erika miller looks at where prices are likely to head from here. >> reporter: aaron ernst is the envy of drivers everywhere because it costs just pocket change to fill his tank. >> this takes one gallon, so i usually put one gallon in it-- and that's like $5. so when gas prices go up? $6. >> reporter: but plenty of others are feeling the pinch of higher fuel costs. not only does sal maurano drive a less fuel-efficient vehicle, he also travels 300 miles a week for his commute. >> you got to bite the bullet. i mean, you got to get to work. you got to pay it. >> reporter: prices have been rising despite efforts by the united states and other countries to lower them by tapping emergency energy stockpiles. after that coordinated strategy was announced in late june, gasoline prices fell to an average of $3.57 a gallon nationally. now they're 7 cents higher. the good news for drivers is there could be relief at the pump over the next few weeks. some experts are predicting energy prices will fall on signs of weakening global demand. trader jeffery grossman thinks crude could drop $10 a barrel

erika miller, "nightly business report," new york. >> tom: this is another summer of discontent over government debt in europe. and the worries have hit overseas stocks. by one measure, an exchange- traded fund that includes 50 of the biggest european stocks, european stocks have dropped to their lowest level since march. that brings us to tonight's "word on the street," "europe." robert walberg is the chief market strategist at thestreet.com. walberg is with us from the nasdaq. bob, welcome back. how are stocks of european countries impacted by the government debt worries? >> well, tom, it has been, as you mentioned earlier, ugly. the european markets across the board have some of the worst performers in the world year to date. generally, the fears of the debt overhang and the implications that's going to have on the economies of that whether it's cutting spending, slowing down economic growth. all thaf has led to the shedding of >> tom: so you're bringing along three global players in europe thaw find value, beginning withun unilever, , an hellmans, , , and it's held up well, hasn'

erika miller, "nightly business report," new york. >> susie: meanwhile, the biggest u.s. city in bankruptcy won approval today for its chapter 9 bankruptcy plan. valejo, california, plans to cut interest payments to its bank and reduce benefits to retirees. the former u.s. navy town near san francisco had sought protection three years ago after the recession eroded tax revenue and unions rejected wage cuts. >> susie: stocks slipped in and out of positive and negative territory all day as investors and traders waited for news on that debt deal. let's get right to the stock stories in tonight's "market focus." information technology was the street's leading sector-- cisco one of its best performers, up 2% to $16. goldman sachs said cisco's sales growth is set to rebound in 2012. wall street's worst performing sector: sprint nextel taking the biggest hit. its second quarter loss widened as more than 100,000 subscribers dropped the carrier. sprint shares plunged almost 16%, their biggest one-day sell- off since 2008, down 82 cents to $4.34. the wireless giant lost 28 cents a

erika miller looks at whether the strength is likely to continue through the back-to- school season. >> reporter: with the sweltering heat wave sweeping across much of the nation, it's hard to think about sweaters and slacks. but if you trust the message in the june sales results, it could be a strong back-to-school season. only three out of 25 retailers in the thomson same-store sales index missed expectations: j.c. penney, stein mart, and fred's. the other 22 stores beat forecasts, the best showing on record. jharonne martis, the analyst who tracks those numbers, is particularly encouraged by gains in the teen sector. >> we consider the teen index a good proxy of discretionary spending. so the fact that they smashed their estimates of 3.3% and came in at 6.5% shows us that parents are feeling a little bit more comfortable with stretching themsleves. >> reporter: but in spite of the big beats by retailers in june, only macy's, t.j. maxx and ross stores boosted their earnings guidance. so the concern is the strong sales may have been rooted in deep discounting, which hurts profits. b

erika miller, "nightly business report," new york. >> susie: looks like investors came back from the holiday weekend a little cautious about investing in the markets, and sort of a see saw day all day, and in the late afternoon when the news about portugal and the debt downgrade from moody's, stocks went into a sell-off. >> early in the afternoon, all three of the major indices were in positive territory, but they couldn't hold on to the gains. >> tom: clearly as erica just mentioned we've had a nice rally. let's get everybody up to date with the market post. >> tom: stocks ended the day mixed. a rebound in some commodity prices helped certain stock groups move higher. that's where we're going to begin. among those commodities finding buyers? oil. crude oil jumped about 2%, rising to almost $97 a barrel-- its highest price since mid- june. energy was the best sector today. no surprise. chevron led the dow industrial average, up 1%. all year long, shares have been able to find buyers when they drop to $98, as they did in february, may and last month. the stock, by the way, is up more

