>> this is n.b.r. >> susie: good evening. i'm susie gharib. the federal reserve announces a new "twist" to boost the slowing u.s. economy. >> tom: i'm tom hudson. central bankers will continue buying bonds hoping to lower interest rates even more. former fed governor randy krozner joins us. >> susie: and the "tide" turns for procter and gamble, the household products maker blames europe for slower growing profits. >> tom: that and more tonight on "n.b.r.!" >> tom: the federal reserve said today it's extending its latest stimulus program to prop up the u.s. economy. but investors wanted to see more aggressive action. after a two day meeting, here's what the central bank decided: it renewed "operation twist", this is a bond-buying program with the goal of bringing down long-term interest rates, and

mortgage rates. the program is extended to the end of 2012, it was set to end on june 30. that wasn't good enough for wall street: the major averages fell immediately after the news, and then see-sawed the rest of the day. by the close the dow lost about 13 points, the nasdaq rose a fraction, and the s&p slipped two points. speaking to reporters after the announcement, federal reserve chairman ben bernanke said the central bank is prepared to do more if the economy slows. to scope to do more and mon for the economy and looking primarily at the labor market in this respect in we're not seeing sustained up improvement it would retire additional action >> tom: the central bank is less optimistic about new jobs and overall economic growth. we will have that new outlook in a moment, as well as what

investors could expect now that the federal reserve has acted. >> susie: also, still ahead. do everyday investors get a fair shake when it comes to stocks going public? we'll get some surprising insights about investor confidence. "nightly business report" is brought to you by: captioning sponsored by wpbt >> tom: the message from the federal reserve today was the economy is not in great shape susie, and it's taking incremental steps to fix it. >> susie: tom investors were counting on policymakers to announce something bolder, like a new round of "quantative easing", or what everyone calls "q-e3". they were disappointed when it didn't happen. we have two reports looking at the fed's economic outlook, and investor reaction on wall street.

we begin with darren gersh in washington. >> reporter: the words the federal reserve used to describe the economy today were not very upbeat. unemployment, it's elevated. housing's depressed. growth is moderate, but only likely to pick up very gradually. but the emphasis was on the poor shape of the labor market. >> it's going down too slowly, but it is going down. our sense is that, people are finding jobs, but just not at the rate we'd like to see. if we don't see continued improvement in the labor market, we'll be prepared to take additional steps if appropriate. >> reporter: in their new economic projections, fed policy makers downgraded their outlook for jobs. they now think the unemployment rate will end the year basically unchanged at 8.1%, and they see next year as soft too, with unemployment coming in at around 7.7%. that's an increase from the forecasts fed officials made back in april. economic growth has also been

downshifted with g.d.p. coming in 2.1%. that's 0.5% lower than policy makers expected in the spring. the weakness explains why the fed tweaked their statement pledging to take further action to promote a stronger economic recovery and sustained improvement in labor market conditions, if needed. >> i think they are going to be watching very closely what happens with the june data. if we see another lousy jobs market, that puts them one step closer to initiating another round of quantitative easing and i think that's what they are going to be watching and i think that could make them pull the trigger. >> reporter: the gloomy tone left many wondering why the fed is waiting, but bernanke said he wouldn't be rushed into expanding unconventional policy moves. >> i don't think they should be launched lightly. i think that there should be some conviction that they're needed, but if we do come to that conviction, then we will be prepared to take those additional steps. >> reporter: but bernanke was quick to add the fed's unusual tools, things like buying bonds and twisting interest rate

curves, while not standard, can still help the economy. darren gersh, "n.b.r.," washington. >> reporter: i'm suzanne pratt. it may be known as operation twist, but there was little twisting or turning for stocks today after the fed's big announcement. investors expected the extension of the fed's program designed to lower long-term interest rates. and, that's what they got. and, although investors might've hoped for more economic stimulus from the fed, policymakers certainly didn't rule it out. >> inflation is no longer as problematic. and, with slower growth and lower inflation, it leaves the door open potentially to q-e3. we think it could happen later if growth continues to slow and inflation becomes a non-issue. >> reporter: stocks have rallied this month as investors tried to put a positive face on the weakening economy. the positive part: the potential for more help for the economy from the u.s. central bank. as for what equity investors are likely to focus on next? you guessed it, it's all eyes on

