>> we need to reduce our dependence on foreign oil, we need to do it for security reasons and we also need to do it because we can create jobs for america. >> susie: the white house launches a plan to open miles of america's coastlines to offshore drilling. >> tom: some critics worry about having oil rigs so close to home while others say the president's plan doesn't go far enough toward energy independence. you're watching "nightly business report" for wednesday, march 31. captioning sponsored by wpbt this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:

this program was made possible by contributions to your pbs station from viewers like you. thank you. >> susie: good evening everyone. president obama announced today a bold plan to drill for oil off the u.s. coastline. tom, the plan reverses a ban on offshore drilling that's been in effect for 20 years. >> tom: susie, the announcement came on a day when oil prices closed in on $84 a barrel; a 17-month high. high oil prices are just one reason the president wants to reduce u.s. dependence on foreign oil and build up domestic energy supplies.

>> susie: the real impact of this new policy is many years away. but as stephanie dhue reports, it still stirred up lots of criticism from lawmakers and environmentalists. >> reporter: in a speech at andrews airforce base, president obama called his proposal to open up offshore drilling both a national security and an economic issue. >> given our energy needs, in order to sustain economic growth and produce jobs and keep our businesses competitive, we are going to need to harness traditional sources of fuel even as we ramp up production of new sources of renewable, homegrown energy. >> reporter: the president would open up the gulf of mexico and end a longstanding moratorium on oil exploration along the east coast from delaware to florida. alaska's north slope would also be opened, but the proposal keeps drilling off-limits in that state's bristol bay. the oil industry says developing offshore resources could help generate more than a trillion dollars in revenues. shell oil launched production

from the perdido development, deep in the gulf of mexico, today. company president marvin odum says opening up new areas is a big step forward. >> the eastern gulf of mexico is not far from where this project is starting up. it will open up new areas where we can put in more projects like this and supply significant amounts of energy to this country. >> reporter: while critics worry about oil spills close to home, the administration says new technology makes that less likely. the president's calling on congress to pass comprehensive energy and climate change legislation. white house climate change advisor carol browner says the president's support for drilling may open up that debate. >> i think it is bringing some people's attention to this administration saying, wow, maybe we didn't expect them to do those kinds of things, but we're glad we're doing those sorts of things, whether it be the nuclear loan guarantee or opening up some areas for drilling. >> reporter: the offshore drilling proposal faces criticism. house republican leader john boehner said it doesn't go far enough, and that it was a mistake to keep the west coast

off-limits to drilling. some environmentalists are fuming. environment america's anna aurilio says swapping oil rights for climate change support is a mistake. >> there's no need to threaten our coasts and our beaches and our wildlife with oil spills and pollution; we have much better solutions to save oil. >> reporter: it will be at least a couple of years before oil flows from any newly opened areas. shell's perdido project was 14 years in the making. stephanie dhue, "nightly business report", washington. >> tom: here are the stories in tonight's "n.b.r. newswheel". worries about jobs and higher oil prices took stocks lower. the dow fell 50 points, the nasddaq lost 12 points, and the s&p 500 was off nearly four points. trading volume picked up today for both the big board and the nasdaq. stocks were under pressure as payroll processor a.d.p. said by its count, u.s. businesses cut 23,000 jobs in march. that was a surprise because most

economists expect job growth in friday's employment report. the federal reserve bid farewell today to its 15-month buying spree in the mortgage backed securities market. mortgage rates have started inching higher as the end of the fed's $1.25 trillion program neared. but dallas fed bank president richard fisher today said a restart of the program is unlikely. speaking of exit plans, morgan stanley will earn at least $24 million, and as much as $135 million for selling uncle sam's citigroup stock. the take depends on how the shares are sold; electronically or the old fashioned way. still ahead, putting wall street's first quarter to bed and getting a start on the quarter to come. standard and poor's sam stovall says we'll start the traditionally strong 2nd quarter at 18-month highs. >> susie: how is the economy doing? i mean, how is it really doing? the answer depends on how you interpret two important measures of the u.s. economy: the g.d.p.

