erika miller looks at whether another banking crisis could be brewing. >> reporter: for many investors, this feels a lot like the financial meltdown of 2008, which saw the collapse of big american institutions like lehman brothers and bear stearns. but relax-- bank analyst erik oja says the sector is in much better shape today. >> we do not expect large institutions to fail this time around. we do not see any breakdown in liquidity. if you look at libor, which is one indication of liquidity, libor is far below where it was three years ago. >> reporter: in addition to increased liquidity, oja says banks have bigger reserves and far less leverage. but it's clear there are still major headwinds for american banks, including the possibility of another recession. >> bank profits depend mostly on how well the economy is going to do. loan growth, credit quality, fee income growth, and then capital levels-- everything depends on how the u.s. economy does. >> reporter: there are also concerns about fallout from the european banking crisis. true, most u.s. banks have little direct exposure to gr

and as erika miller reports, that could pressure american markets for quite a while. >> reporter: most american's don't give much thought to french banks. after all, they're not on u.s. street corners offering retail banking. but as international strategist paul christopher explains, problems in france would quickly have ripple effects here. >> it's a series of dominoes, really. if the french banks get in trouble, and lets say the french government is downgraded and its borrowing costs go up, then it's more expensive for the french government to support the french banks. >> reporter: that's just the beginning. assuming france cannot fix its own problems, it would likely ask the european union for a bailout. that, in turn, could lead to consumer confidence, weakening declines in business and consumer confidence, weakening the european economy. and a slowdown there would hurt u.s. corporate profits. market strategist wayne kaufman believes europe is the biggest fear holding back stocks. >> united states companies, at this point in time, get over 50% of their profits internationally, over

for more on what bernanke said and didn't say, and investor reaction, here's erika miller. >> reporter: wall street was hoping fed chairman ben bernanke would detail new options to kickstart the recovery. instead he passed the buck. economist bob brusca says bernanke delivered a straightforward message today. it's time for congress to do its part. >> it's really at a point where you have to talk about doing something that the government is responsible for instead of the fed. the question is whether you need something on the fiscal side, whether you need a stimulus plan, whether you need some wholesale tax reform. >> reporter: bernanke also chastised politicians for how poorly they handled the debt ceiling debate, warning, many on wall street were disappointed that bernanke did not talk about whether recession risks are rising. he also did not discuss specific policy tools the fed is considering for the future. >> he may even have some creative things in his mind that he's willing to try that he hasn't listed and he wants to keep secret for a while longer. >> reporter: but bernanke did

erika miller, "nightly business report," new york. >> suzanne: joining us now from the c.m.e. in chicago, jeff saut. he's chief investment strategist at raymond james. jeff, welcome back to the program. >> what a day. >> you bet. >> so what's the individual investor do on a day like this? >> well, this feels re like the end of a decline than the beginning of a whole other leg down. we counselled people to raise some cash back in february and march and are actually starting to put some of that capital back to work on days like this. you have to go back to 1940 when the germans blew a 60 mile hole in the line to get a day like this where less than 2% of the stocks trade product actually up on the session. >> so you really think that individual retail investors should be buying, perhaps even tomorrow? >> yes, i do. as a matter of fact. this feels more like the end of a decline than the beginning of a whole other leg down to me. >> and what should they be buying, of course? ness well, i think if you are looking at the s&p, i think you can buy an s&p type fund, very efficient way t

erika miller, "nightly business report," new york. >> susie: japan promised bold action today to stem the rise of a super-strong yen. it's launching a $100 billion fund to help japanese companies operating overseas deal with a strong yen environment. the move comes on the heels of a moody's downgrade of that nation's credit rating last night. moody's cut japan by one notch to double a3, noting a big buildup in debt over the past two years and the country's revolving door politics. >> tom: from asia to europe, france slashed its economic outlook today and rolled out a host of new austerity measures, hoping to keep its triple-a credit rating. france cut its growth forecast from 2% to 1.75% this year and predicts much the same next year. it also unveiled 12 billion euros in new budget cuts and a temporary 3% tax on households making more than 500,000 euros a year. >> susie: speaking of europe, still ahead, our "street critique" heads across the pond for two pharmaceutical stocks with healthy dividends. our guest? hilary kramer of gamechangerstocks.com. >> tom: for the first time in six y