europe and resolving the region's financial mess. >> i think the next big issue on the calendar is going to be the european union meeting on june 28 and 29 and really trying to put together some additional strategies around the debt situation. >> reporter: between now and the e.u. summit, experts predict more choppy trading in stocks. in fact that's what they expect we'll get all summer long. suzanne pratt, "n.b.r.," new york. >> susie: for the analysis on the fed decision our guest was once a federal reserve governor himself randal randall krozner. so glad to have you back. do you think the fed made the right decision today? >> i think they did. they certainly downgraded the forecast and they said inflation

is still under control but they didn't say we're going over a cliff so i think the natural thing to do was to extend the accommodation operation they have the operation twist of selling the short-term security and buy the long-term securities to bring down the long-term interest rate and leaving the possibility to doing more if conditions warrants it. >> susie: the report was why wait. we were already talking about weak economic growth and weak job market. why not do something for the aggressive now. why wait? >> the data aren't quite clear. certainly the job market is slowing down but as chairman bernanke said we're generating job growth as a pace no one thinks is strong enough but it's not clear the additional fed action will be the main thing to really boost up the job growth. we have so much uncertainty about the fiscal side and uncertainty in europe those are

things weighing heavily. it made sense to wait a bit and maybe build a stronger foundation if we get negative employment reports or disappointing employment reports to then do more. >> susie: talking about the employment report, chairman bernanke kept coming back to that again and again saying if he didn't see significant improvement in the job market they'd take action. is there a number na policy makers are looking for whether it's the unemployment rate or a certain number of jobs employment reports that come in lower than expected? >> i don't think there's any magic number but it's the key thing one of the key things they're focussing on. as long as inflation is well contained it seems to be on a downward trajectory and expectations are well contained they'll focus on whether enough jobs are being created it's not a magic number like below 1,000

numbers it's part of a larger puzzle but if we see job growth under 50,000 or under 25,000 going forward, that's going to provide a much stronger foundation for putting a boost under the economy. >> susie: and what would that boost be? let's say it plays out like you're saying a couple of months of weak job growth. could we see this qe-3 by the end of the year? if you were sitting at the policy table is that the kind of thinking other fed governors are looking at? >> i think there's a rerobust debate whether something more be done and some fed governors say we're still in the mess and it shows fed policy has not been effective in getting us out. others are say my goodness, exactly the question you asked, why are we waiting? the chairman has taken a reasonable middle path saying we need to continue to have a boost to the econom economy and conti

twist and see if things are sliding downwards weather side ways as we characterized last time on with you. >> susie: we have 30 seconds left. the other issue bernanke brought up was saying europe and the financial crisis is a significantis significant issue for the u.s. economy. how bad would it have to get before the fed responds to that? >> they'll try to take out the tail risk of a deflationary stock and buy securities if need be if that happens. for europe for the u.s. to keep talking about chubby checker and twist and shout for europe the song i keep hearing is promises, promises. we never get the solution. they have the tools that could be used but they never actually use them so we'll have to wait and see on that. >> susie: we certainly will. hopefully you'll come back and talk to us more about it.

thank you, randy. randall krozner. >> tom: our week-long focus on the federal reserve continues tomorrow, as we look at the differences between the goals of the federal reserve and the european central bank. >> susie: the spanish government said today it does not need a bailout, despite the rising cost of ensuring its i.o.u.'s. the nation's budget minister said spain has the support of its european partners, and european institutions. an independent audit of spain's financial system is due out tomorrow. many worry it will be a far

worse than expected. earlier this month the euro-zone offered spain as much as $125 billion, to boost its battered banks. >> susie: meanwhile greece's new prime minister was sworn in today, and the country said a coalition government has been reached. that's seen as a key step in securing further aid from the euro-zone. >> susie: formation of the new government comes after sunday's closely fought elections, which were seen as a defacto vote on whether greece would remain in the euro-zone. prime minister antonis samaras said the coalition will do whatever it can to help its people emerge from the crisis faster. >> tom: persistent, slowing demand in western europe. that's partly to blame for weak profit growth at procter and gamble. p&g is the world's biggest consumer products company, making everything from tide laundry detergent to gilette razors. but it's not just the uncertainty in europe that dogs procter and gamble. some worry the company has gotten too big. ruben ramirez reports. >> reporter: procter and gamble

