darren gersh, "n.b.r.," washington. waiting for president obama's speech. now despite a cautious day of trading, the dow closed at its highest level in more than five years, and returned to the psychological important 14,000 level. the dow gained 47 points, and the nasdaq lost five, and the s&p 500 up two points. even though the stock market has made dramatic moves, and trading volume today and throughout february has been light. market pros say that's because investors are searching for new reasons to buy equities. there's a chance president obama might give them some tonight in his state of the union address. suzanne pratt has the story. >> reporter: with earnings season winding down, wall street could use some new headlines to chew on. good economic data would be nice. friendly washington politics would also be helpful. tonight's state of the union speech might give investors a clue as to whether that's likely to happen. veteran trader teddy weissberg is hoping president obama will stress the need for bipartisanship but isn't sure that's what he'll hear.

darren gersh digs deeper. >> reporter: in housing, one month does not a trend make. analysts shrugged off the news that housing starts fell last month, instead looking to encouraging trends on home prices, rents, and overall demand. >> there are gonna be these squiggles, blips in the market as things happen, just because they happen from month to month- - snow storms, weather, holidays, whatever, but right now we are in a recovering market. >> reporter: overall, homes sales are up more than 10% over last year. and builders are picking up the pace. they are now on track to build around 900,000 homes this year, but by the end of the year, the national association of realtors expects the pace to pick up to an annual rate of 1.1 million starts. that's great, but keep in mind a normal year for home construction is closer to 1.8 million. the outlook for apartments and other multi-family construction is also good, even though those starts dropped last month. rents rose 4.5% last year and researchers at zillow expect a similar increase this year. that's why investors are pou

darren gersh, "n.b.r.," washington. >> susie: diesel powered passenger cars and trucks made up just 1% of car sales in the u.s. last year and while that's up five-fold in as many years, it's still a tiny portion of the u.s. auto industry. ruben ramirez takes a look at some car makers hoping american consumers fall in love with diesel this year. >> reporter: "if at first you don't succeed, try again." that's g.m.'s motto g.m. as it brings diesel passenger cars. back to american consumers, the diesel chevy cruze will start hitting showrooms this april. what's different today from general motors chevy's diesel cars back in the 1980s? >> they don't smell, they don't smoke, the don't clatter, they're quick. >> reporter: while clean-diesel technology has come a long way, g.m.'s still treading lightly. >> we are being very cautious about the market and the demand for the market. it's a big change within general motors that's happened in the last couple of years to say, let's not overbuild, let's understand the marketplace and try to build to where the demand is. >> reporter: it appears other

darren gersh, "n.b.r.," washington. >> susie: more uncertainty today about when boeing's dreamliner will be cleared to fly. the nation's top transportation safety official, is now questioning the testing process used to assess the safety of lithium ion batteries in boeing 787 planes. the national transportation safety board says the f.a.a. has to re-think those tests, because many were based on assumptions that have since proved wrong. battery issues forced the grounding of all 50 dreamliners in service. >> susie: blockbuster earnings from linked-in tonight, and they came in far above expectations. the professional networking site earned $0.35 a share in the fourth quarter, beating estimates by $0.16. revenues also came in higher than expected: up 81% to $303 million. and it was a milestone quarter for membership, it topped the 200 million user mark, adding two members every second. linkedin shares surged after hours, jumping over $12 or 11% from its closing price of $124 a share. the stock went public in 2011 at $45 a share. >> tom: shares of the world's largest video game publisher gai

darren gersh, "n.b.r.," washington. . >> chairman of macroeconomic advisers joins us tonight from st. louis. you have been looking at the sequester and fiscal cliff for man moons, joel. a pay cut for hundreds of thousands federal employees april 1. that sounds pretty substantial. is it, to the economy? >> well, first of all, it's substantial to the people affected, no question about that. in terms of its impact on the economy, we recently did a study that suggested if the sequester goes into full effect march 1, want impact will be to knock .6% off of growth this year. that is if we thought the economy was going to grow at about 2.6% without the sequester, that will be reduced to 2% with the sequester. >> tom: for this year, we're talking $85 billion potentially taken out of the growth of government spending between march 1 and the end of september and a $4 trillion budget. proportionally for median household income that's the equivalent of $1,000 out of a $50,000 income being taken out. how can that impact economy so much? >> well, it's-- it amounts to something like an 8% cut in the