and the g.d.i. what are they and why are they being debated? scott gurvey explains. >> ♪how does it feel >> reporter: well, how does it? yes, i'm talking to you. if you're like most of us, it still does not feel good out there. this is surprising because the widely followed gross domestic product, which measures the dollar value of goods and services produced, turned positive in the third quarter of last year. but there is another measure, the rarely noted gross domestic income, which tracks what people actually get paid for those goods and services. christopher low of f.t.n. financial says it tells a different story. >> when you look at the g.d.i. data today, what it shows is that the recession was deeper than g.d.p. shows in '08 and '09, and it also shows that the recovery came a quarter later. in other words, when economists were crowing because we finally had growth in the u.s. and

people on the nightly news were saying "gee, i don't feel any better", it turns out those people were right. >> reporter: this is not just an academic debate. policy makers base decisions which effect us all based on the numbers they follow. they increase government spending and extend benefits during a recession. they raise interest rates following a recovery. laksman achuthan studies business cycles. he says you can't just follow the g.d.p. or the g.d.i. >> that's too simplistic. too narrow. it's really got to be a collection of big measures of activity. we look at income, production, like g.d.p. we look at jobs, jobs growth, the unemployment rate. we also look at sales, how much stuff is being sold, bought and sold. >> reporter: it's not just government which bases decisions on these numbers. consumers and businesses adjust buying and hiring habits to adjust for mood. this time around it appears small businesses are slow to share in those good feelings. >> when the economy began to

grow last year, small businesses did not take part in that. we've heard from countless sources, like the national federation of independent businesses, that their members are still not ready to commit to an economic expansion even six months into it. >> reporter: the g.d.i. has now turned around, following the g.d.p., leaving most economists to believe job growth is beginning. we'll find out with friday's march employment report. scott gurvey, "nightly business report", new york. >> tom: federal prosecutors in new york are sending out a new message tonight: they're playing some hardball. the u.s. attorney is setting up a new unit aimed at sniffing out financial fraud. it'll scrutinize banks, grants, healthcare, and pharmaceuticals as well economic stimulus plans like the government's tarp. the idea is to fight large-scale and sophisticated cheating. the unit will be able to gather evidence before trial, and more importantly, to freeze assets. >> susie: for the first time

ever, pfizer, the world's largest drug company, detailed just how much money it paid doctors for drug development and promotion. pfizer made $35 million in doctor payments in the second half of last year. but it didn't offer the details willingly. the feds ordered pfizer to make that disclosure as part of a settlement over illegally marketed drugs. the drug industry says it pays doctors to develop and promote new treatments. but critics call the payments a big conflict of interest and say they could even put patients in jeopardy. darren gersh reports. >> reporter: pfizer's long list of payments are an example of what many analysts have long argued: the drug industry has extensive financial ties with the doctors who prescribe its products. while doctors do need to work on drug research and development, the pew prescription project's allan coukell says other payments raise serious ethical concerns. >> there are a lot of doctors who are out there giving speeches which are essentially promotional. they are functioning as a marketing arm of the companies, and we just think that has the potential to influence prescribing and isn't consistent

with evidence-based medicine that's guided by good science. >> reporter: of the $35 million pfizer paid doctors in the last six months of last year, $15 million went to research. $17 million to doctor speaking fees and consulting. about $2.5 million to meals and business travel. altogether, pfizer made payments to 4,500 doctors and health professionals. dr. freda lewis-hall, pfizer's chief medical officer, says the company needs to pay doctors to help develop new drugs. >> we're working to gain insights that we need, we're working to share information that's required. we're really looking to provide the best outcomes for our patients and it requires collaborations. these are absolutely essential to the work that we do. >> reporter: lawyers like erika kelton are eagerly sifting through industry payments of more than $150 million by pfizer and others. she represents whistleblowers who often claim companies

illegally marketed drugs in ways that might harm patients. kelton says she sees cases where consultants never actually consult, or worse. >> when that payment is made for a phony clinical trial, in essence, basically to get drugs in the hands of the physicians so he or she can prescribe those drugs to their patients without as much concern for patient health or safety, or even clinical efficacy, then that's not legitimate. >> reporter: it's hard to compare payments across drug companies, because each reports under different categories. but under the new healthcare reform law, that will change. the law requires the government to set up a public database listing any payment or gift to doctors and teaching hospitals worth more than $10. >> some physicians may really reassess: "do i really want, am i comfortable with the whole world knowing i am making this much money out there, giving speeches every day to promote a particular drug," and we may see

fewer of those relationships going forward. >> reporter: the new federal database will be available three years from today. supporters of the new disclosure requirement say it will allow patients to make up their own minds about their doctor's financial relationship with a drug company. darren gersh, "nightly business report", washington. >> susie: end of a quarter and as we were talking a few minutes ago, four quarters in a row that the stock market