admitted today that it has been slow to innovate new products and hasn't been fast enough to cut costs. the biggest culprit: slowing demand in western europe, the u.s., and china. for the current quarter, p&g expects sales to grow between 2% and 3%, that's lower than the 4% to 5% it had been expecting. and, for fiscal 2013 which starts next month, the company expects to grow sales 4% at most. the strong u.s. dollar and higher commodity costs have also cut into earnings. c.e.o. bob mcdonald said the company will concentrate on its core business to "achieve more balanced growth across geographies, product categories and the top and bottom lines." p&g will also focus on its 40 biggest businesses, 20 biggest new products and ten most important developing markets to try to improve results. but will that be enough to satisfy investors? over the past year shares of p&g

have fallen almost 4.5%. alliance bernstein analyst steve powers says a breakup of p&g could allow the consumer goods giant to be more nimble. >> at some point there become diseconomies of scale for an organization as large as p&g and if you look at a lot of its smaller competitors who have been gaining share at p&g's expense. you could argue that they are benefiting from increased focus. >> reporter: for its part, procter and gamble says it believes "the size and scale of our business offers competitive advantages and unique opportunities to win now and into the future." ruben ramirez, "n.b.r.," new york.

>> susie: a decision that came out this afternoon. first there was a big selloff and then investors started to track it and thought maybe it's not so bad and they're going back and forth and i think it will continue through tomorrow and the rest of the week as investors begin to assess what it all means to the economy. >> tom: we saw them hold on to the gains in anticipation of the federal reserve acting that's what we can take away in the market focus and get it underway with the federal reserves >> tom: the federal reserve's decision to provide more help for the economy didn't register much of an impact on stock prices by the closing bell, but we did see some volatility during the session. the s&p 500 hovered slightly in negative territory until the central bank's announcement just after noon eastern time. that's when we saw the worst levels of the day.

but those losses quickly reversed to gains only to lose stream throughout the afternoon. trading volume was moderate; 749 million on the big board. just under 1.6 billion on the nasdaq. the worst sector is also among the most defensive. utilities fell more than 1%. the consumer staples and materials sectors each dropped 0.5%. bucking the weaker market, j.p. morgan. the bank reportedly has sold most of the trading position that caused multi-billion dollar losses last month. shares jumped 3% to close at its highest price since the days immediately following the bank's disclosure that a corporate bond derivative trading strategy had lead to losses of at least $3 billion. fellow dow component caterpillar was one of the biggest drags on the index, falling almost 2%. the company said dealers saw a sharp slowdown in sales growth in europe, the mid-east and africa this spring. a year ago sales jumped by 14%. this spring that had slowed to 4% in those regions.

caterpillar isn't the only company seeing slower growth out of europe. earlier we reported on the disappointing earnings outlook from procter and gamble, thanks partly to european anxieties. shares fell hard, down almost 3%. volume more than quadrupled. the stock is at its lowest price since last august. another stock weighing on the consumer sector today was walgreen. shares fell almost another 3% today, bringing its two day losses to 8.6%. that's how much the stock has fallen since walgreen announced a $6.7 billion deal to buy almost half of european pharmacy giant alliance boots. several analysts downgraded the stock over worries about the retailers bet on europe. we saw two different stories from a couple of technology firms, jabil circuits and adobe systems. first, adobe, falling 2.7% on heavy volume. the company cut its revenue outlook as it continues to switch business models to one

focused on selling subscriptions to its software like photoshop. that has slowed its growth. meantime, jabil circuits jumped almost 7% even though its latest quarterly results were disappointing. instead, investors focused on the company's announcement it has been selected as a key supplier for a mobile phone customer. jabil didn't announce who that customer is, but many analysts suspect it is blackberry maker research in motion. the federal reserve efforts to goose the economy did not push energy prices up. instead, oil resumed its move down as supplies jumped unexpectedly. crude oil fell $2.28, settling at $81.80. that's its lowest price since october. elsewhere in the commodity markets, gold prices fell despite the fed's worries about a slowing economy. gold settled just below $1,616 an ounce, down more than $7. it was a mixed finish for the five most actively traded exchange traded funds.