as darren gersh reports, president obama today asked congress to delay the cuts before the march 1 deadline>> reporter: with $44 billion in spending cuts in defense and most othefedel programs just weeks away, the president urged congress to pass a mix of spending cuts and tax increases to ease the immediate hit. >> there is no reason that the jobs of thousands of americans who work in national security or education or clean energy, not to mention the growth of the entire economy, should be put in jeopardy just because folks in washington couldn't come together to eliminate a few special interest tax loopholes. >> reporter: republicans dismissed the calls for more tax increases, and many argue the threat of the automatic spending cuts known as the sequester are the only way to force democrats to accept more spending cuts. but their leverage may be limited. >> i think we will have the sequester for a short period of time, probably until the first civilian employee of the government is furloughed, which might take about a week. and then, that pain may be enough to cause the people on capitol

darren gersh, "n.b.r.," washington. >> susie: let's get more analysis from stan collender. he's a former staffer for the budget committees in the house and the senate and now senior partner at qorvis communications in washington. >> susie: so, stan, what do you think of this new simpson bowles plan, is it doable? >> no, it is not doable. democrats and republicans are both equally attacked. it never had a chance to begin with. simpson and bowles didn't get their original plan through their own commission. this is just a plea for attention. >> susie: all right, so here we are, down to the wire, and congress isn't even in session and we're coming up on that deadline. you've been through so many of these budget battles on the hill before. so do we get a deal on march 1? >> almost certainly not. the sequester was designed to be the worst possible alternative, as darren said. but what we're discovering it is the best possible alternative, compared to more tax increases, more spending. so there is not a lot of time between now and march 1 to get an agreement on something where no

darren gersh, "n.b.r.," washington. >> tom: it's a street fight, wall street style, over nutritional supplement company herbalife. two of wall street's best known hedge fund managers are on very public, but opposite sides of the trade. the war of words has meant some big swings recently in herbalife shares. ruben ramirez reports on a battle that's being played out in what's typically a very secretive industry. >> reporter: hedge funds typically take big positions in companies and are very careful not to disclose what they're buying or selling. but the battle between hedge fund giants carl icahn, who now owns 13% of herbalife's shares and bill ackman who has a billion dollar short or bet that herbalife shares will fall is taking a nasty turn. >> a number of other hedge fund managers have gone public with shorts especially when they claim that something wrong is going on at a company. what's different in this case is that icahn also came out and was very vociferous and said, "oh no, this is a wonderful company and bill ackman doesn't know what he's talking about." it's very rare to see

darren gersh reports. >> reporter: supporters of a higher minimum wage increase point to studies showing little impact on employment after the pay at the bottom of the job market goes up. one reason is that employers may actually come out ahead when they are forced to pay workers more. productivity and job satisfaction improve and turnover falls. >> so employers get to reap the benefits of lower hiring and firing costs, lower turnover costs. hiring and firing is actually very expensive to companies, so if you pay people a little higher wage, they have more job stability. that's actually good for everyone. >> reporter: of course, we're talking about economics, which means there are other studies that show a minimum wage hike is most likely to hurt those who need it most. critics point to research showing the minimum wage will benefit teenagers and college students who work part time, but aren't poor. and it will hurt workers who need to work their way up. >> most of the people who earn the minimum wage today will be earning more than that a year from now. the danger of a minimum wage incr

as darren gersh reports, the fight could be a sign more mergers will face a tougher time in washington. >> reporter: the justice department is not quite ready for a two-pack of brewers to control almost half the american beer market. in a statement announcing a lawsuit to block anheuser-bush inbev's $20 billion deal for mexican brewer modelo, assistant attorney general bill baer says >> if abi fully owned and controlled modelo, a.b.i. would be able to increase beer prices to american consumers. this lawsuit seeks to prevent a.b.i. from eliminating modelo as an important competitive force in the beer industry. anheuser-busch was not deterred, saying: >> we remain confident in our position, and we intend to vigorously contest the justice department's action in federal court. >> reporter: the proposed merger between the largest and third largest beer makers would create a company with 46% of the market in the united states. millercoors would be a distant third at 29%. antitrust expert barry lynn hopes the suit means the obama administration is finally willing to fight a broader trend towa

darren gersh reports. >> reporter: whenever they can, republicans point out the sequester cuts add up to about a 2% trim to federal spending. that's why many conservatives say the white house is over- hyping the fall out. and some senate republicans think it would be a good idea to replace the across the board cuts with trims that the president himself picks out. though some conservatives fear that would give the white house too much control. >> i understand those concerns, but let's be clear about the goal here. the goal isn't to hand over congressional authority, it's to make sure these cuts actually happen. and that we don't cut a penny less than we promised the american people we would cut a year and a half ago. >> reporter: the white house position shows no sign of changing, the president insists some tax increases must offset some of the sequester spending cuts. if anything, the white house is actively ratcheting up the pressure. the secretary of education today warned the sequester would eventually cost teachers their jobs, though that might not happen until the next school yea

