i'm joined by suzanne pratt. wall street saw its first rally this month, suzanne, after six straight losing sessions. >> suzanne: tom, stocks moved higher at the open and stayed in the plus column all day. the dow rose 75 points, the nasdaq and s&p 500 both added 9.5 points. >> tom: helping the market: word the u.s. trade deficit fell in april to its lowest level of the year. it dropped 6.7% to just over $43.5 billion. exports hit a new high, climbing just over 1% to $175 billion, while imports fell slightly to $219 billion. >> suzanne: despite today's rally on wall street, the past month has not been a good one for u.s. stocks. in fact, the major stock indexes peaked at the end of april. since then, the dow and s&p 500 are down more than 5% while the nasdaq has lost 6.6%. experts point the finger directly at the economy and its softpatch. the drop this month has investors looking for protection and safety from the struggling economy. let's first assume the economy will be in "slow mo" for the next several months.

suzanne pratt reports. >> reporter: the u.s. economy is in a big funk, and a funky economy can spell trouble for the stock market now and down the road. experts say some areas will suffer more than others. financials is the one sector that most experts agree investors should definitely avoid. market strategist nick colas says that's because financials are facing a host of headwinds. >> not just regulatory, but also the consumer and the housing market. none of those three things work in financials' favor, and at least two of those three things have to be at least neutral or positive for financials to actually work. so, in the current environment it's a pretty tough place to make money. >> reporter: already this year, financial stocks have stunk up a storm, down a hefty 6.8%. sector guru sam stovall agrees investors should underweight the financial sector, but he also says watch out for consumer discretionary stocks such as retail and restaurants. >> i think right now the momentum, the reasons for concern, the eroding fundamentals

suzanne pratt explains. >> reporter: on wall street, there's always something new to fret about. lately, however, a rather old worry is gaining attention. it's stagflation, and it occurs when the economy experiences stagnant growth-- the "stag"-- and high inflation-- that's the "flation." add in high unemployment and it can be a very nasty economic recipe. economist steve richuitto doesn't see it because he thinks current high oil prices are temporary. >> i'm not really worried about stagflation so much, because the economy's deceleration is going to take some of the inflation pressure that everyone's been worrying about off the table. and, it's not the u.s. slowdown that's important-- it's the global slowdown that's taking place. >> reporter: in the late 1970s, the u.s. was pummeled by stagflation. many americans probably still remember those sluggish, high- priced days. they may also recall the federal reserve had to hike interest rates to 20% to fight inflation, ouch! >> the problem with stagflation is the soft growth environment. if you can't wring inflation out of the system

suzanne pratt takes a look at whether u.s. bank stocks will remain under pressure this year. >> reporter: it isn't easy being a financial stock these days. from big banks to investment banks to regional banks, the sector has gotten mauled this year. since january, financial stocks as measured by this popular index are down about 6%, while the broader market is up slightly. experts say investors are nervous because banks are still in limbo as the dodd-frank banking reform bill gets sorted out. and then there's greece and what debt defaults there could mean for the global banking sector. and if that's not enough, analyst erik oja says there's the u.s. economy and its recent soft patch. >> it's a question of is it a temporary downturn caused by the japanese events, or is it something worse, a housing- related double-dip recession? >> reporter: many of the problems facing financials will not be solved any time soon. but the question now is whether the stocks are cheap enough to consider buying. analysts say that depends on what si

still, as suzanne pratt reports, it may be more of a speed bump for the recovery rather than a major pothole. >> reporter: two years after the recession ended, the u.s. economy should be growing at a very healthy clip. instead, new jobs are hard to come by, factory output is slowing and buyers have put on the brakes on car sales. on top of that, consumer confidence is slipping and the stock market is sliding. the big question is whether the economy's so-called soft patch will expand into something more dangerous. economist cary leahey says the risk of an extended slowdown is very high. >> you can't help look at the numbers and see that when energy prices get as high as they are-- with many people encountering $4 a gallon when they go to the pump-- that has traditionally been a flash point for the economy and slower growth ahead, if not a downturn. >> reporter: six months ago, goldman sachs thought the economy was picking up steam. today, the bank's economic team says that was the wrong call. while the firm's chief economist jan hatzius says the u.s. has hit a soft patch, he does not

suzanne pratt, "nightly business report," new york. >> susie: okay, tom, four sessions for the blue chip rallying here at the new york stock exchange. a little more confidence, less fear in the markets especially as you reported on that greek confidence vote. >> tom: absolutely. we've seen confidence creep into this market due in large part because the spring lows have held with the major stock indices. let's roll with tonight's market focus. we saw steady buying interest for stocks all day long as investors seem to get more confident of a rescue for greece. the s&p 500 spent the entire day in the green, hitting its high price of the day about an hour and a half before the closing bell. let's see where we are over the past 90 sessions. the march lows held last week, and the index has been swinging higher. its up more than 2% of the low last wednesday. drugstore giant walgreen turned in earnings two cents per share better than estimates. but it also announced it has been unable so far to renegotiate a deal to be part of the express scripts pharmacy provider network. that hurt shares to th

earlier today, suzanne pratt met with c.e.o. steve sadove and asked him why saks is doing so well. >> our customer is feeling better about themselves, and they're feeling better about the overall condition of the economy. not the overall economy, because you you've got concerns. but there's a bifurcation in the high end customer, and they're feeling better. >> i was going to ask you about the bifurcation. because they're feeling well, and you have the midrange not doing well, and the low end doing so, so, so do you expect that to continue? >> i think the higher end is tied to the stock market. the stock market in the 12 to 12 and a half thousand raishlg, and better than 6500. and our customer looks at their net worth and say i feel not as good as 14,000. but reasonably good about my situation today. they're feeling good about their jobs and the unemployment at the higher end is not very high. and they're saying, i can deal with this and they're buying. >> in the last two weeks, we've seen cybs that the economy has slowed signifi