the financial sector and nasdaq 100 tracking funds ending with small gains. and that's tonight's "market focus." >> susie: what used to be an investor's market has become a trader's market, so says the head of the big board. the nyse's c.e.o. duncan niederauer told house lawmakers today that the public has never been more disconnected from the marketplace. he was testifying on the rise of high frequency trading and computerized trading programs. >> susie: the market chief said citizens have lost trust and confidence in the market's underlying mechanisms.

>> tom: some of that investor confidence has been shaken by the facebook stock sale. the company went public with lots of hype, but the initial offering was marred by technical glitches and complaints that big investors got information about facebook's business that smaller investors did not. the stock started at $38 per share, and continues well below that price despite more than a 20% rally in the past two weeks. today's new stock was burger king, returning to the public market a year and a half after it was taken private. shares closed up 3.7% on its first today trading. ilan moscovitz is a senior analyst at the motley fool. testifying to congress. is the stock sale process working considering the problems with facebook and the success with burger king? >> there's at least two major problems with the ipo process from the perspective ordinary

investors. there's inequal access to information if you want to find out what's going on with the company it's digging through massive s-1 filings where if you're an institutional investor you can get it with manager or -- >> tom: what's the second problem you identified with when it comes to the process? >> there's inequal access to shares the way shared are allocated to ipos they can sell them at a discount to friends and favored clients and they can pawn it off at a higher price later in the day. over the last two decades we've seen on average a 22% pop on the first day of trading so that's suggests to us that there's not really a level playing field when it comes to pricing or information. >> tom: it seems to me this is the price of favoritism that's

what you're critiquing. can one pretend to regulate that however? >> it's a difficult problem to address the question. one meaningful first step we can take there's already a rule now that says if you're a publicly traded company you're not allowed to offer information to analysts that isn't offered to the rest of the world. >> tom: regulation fd, fd for fair disclosure. you have to put it out to everybody. >> they pushed to get that passed many years ago and that's something we can extend to the ipo process. there's no reason for that information to be kept away from everyone. >> tom: now, there's a new law president obama signed this spring designed to make the process of selling stock easier for young companies. critics claim it paved the way

for ipo fraud. how do you find the balance? >> it's a difficult balance but there are a few things about the bill that are troubling. the way the bill tries to operate it tries to low their bar before companies come. and we could see more frauds or lower quality accounting or lower quality pool of ipos coming to the market and less information for investors. >> tom watching with it ilan moscovitz in washington with the motley pool >> susie: tomorrow on n.b.r. more clarity on the u.s. housing recovery, with the may sales numbers. and this week's "made in america" is going to the dogs. we meet a company cooking up new ideas in the petfood business. well, if you can't beat the market, be" the market.

that's the advice of tonight's commentator, here's manisha thakor, author of "on my own two feet: a modern girl's guide to personal finance." >> have you ever wanted to "beat the market?" to out-smart the competition by buying low and selling high? in theory it sounds like the only logical way to invest. i like to call this return-based investing. alas, historical data shows us it's remarkably difficult to beat the market in any given year and near impossible to do it consistently. which brings me to another type of investing, "passive" management. here, using asset allocation-- the mix between stocks, bonds, cash, etc., as your primary driver, you seek to take on an appropriate level of risk to meet your life objectives by "being" the market in each of these areas rather than "beating" the market. i like to call this goal-based investing. if you, like many people these days, are frustrated with your

portfolio's performance, ask yourself if you want to be a return-based or a goal-based investor. hint-- the data supports the goal. i'm manisha thakor. >> tom: that's nightly business report for wednesday, june 20. have a great evening everyone, and good night susie. >> susie: good night tom, and goodnight everyone. we'll see you online at: www.nbr.com and back here tomorrow night. "nightly business report" is brought to you by: captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org

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