erika miller reports on just how violent that reaction might be. >> reporter: in midtown manhattan, the national debt clock looms, highlighting the amount of money owed by the u.s. government. the clock is also ticking on politicians to work out a compromise to raise the nation's borrowing limit, but strategist jim awad warns just raising the debt level won't be enough to raise stock prices. >> the market wants two things. it wants the debt ceiling raised so that we don't default, and it wants a credible deficit reduction plan so the dollar gets some support so you don't >> reporter: if there is no agreement and stock prices plunge, strategist vadim zlotnikov says "buy". >> i do believe that if the reaction is anything more than 5% or 7% to the market, i believe investors should be buying the market at that level. >> reporter: what about treasury bonds? their yields have been hovering at historic lows despite the threat of default, and the loss of the nation's aaa rating. but some strategists see little reaction in treasuries regardless of what happens. >> in the prior periods, when you

erika miller, "nightly business report," new york. >> tom: late today, the u.s. treasury department said secretary timothy geithner will not make any decision about leaving the obama administration until a deal is reached on raising the debt ceiling. the comment came after bloomberg news reported geithner was considering a return to private life after the debt ceiling is raised. >> susie: here are the stories in tonight's "n.b.r. newswheel." the federal reserve today wrapped up its government bond buying binge called "q.e. 2," the fed bought u.s. treasuries during this latest round of so- called "quantitative easing". but the central bank is still expected to spend $25 billion a month to replace the maturing debt on its books. standard and poor's detailed plans to cut uncle sam's credit rating if congress doesn't raise the debt ceiling. the ratings agency is prepared to strip the u.s.'s triple-a to "d", the lowest rating, if no agreement is reached by the august 2 deadline. the greek parliament has okayed a tough new austerity plan. now, billions of dollars in lo

erika miller, "nightly business report," new york. >> susie: carmakers in detroit and the united auto workers have officially begun bargaining for a new four-year contract. chrysler and u.a.w. leaders began talks this morning with a series of friendly handshakes. company and union officials wore matching maroon jackets to signify their unity. both sides say they want fair contracts that keep the automakers competitive. the current contract expires in mid-september. >> tom: investors dialed back their appetite for risk with no clear resolution on the debt ceiling. let's get to tonight's "market focus." it was a rough start for stocks this morning. the s&p 500 fell 1% at the opening bell. that was the worst level of the day. this is today's trading for the index. prices improved throughout into the early afternoon, before closing down 0.5%. after the close, the market focus turned to netflix. earnings were well ahead of estimates, but revenues were slightly disappointing, as was its outlook. subscribers have been complaining about its recently announced price hikes, separating the charg

erika miller, "nightly business report," new york. >> tom: still ahead, the murdoch mess. ruper murdoch's newscorp is under scrutiny for questionable journalism on both sides of the atlantic, but we'll talk to an analyst who still likes the stock. >> susie: government debt worries put investors in a selling mood. at the close, the dow lost 94 points, the nasdaq fell nearly 25 and the s&p 500 off almost 11. as for volume, 871 million shares were traded here at the big board and just shy of 1.8 billion at the nasdaq. meanwhile, all that glitters is gold. the yellow metal closed above $1,600 for the first time. ever. gold for august delivery settled at $1,602 an ounce, up $12. that's a record in dollar terms, but below the peak reached in the 1980s, after accounting for inflation. >> susie: big layoffs announced late today at cisco systems. it will layoff 6,500 workers, or about 9% of its full time workforce. analysts predicted thousands of job cuts after cisco announced plans to reorganize in may. the company had been losing ground in the network equipment business. cisco sa

erika miller has more on whether owners of treasury bonds should be worried about the safety of their investment. >> reporter: there are many types of safehavens in the world and on scorching hot day like today, cooling centers are one of them. but it's an investment safehaven that traders here are focused on: u.s. government bonds. treasuries have been growing in popularity for months, despite the threat by ratings agencies to downgrade u.s. debt. interest rate strategist suvrat prakash explains what that would mean. >> what they are saying is we can't be 100% sure that the government can pay your money back 30 years from now. maybe we are just talking about 95% or 99% sure. >> reporter: if the rating on u.s. debt is lowered, it would most likely be to double-a plus. that would put the us below canada and france, but still ahead of japan and china investors are betting that the u.s. maintain its debt payments and keep its top level credit rating. but what if it doesn't? traders are divided on what would happen. >> i can make a very good case that even if we lose our triple "a" rating

and as erika miller explains, even americans who don't borrow or invest will still feel the sting. >> reporter: open your wallet and look inside. if you own any of the 700 million credit cards used in america, you have a stake in washington's debt negotiations. unless lawmakers reach an agreement that satisfies ratings agencies, the u.s. cod lose it's triple-a badge of honor. that would raise borrowing costs for uncle sam. it would also mean higher rates for people who have home loans, car loans, and student loans, as economist bob brusca explains. >> if you have anything that has an interest charge attached to it, chances are it's a variable interest charge. it will be going up. >> reporter: consumers and businesses could also have a harder time getting credit, the lifeblood of the economy. if the u.s. government can't be completely trusted to pay its debt on time, bankrate's greg mcbride says lenders will become more worried about you. >> if uncle sam can default, lenders are going to be reluctant to lend to anybody out of the fear of risk of default, and then you could get a freeze