erika miller, "nightly business report," new york. >> tom: still ahead tonight, from job creation to funding small businesses, we head to the heartland for main street's ideas on "how to fix the economy." as we mentioned, stocks were mixed today, with the blue chips gaining just a little bit on some high-profile retail earnings. the dow rose four points, the nasdaq fell almost 12.5, and the s&p 500 was up a point. trading volume fell slightly from yesterday's pace; just under one billion shares moving on the big board, under two billion on the nasdaq. >> susie: two retail giants were in the spotlight today. target rang up better than expected profits in its second quarter and raised its outlook for earnings in the second half. the nation's second largest discounter credited its remodeled stores and larger selection of fresh food. target's sales averaged 3.9% in the quarter, their fastest pace in four years. meanwhile, abercrombie & fitch also posted a better than anticipated quarter, but the teen retailer warned of trouble in the crucial back-to-school season as it enters "a period o

erika miller, "nightly business report," new york. >> suzanne: two is better than one. that's the thinking today at kraft foods. the company announcing it's splitting its business in two. the company has been contemplating a split for months and made it official today. it will create a global snacks business with revenues of $32 billion, and a north american grocery business with $16 billion in sales. from products like jell-o, kraft shares higher this morning on the news but they got caught up in the selloff, ending the day down 1.5%, tom, kraft has second quarter earnings 4 cents better than estimates and may not be the best day to be putting news out there. >> tom: it got swamped. kraft was a rare bright spot in the market and for the dow jones industrial average but by the end of the day couldn't keep up in positive territory, selling overwhelmed the market. no sugar-coating it. today was ugly for stock investors. all 30 stocks making up the dow industrial index were down. all of the nasdaq 100 components were in the red, and all but three stocks of the s&p 500 clos

erika miller reports. >> reporter: the big relief rally that wall street was expecting did not happen today, but don't give up on tomorrow. stock market strategist jeremy zirin says investors won't exhale until a debt deal is signed, sealed and delivered. >> markets are going to remain on edge, only because of the potential tail risk-- low probability tail risk, but high- impact negative event that could occur if we default on our debt. >> reporter: assuming the debt agreement becomes law, zirin thinks the s&p 500 could rally 3% to 5% in the next month. that would be more than the index has risen this year. part of the reason most strategists do not see bigger gains is uncertainty about the u.s. credit rating. strategist nick colas worries spending cuts in the current debt deal won't be deep enough to satisfy ratings agencies like standard & poors. >> they are going to either leave us on some kind of watch or, worse case, downgrade the sovereign debt of the u.s. >> reporter: that's not the only headwind for stocks. another big concern is the soft economy, which could get even softer i

erika miller, "nightly business report," new york. >> suzanne: two is better than one. that's the thinking today at kraft foods. the company announcing it's splitting its business in two. the company has been contemplating a split for months and made it official today. it will create a global snacks business with revenues of $32 billion, and a north american grocery business with $16 billion in sales. from products like jell-o, kraft shares higher this morning on the news but they got caught up in the selloff, ending the day down 1.5%, tom, kraft has second quarter earnings 4 cents better than estimates and may not be the best day to be putting news out there. >> tom: it got swamped. kraft was a rare bright spot in the market and for the dow jones industrial average but by the end of the day couldn't keep up in positive territory, selling overwhelmed the market. no sugar-coating it. today was ugly for stock investors. all 30 stocks making up the dow industrial index were down. all of the nasdaq 100 components were in the red, and all but three stocks of the s&p 500 clos

erika miller reports. >> reporter: investors couldn't see bank of america c.e.o. brian moynihan, but 6,000 people dialed into to hear him defend his business strategy. moynihan reassured investors there's no need for the firm to raise additional capital, because conditions are improving. >> the fundamentals are so much better in our country, and in our company, and in our industry, than they were four years ago, when the financial crisis hit. >> reporter: moynihan also tried to bolster confidence by pointing to the positives during his 18-month leadership. they include an increase in market share, cost-cutting, lowering risk and selling non- essential assets. >> reporter: but investors remain skeptical. b. of a.'s stock gained all of 16 cents from the start of the call to its finish. the shares are down nearly 50% from where they started the year. n.y.u. finance professor viral acharya says bank of america will continue to face big challenges beyond the weak economy. bank of america's somewhat greater mortgage exposure and it's higher leverage make it vulnerable.