. >> susie: suzanne pratt takes a look at what's behind the run-up in treasuries and what it means for investors. >> reporter: a funny thing has been happening in the bond market lately. "funny" as in "puzzling," and puzzling because treasury bonds have been rallying when they're supposed to be out of favor. but, there are explanations for investors' change of heart. first, u.s. government debt looks far more appealing, relatively speaking, when other large economies face even bigger headaches. don't forget europe has serious sovereign debt issues, and japan is now in recession thanks to mother nature. bond expert michael pond says secondly, the u.s. economy is downshifting, when it was supposed to be a lot stronger. >> investors have also become more concerned about the growth prospects in the very near-term for the u.s. because q1 was an obvious soft patch. whether we pick up again is yet to be determined. >> reporter: the weaker the u.s. economy, the more likely it is that the federal reserve will hold interest rates near zero. that means treasury yields could fall even further, cre

as suzanne pratt reports, americans will be following the greek drama closely for weeks to come. >> reporter: recently greece has gone from being viewed as a fabulous tourist spot to a thorn in the side of u.s. stock investors. the question now is whether greece and it's financial woes will dictate the direction of the american stock market for the immediate future. nyse trader jonathan corpina says it absolutely will because investors hate uncertainty and greece's financial outlook is far from certain. >> until we have some stability, any information about a plan or some sort recovery that's put in place coming out of europe and greece at that point then investors will feel much more confident to get back in the market. looking into today, markets are positive this morning and leading into the afternoon due in fact to the headlines that are coming our of greece. >> reporter: market strategist rick bensignor agrees positive news out of greece is just as important for u.s. investors as negative. >> if by chance something good out over the weekend a good headline or something like that it woul

and, as suzanne pratt reports, experts are fretting about where the economy goes from here. >> reporter: this was not how the recovery was supposed to go. two years after the great recession, the u.s. economy is only sputtering along. history suggests it should be supercharged. take a look at this chart of u.s. g.d.p. growth. the numbers turned positive two summers ago. but there's been little acceleration in output, which is typical of most recoveries. economist beth ann bovino says we're traveling at half-speed. >> you'd normally like to see about 5% growth on average for the united states. just to keep up with the average. so, the last year was close to 3% was not nearly not near that. and, right now it's coming in lower than that, we're very subpar in terms of growth. >> reporter: other economists are less concerned about subpar growth. they say after a deep recession, it makes sense the rebound is lackluster. economist conrad de quardos says the more worrying part of the economic picture is the lack of job growth. >> given the damage that was done to the labor market during the rec

suzanne pratt, "nightly business report," new york. the dow lost 59 points after falling more than 200 earlier in the session; the s&p 500 and nasdaq actually gained ground. >> tom: here are the stories in tonight's "n.b.r. newswheel." fresh signs of the weak recovery in jobs and housing. first up, jobless claims continued to tick higher, rising by 9,000 last week to 429,000 applications. the weekly average hasn't dipped below the key 400,000 since april. new home sales fell 2.1% in may to an annual pace of 319,000 units. that means we're on pace for fewer sales than 2010, the worst year ever for new home sales. but prices ticked higher for the first time since december-- the median rose to $222,000. with gas prices still running about a buck higher than last summer, the tax man is giving consumers a break. the irs today boosted its standard mileage deduction to 55.5 cents a mile; that's up almost a nickel. still ahead-- too hot not to cool down. we talk about the red-hot chinese economy and its place in global markets. our guest, jing

suzanne pratt explains. >> reporter: the lazy days of summer are finally here on wall street, but market pros predict this summer the u.s. stock market will see more volatility than sluggishness. from the debt crisis in greece to debt ceiling negotiations in washington, trading will be headline driven. take today for instance. startegist paul larson says u.s. stocks got a nice boost as investors welcomed the progress made in europe. >> much like in real estate, where it's location, location, location, right now in the market it's all about greece, greece, greece. >> reporter: greece's debt problems will not go away overnight, and experts say they're likely to whipsaw the market when domestic news is in short supply. in two weeks, however, look for u.s. corporate news to dictate trading again. that's when companies begin reporting second quarter results. alcoa will be first on july 11. according to thomson reuters, expectations for q2 profits for s&p 500 firms have gotten progressively better since the start of this year. still, portfolio manager jack caffrey says the bigger issue for inv

i'm suzanne pratt. good night everyone. you too, tom. >> tom: goodnight suzanne. i'm tom hudson. 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. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> more information about investing is available in "nightly business report's" video "how wall street works". to order this dvd, call 1-800- play-pbs or visit online at shoppbs.org. >> be more. pbs. d andy mcconnell: so are you saying that this vase actually belonged to field marshal montgomery? his parents-- his father was a minister in moville and they lived in the house. and the vase was in the house when my son-in-law's father bought it. so your son-in-law's father buys the house and this is part of the contents of the house. yes, that's part of the contents. it sat at the top of the stairs-- at the top of a spiral staircase in a hallway on a table. was it a grand house, would you describ