darren gersh, "n.b.r.," washington. >> tom: have you filled up your gas tank recently. it is costing more, a lot more. regular unleaded jumped 15-cents a gallon in a week. the national average is up to $3.54 a gallon. that's the biggest one week jump in nearly two years. and as erika miller explains, prices are expected to continue to climb in the weeks ahead. >> reporter: winter is supposed to be the time of year when gasoline is cheap. but that hasn't been the case lately. prices at the pump have risen 20 days in a row, and so far this month, prices are at the highest level for any february, ever. so why are prices rising so quickly? >> part of the root of that has to do with refinery outages that we've had-- a series of them over the past few weeks, and that has curtailed the production of gasoline, and therefore put upward pressure on gasoline prices. >> reporter: there are also fears refineries will face more interruptions, as they switch from winter to summer fuel blends. it's not just refinery issues pushing prices higher. much of the recent spike in gasoline can

as darren gersh reports, president obama today asked congress to delay the cuts before the march 1 deadline. >> reporter: with $44 billion in spending cuts in defense and most other federal programs just weeks away, the president urged congress to pass a mix of spending cuts and tax increases to ease the immediate hit. >> there is no reason that the jobs of thousands of americans who work in national security or education or clean energy, not to mention the growth of the entire economy, should be put in jeopardy just because folks in washington couldn't come together to eliminate a few special interest tax loopholes. >> reporter: republicans dismissed the calls for more tax increases, and many argue the threat of the automatic spending cuts known as the sequester are the only way to force democrats to accept more spending cuts. but their leverage may be limited. >> i think we will have the sequester for a short period of time, probably until the first civilian employee of the government is furloughed, which might take about a week. and then, that pain may be enough to cause the people on ca

washington bureau chief darren gersh has details on the fed chairman's strong defense of his aggressive policy to support the economy. >> reporter: sure, there are risks when the federal reserve is buying almost $3 billion worth of bonds every day. but chairman ben bernanke told congress basically, "we got this." >> although a long period of low rates could encourage excessive risk taking, and continued close attention to such developments is certainly warranted, to this point, we do not see potential costs to the increased risk- taking in some financial markets is outweighing the benefits of promoting a stronger economic recovery and more rapid job creation. >> reporter: with unemployment stuck around 8% and inflation subdued at 1.5%, there are no economic red lights flashing. so bernanke gave no signals he was ready to change course or back away from his aggressive program to get the economy back to a more normal level of output. still, the fed chairman did reassure lawmakers he understood aggressively buying bonds to keep interest rates low was not a magical economic elixir. >> i thi

as darren gersh reports, the fight could be a sign more mergers will face a tougher time in washington. >> reporter: the justice department is not quite ready for a two-pack of brewers to control almost half the american beer market. in a statement announcing a lawsuit to block anheuser-bush inbev's $20 billion deal for mexican brewer modelo, assistant attorney general bill baer says >> if abi fully owned and controlled modelo, a.b.i. would be able to increase beer prices to american consumers. this lawsuit seeks to prevent a.b.i. from eliminating modelo as an important competitive force in the beer industry. anheuser-busch was not deterred, saying: >> we remain confident in our position, and we intend to vigorously contest the justice department's action in federal court. >> reporter: the proposed merger between the largest and third largest beer makers would create a company with 46% of the market in the united states. millercoors would be a distant third at 29%. antitrust expert barry lynn hopes the suit means the obama administration is finally willing to fight a broader trend towa

darren gersh, "n.b.r.," washington. >> tom: have you filled up you gas tank recently. it is costing more, a lot more. regular unleaded jumped 15-cents a gallon in a week. the national average is up to $3.54 a gallon. that's the biggest one week jump in nearly two years. and as erika miller explains, prices are expected to continue to climb in the weeks ahead. >> reporter: winter is supposed to be the time of year when gasoline is cheap. but that hasn't been the case lately. prices at the pump have risen 20 days in a row, and so far this month, prices are at the highest level for any february, ever. so why are prices rising so quickly? >> part of the root of that has to do with refinery outages that we've had-- a series of them over the past few weeks, and that has curtailed the production of gasoline, and therefore put upward pressure on gasoline prices. >> reporter: there are also fears refineries will face more interruptions, as they switch from winter to summer fuel blends. it's not just refinery issues pushing prices higher. much of the recent spike in gasoline can