erika miller, "nightly business report," new york. >> susie: and now, more on that stunning change at apple-- steve jobs stepping down and tim cook taking the c.e.o. job. the question investors everywhere were asking today-- will apple continue to succeed without steve jobs, especially when you consider this statistic? since jobs took over as c.e.o. in 1997, apple stock has zoomed higher by 9,000%. joining us now to talk about apple's future, gene munster, senior research analyst at piper jaffrey, and jeffrey sonnenfeld, professor of management at yale university's graduate school of business. thank you for both joining us. >> good evening, susie. >> susie: gene, let me start with you. certainly steve jobs is a tough act to follow, but can tim cook keep the momentum going at apple. >> yes, and i think the reasons that the road maps aren't in place for the next three-- are in place for the next three to five years, we know about the iphone and i pad but the television that steve jobs has worked on, should carry the company for the next several years. so we continue to look very good ab

erika miller, "nightly business report," new york. >> there's no recession in sight. we're going to skirt it but with a slowdown that's going to be meaningful. >> tom: still ahead, tonight's market monitor guest is investing for a recovery. he's marshall front, chief investment strategist at front barnett. >> tom: the nation's largest bank is cutting jobs. bank of america will layoff 3,500 workers by the end of september. that's just over one percent of its workforce. a spokesperson said the cuts will be spread across all business units. b. of a. is not the only banker scaling back-- bank of new york mellon, goldman sachs and state street have all recently announced layoffs. >> susie: just how weak is the job market? a new report shows that unemployment rates rose in july in more than half of all states in the u.s. while the nation's overall unemployment rate fell to 9.1% last month. joblessness was up in 28 states, unchanged in 13 and down in nine. nevada is still the hardest hit. the unemployment rate there: 12.9%. north dakota has the nation's lowest: 3.3% as we co

erika miller, "nightly business report," new york. >> susie: joining us now? robert doll, chief equity strategist at blackrock. he oversees more than $1 trillion in assets. >>nice have to you with us tonight. >> good evening, susie. >> susie: it was really a nasty day, i'm going to ask you is this the beginning of a bear market. >> i don't think so susie. they reported 8% off the high. we showed a chart of the s&p 500, and all year long we've been 50 points either side of 1300. right now that doesn't feel so good, but we're bouncing around with lots of cross currents of late more negatives but there are still some positive out there. >> susie: we expected to have a relief rally now that the deal was signed. where do you stand on this, on the rationale behind the selling? was it about the debt deal or was it about the economy? >> i think it's more about the economy, susie. but they are related. at the end of the day, i don't think there's anyone in the financial market to really have debt default by the u.s. and so the assumption was in the 12th or 13th hour, w

erika miller reports. >> reporter: if the stock market were an amusement park ride, it would probably look something like this. investors are at the edge of their seats as the s&p 500 has dropped more than 12% this month alone. strategists say investors want to see three things before they'll be convinced it's safe to step back in. the first is the resolution of europe's debt crisis, as strategist david levkowitz explains. >> in think investors want to see the european policymakers make a very strong financial commitment to defending the eurozone, and there are various estimates to how much that might be-- some estimates as high as $2 trillion euro backstop. >> reporter: but investors are also worried about the situation here in the u.s. strategist sam stovall thinks confidence will come back once there's a credible debt reduction plan. >> i think what would make investors feel a little bit better are comments coming from fed chairman bernanke, comments from the treasury, from the u.s. government that indicate both sides of the houses of congress are really working together to solve o

well, i like the clothes, the short sleeves. >> reporter: erika miller, "nightly business report," new york >> tom: a little later in the program, some back-to-school stock plays with tonight's word on the street: "tech." >> susie: another grim report on housing. the commerce department said new home sales fell 1% in july. that's the fourth monthly decline in a row. the mammoth number of foreclosures is a big reason the housing market is still struggling. as we continue our series "how to fix the economy," diane eastabrook tells us how chicago is trying to fix its foreclosure problem neighborhood by neighborhood. >> reporter: in chicago, there are thousands of boarded up homes in distressed neighborhoods like this. last year alone they cost the city close to $30 million to maintain. chicago is trying to get a foothold on foreclosures with nearly $200 million in public and private grants. in the past year, the city has acquired more than 600 abandoned properties, rehabbed close to 250 and sold 20 of them. katie ludwig is the assistant commissioner of housing and economic development. sh