indexes have been on the rise. that's pretty encouraging. >> tom: it's very encouraging, absolutely. about a 5% rise across the board almost in this past quarter as we put it to a close tonight. in tonight's market focus. the only sector that saw some buying throughout the day was energy, thanks to the white house announcement on energy exploration stephanie reported earlier. this oil services exchange traded fund moved higher on hopes of more work off u.s. coastlines. it didn't hurt that oil prices jumped more than a dollar to over $83 dollars a barrel. drillers like diamond offshore, rowan, ensco, and noble all saw moves of more than 2%. in addition to the drilling expansion, the oil rally today took crude price to a multi-week high on the back of a drop in the u.s. dollar. in the midst of all the iphone

talk of recent days, research in motion released its quarterly results after the close tonight. rimm makes the chief iphone competitor, the blackberry. earnings were a penny shy of estimates. revenues were also lighter than anticipated. rimm shares were weaker heading into the earnings call, and dropped 7% in after hours action. the pace of earnings has slowed, but a trio of surprises provided some big stock moves. first, an upside surprise at online retailer overstock.com. shares jumped to a new four-month high. it turned a profit in the fourth quarter as revenues and margins saw double digit increases. the news wasn't as positive for pharmacy retailer rite aid. its stock got slammed after a bigger than expected quarterly loss and outlook. defense contractor s.a.i.c. dropped to a new 2010 low, thanks to cutting its forecast due to delays on government contracts.

as the first quarter comes to a close, gone may be the days of cost cuts, instead pricing power may be driving performance. that's the hope for louisiana pacific. the company makes building products like lumber and siding. shares of l.p.x. are at a new 52-week high on the heels of credit suisse expecting the firm to benefit from the highest prices of certain engineered wood boards since the middle of 2006. a year ago, at the height of the housing crunch, l.p.x. was trading around $2 a share. today, it's over $9. as we're talking about housing, home mortgage insurers continue to see big buying interest. the p.m.i. group, m.g.i.c., radian and m.b.i.a. all saw healthy gains on heavier than average volume. an industry report finds in february, for the first time in three years, the number of people late paying their mortgages dropped. consumer discretionary stocks led the selling today, with ford topping the losers.

tomorrow, march auto sales are due, but ford shareholders have been winners since early 2009. the united auto workers union is looking for some profits. it is selling the rest of its stock warrants it holds in its health fund. those warrants give the holder the right to buy ford at $9.20 a share. even with the recent selling pressure on ford, shares have more than quadrupled in the past 12 months. the stock saw heavy volume today as it dipped to a one month low. one other ford related note: it's teaming up with microsoft with software to allow ford's electric vehicles to recharge more efficiently. and finally, biotech firm arqule. the stock soared 63% as it was among the nasdaq volume leaders. an experimental lung cancer treatment combination had some encouraging results. that drug remains in testing. and that's tonight's "market focus".

>> tom: with the bull market for stocks now in its second year and the first quarter officially in the books as of the closing bell today, the major indexes are close to some post recession highs. sam stovall joins us from new york, chief investment strategist for standard and poor's. nice to have you back. >> nice to be here after a strong month and quarter. >> tom: three months ago you were on n. b. r. and the forecast for 2010 you said the second verse was going to be the same as the first. are you still singing that same song?

>> pretty much so. i think in the second year of this bull market we'll likely have a similar direction, maybe the magnitude of the advance will be less. but i think overall the direction is about the same. >> tom: magnitude of the stock rally, although a little bit of losses today to end the quarter. 5% plus, that's got to rank as among a pretty good return for three months. >> a very good return. and surprisingly the first quarter is not as strong as the second quarter is. nor is it as good as the fourth quarter traditionally is. so possibly we have better returns ahead of us. >> tom: let's take a look at some of the sector preferences for the second quarter that your research at s&p has identified. technology, financials, industrials, and materials. what's the fundamental reason to be in these areas? >> i think certainly we still see some good capital inflows taking place, investors are funding their 401-k's and their ira's. if they did get a bonus they

are putting those to work. if they're getting tax refunds they're putting those refunds to work as well. so good capital inflows,. also what we're finding is that the economic back drop has been improving. every mob we get new economic projections and they happen to be stronger than the one before. the threat of a double dip recession seems to be getting less and less, and the fundamental forecast, meaning the earnings projections, seem to be stronger as we get additional data coming in implying that maybe the turn around is at hand. >> tom: one key part when we take a look at first quarter earnings reporting season, which will happen in the calendar second quarter, the comparisons are off, because of what was going on a year ago. how much of that plays into the fundamental story? >> an awful lot does play into it. some analysts are projecting a 70% increase in year over year operating results for the s&p 500, led by triple digit increases for the financials, the consumer discretionary and material sectors.

