> susie: myuest tonight: art hogan chief market analyst a jefferies and coany. >> paul: he depot's second quter earnings fell 7% as it cut costs to offset ak sales. excluding item the home- imprement retailer earned 64 cents a share, beang wall street'sxpectations. home depot also ised its outlk for the full-year as its tol number of transactions in the u.s. increased year-over year for the fir time in five yes. sales small items increased but homeepot says consumers are still luctant to spend ney on major renovations.

>> sie: hewlett packard also reported better thanxpected quarterlearnings after the bell today. excluding items hparned 91 cents a are, a penny better than analysts expected. revenue r the world's largest maker of personal computs fell 2% to 27.5illion. sales of printer supplie computers and coorate hardware ardown. buhp sees some improvements in its consumer pc buness. anpaul, looking ahead, the company expects to ear$1.12 a share in the current quarter muc stronger than anysts thought. >> paul: but sus, in after hours,hares of hewlett packard dropped about , when the c.e.o. said the rm may face continuing weakness in eope. now, let's take a look at so other stocks in e news tonight.

and those are e stocks in the ws tonight, susie. >> susie: pa, the cash for clkers program is making a u- turn. sales fell 15% last we, according to eunds.com the car opping website. edmonds predicts sales will op even more overhe next few week industry experts belve shoppers interted in "cash for clunkers" have alrdy participated in the progm and ambivalent consumers are steering away. well, despite thatrediction, generamotors is boosting pruction at several of its factories. encouraged by gher sales from e "cash for clunkers" progra the automaker sa it will build 6000 more vehicles than planned for e third and fourth quarters. two g.m. vehles, the chevy

malibu and the chevy calt have been popularith consumers participating the govement's rebe program. since last month, alers have reported shortages oboth. the move will brg more than 1,300 id-off workers in the us and canada back to thessembly lines. a plant in ohio wi add a shift, whilenother in michigan will increase overtime. >>aul: ford motor is charging ahead with plans to brin electric vehicles to the mses. it's worng with a dozen utility coanies and the dertment of energy on a smart charging system that will t electric cars talk to power grids across the cntry. ford says the system willet owners control when they chae theivehicles and for how long. its firsbattery electric vehicle, the transitonnect commercial van ces to market next and a battery pered ford focus due in 2011. >> susie: meanile, chrysler creditors are suing daimleag for billions odollars. they're accusing theerman automaker of stripng chrysler assets before selling it to

cerberus capit management two ars ago. the creditors claim daimler d that when it separated chrler finaial from its american car- making parent. now, chrler creditors want a jury to hear the case andecide damages. daimr says the case is without merit. >> paul: tomorw, while this oks like a normal trading floor second market's making a market in things you can't tde anywhere else. >> susie: the white house ys prident obama's pay czar will review the7-million pay packe being arranged for a.i.g.'s new c.o. a spokesperson f the president sa a.i.g. needs good competent leadership that careturn the bailedut insurer to pritability. still, incoming cerobert benmosche uld earn millions more in performance-based incentives. st fall, taxpayers paid $182 billion to bail oua.i.g. >> paul: just in timfor the holiys, sony is cutting the price ofts play station 3 by

$100, to 299 buc. it's also launching a smler model with a 120 giga-te hard drive ne month. play staon sales have fallen behind microsoft's "x-box" a nintendo wii. but sony's c.e.o. thinks coumer reaction to the price cuts will be "phomenal."

>> susie: here's a looat what's happeni tomorrow: >> susie: tonight's mutual interestommentator says there's a changenderway in the mutual fund market with grow funds gaining far. he's john waggoner mual fund columnisat "usa today." >> everything goes in cles. the spring, the swallows return to capistrano in the summer, the pseid meteor showe light up the heens. and every n years or so, grth funds return to favor. this ione of those times. stock-fund managers fall int two camps: valuend growth. value managers loofor beaten- up scks that will return to wall street's graces. growth maners look for stocks of companies with potentiay huge earnings owth. value has been the winr for a decade. but now growth stocks are the rally, and tre's a good reason for that.

owth stocks fare best with growth is hard to fi. in a sluggish econy, investors adorthe few companies whose earnings are soaring. the economy is probablstarting to grow w, but few are looking for rip-snorting growth. and there are two very gd reasons for th. the first is intest rates. when rates re, borrowing becos more expensive, and it becomes harder for cpanies to borrownd expand. sht-term interest rates are currently zero, or vy close to it. so it's good bet that rates will rise in the future, a that could keep onomic growth mud. given the soaring deficit an the fact that tas are their lowest in decas it's likely that taxes will rise in e future, too. although paying the debt ia good thing, ring taxes typicalldampen the economy. d, in a rare alignment of investing, growth ocks are so eap these days that even som value managersre looking at th. the drawback to growth fds: when they fa, they fall hard. but magement styles often remain in fashion for fi years or more. you won't have to wait untilhe next cycle to jumpn. i'm john waggor. paul: recapping today's market action stocks round after yestery's selloff.

thdow gained 82 points and the nasdaq added 2points. to learn more about the sties in tonight'sroadcast, to watch our streaming video and to te part in our ily blog, go to "night business report" on pbs.org. you can so email us at nbpbs.org. >>usie: that's "nightly business report" for tueay, august 18. i'm susie gharib goodnight, everyone. and good night to yo paul. >> paul: goodnight susie. i'm paul kangas wiing all of you thbest of good buys. "nightly businesreport" is ma possible by: thisrogram was made possible by contributions tyour pbs

statn from viewers like you. thank you. ptioning sponsored by wpbt captioned by media accessroup at wgbh cess.wgbh.org