in fact, all sectors except telecom are likely to show year over year increases. but yes, coming from a very low base in 2009 sure helps. >> tom: let's slice and dice the market by size of company. clearly the s&p 500 has done nicely, those large cap. but small cap stocks are seeing even bigger gains. so what do you make when we tike at the ijr, an exchange traded fund, follows the small cap 600, nice gain here three months on. >> absolutely. and as you had said early on, second verse same as the first. typically the second year of a bull market we see that small cap stocks continue to outperform larger cap issues. i think with investors not really sure where the dollar is headed, they might be gravitating toward the smaller companies because they would have less of a head wind if the dollar were to continue to rise. so small caps are good momentum, and they do well this phase of the economic cycle. >> tom: if we keep singing the same verse here, sam, too many people singing from the same

book though? not enough bears out there? >> that's a good point, because when you do take a look at earnings for the small cap 600 index, we expect about a 120% advance for all of 2010. and with that triple digit increase we're still looking at a p. e. ratio of about 22 times projected 2010 estimates versus 15 times for the s&p 500. so small cap stocks might be getting a bit expensive. >> tom: real quick, any disclosures for these sectors, sam? >> no. neither i nor the company owns these sectors that i discussed. >> tom: sam, always appreciate the quarterly review and preview. sam stovall for s&p. >> susie: here's what we're watching for tomorrow. we'll see the weekly numbers on new jobless benefit claims and february construction spending. we'll also get a check on the folks who make stuff with the i.s.m.'s march manufacturing index. also tomorrow, toyota's looking for a big pop in march sales, up as much as 35%.

we'll see how it did and get the outlook for the rest of the auto industry. jet blue and american airlines are teaming up to make air travel easier. the carriers have a new partnership that lets jet blue passengers connect to american's international flights on one ticket. starting next quarter, american will sell some jet blue tickets on its website. eventually, jet blue will sell american tickets, as well. the airlines also swapped some landing slots at airports in washington, new york, and boston. >> tom: if your employer suspended matching contributions to its 401(k) plan during the recession, you may be in for some good news. new numbers show almost half the firms that stopped matching have either started again, or plan to do so within a year. fidelity investments tracks the figures, because it administers 17,000 401(k) plans. it says the larger the company, the more likely it is the match is already back, or in the works to come back.

>> susie: in the money file tonight, there's no such thing as a free lunch, or a free trade. here's jason zweig, personal finance columnist at the "wall street journal". >> how could anything be wrong with something that costs nothing? in recent weeks, charles schwab and fidelity investments have

enabled investors to buy and sell a selected menu of exchange-traded funds, or e.t.f.s, commission-free. finally, you don't have to pay a separate commission every time you add money to an e.t.f. that has long made regular monthly investments impractical, since even a small $7 commission took out a big bite for someone investing $100 a month. but it's worth remembering the old wall street saying: tinstaafl, which stands for there is no such thing as a free lunch. there are two catches. first, some of the e.t.f.s with free trades also have higher annual expenses. for every $10,000 invested in the ishares emerging markets e.t.f., you will pay $72 a year in annual operating costs. other emerging-markets e.t.f.s not eligible for free trades charge as little as $27 in expenses. second, if trades are free, then you may trade too much for your own good.

constantly flipping funds is bad for your blood pressure, your tax bill, and your investment returns. so make sure you comparison shop for low annual expenses as well as low trading costs. use the free trades to invest automatically every month, not to jump in and out on every whim. above all, remember tinstaafl: there is no such thing as a free lunch. i'm jason zweig. >> tom: that's "nightly business report" for wednesday, march 31. i'm tom hudson. goodnight everyone, and goodnight to you too, susie. >> susie: good night, tom. i'm susie gharib. goodnight everyone, we hope to see all of you again tomorrow night. "nightly business report" is made possible by:

this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org