this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> susie: good evening, everyone. my colleague, tom hudson, is off tonight. egypt's president hosni mubarak said today he will step down from power, and he set a date. it's september of this year, right after egypt's elections. but that announcement did not quell protestors. they want the president to resign immediately. despite the continuing uncertainty in egypt, u.s. stock markets rallied today with the dow closing above 12,000. in the oil markets, prices dipped a bit, but they're still at the highest level in three years. erika miller looks at where crude prices are headed from here. >> reporter: anti-government protests continue to heat up in egypt, and that's heating up trading in the new york oil pits. light sweet crude has jumped about 6% in less than a week. traders worry strikes in egypt could shut down the suez canal, as well as the pipeline that connects the gulf of suez with the mediterranean sea. roughly three million barrels of oil a day-- about 2.5% of global production-- pass through those two points. a paralyzed canal would force tankers to go all the way around africa, boosting transportation costs and raising prices. but trader peter donovan says there's a far bigger fear in the marketplace. >> the real problem is the contagion effect, if this spreads to oil-producing countries. libya is right next door; certainly iraq, iran not too far. and it's a very unsettled environment, as it is in the middle east. >> reporter: many traders say they're not particularly reassured by opec's promise to open the spigots if trouble in egypt affects global oil supplies. oil prices were already on the rise, even before the political unrest in egypt. since the summer, oil futures prices have surged 30%. and many industry experts think prices are headed higher. the european oil benchmark-- brent north sea crude-- is already trading above $100 a barrel. analyst fadel gheit says u.s. crude futures could soon hit that level, if turmoil in the middle east escalates. >> that is the biggest fear that the market has. that could have the possibility of supply disruptions. and in that case, oil prices above $100 will be only the beginning. >> reporter: on the other hand, if the situation in egypt is resolved quickly and peacefully, traders predict oil futures could plunge $6 or $7. what's clear is that the direction of oil prices could have big implications for the global economic recovery. >> rising oil prices will definitely stifle consumer spending and consumer confidence, and that is negative for the economy. >> reporter: according to one estimate, a $1 increase in a barrel of oil for just one day takes $12 million out of the u.s. economy. by that calculation, a $5 increase for three months would cost the u.s. economy $5 billion. erika miller, "nightly business report," new york. >> susie: from the unrest in egypt to debt problems in europe, the global economy is looking more risky and confusing these days. what does all this means to you, and why does the world economy look so fragile? to get some answers, we turned to m.i.t. sloan school professor simon johnson. washington bureau chief darren gersh went through the world's worry list with johnson, beginning with egypt. >> well, obviously, there is a lot of dissatisfaction among the egyptian population, they have not had a good deal economically. they're feeling squeezed, higher food prices, and they don't have a lot of jobs. in terms of what it means for us, not that much. if it stays in egypt. if it spreds to the other part of the middle east, you worry about oil prices. if the suez canal shuts down, that would disrupt the oil. >> you mentioned food prices. they went up around the world about 25%. we're hearing aa lot of people concerned about that. what is causing that and what are the implications around the world and here? >> mostly it is the rebound in the emerging markets, china, india, brazil, russia. these countries are doing fine. they are commanding commodities that people like to eat. and many of the commodity producers, including in africa, are doing very well. but people who consume food, particularly poorer people, and in the united states as well, are adversely affected by this. >> you mentioned more money. there is a lot more money around the world. you mentioned people in china and turkey and brazil talking about hot money. what exactly is "hot money" and what's the concern there, and what does it mean for our folks in the united states? >> the issue is we have very low interest rates, and the other countries have higher interest rates, brazil, for example, you can get 10%, 11%. and the money wants to move from the united states to brazil. this maybe pushed them a little bit too far and too fast. they'd like to slow that down. they think it is a little bit of a burden we're imposing on them. >> it's too much money. >> yeah. and there is a lot of argument about how to do that. should they tighten the policy, but that will higher the interest rates, so that won't turn away the money. should they have a fiscal contraction, and cut back on fiscal spending? poor people in brazil are not going to like that either. these are the policy debates of today. >> you mentioned the united states and all of that. a lot of people are saying, you know, if you're looking over the next couple of decades, you should take some of your money and invest in in emerging markets because they will grow for a long time. if these emerging markets are worried about hot money, how does it affect your investing in it. >> well, you obviously have to be careful and cautious. if you invest in america, you want american dollars when you retire. if you invest in brazil or china, you are going to get paid in those currencies. >> let's talk about the euro zone bailout fund. this is another big global risk factor out there. there is some discussion that the europeans are going to come up with a big bang, and they're going to try to solve all of the debt sovereign in greece. >> the europeans have a big problem with the debt. they do need to have a systemic and systematic solution. if anything, the events in the middle east, if they continue to unfold, sort of take the market pressure off the europeans. people in the financial markets like safe havens when there is instability anywhere else in the world. so money will come to the united states and europe. >> so talking about all of these risk factors, how worried should people of the united states be for what this means for our fragile, still fragile economic recovery? >> we should be very afraid. unemployment is still 5% below where it was before. we have never seen anything like that in the last 50 years. it was more like where the economy would collapse for a while, bounce along the bottom, and struggle to recover. that's the kind of financial mess our risk taking has led us into. the different problems around the world threaten to destabilize, at least the employment. >> well, simon johnson at the m.i.t. sloan school, thank you for taking your time in explaining all of this. >> susie: here are the stories in tonight's "nbr newswheel." a big rally on wall street-- the dow rose 148 points, closing firmly above the 12,000 mark. the nasdaq added 51 and the s&p 500 up 21. trading volume pulled back a bit-- just over a billion shares moved on the big board, while 2.3 billion traded on the nasdaq. one catalyst-- the nation's factories are firing on all cylinders. u.s. manufacturing activity hit its highest level in over six years last month. the institute of supply management's manufacturing survey rose to a better-than- expected reading of 60.8. but one area that's still struggling-- construction. the commerce department says spending on construction projects fell 2.5% in december. the sector also lost 16,000 jobs that month. still ahead-- will it be smooth sailing for shipping in the suez canal? the impact of egypt's unrest on tanker stocks in tonight's "word on the street." food prices are surging higher all around the globe, and that's one of the reasons behind those violent protests in egypt. higher prices are also taking a bite out of the bottom lines of many food makers. we'll see how much tomorrow, when hershey kicks off a wave of earnings reports from the big food companies. as diane eastabrook reports, some are fighting back with new products, while others are passing higher prices to consumers. >> reporter: this is the sound of sticker shock at the grocery store. joe caputo and sons fruit market in palatine, illinois, says, in recent weeks, prices for everything from lemons to green peppers have been going through the roof. as a result, general manager mike macrito's been getting an earful from customers. >> they are coming in here and saying, "what happened? why is the produce so high?" it's like the stock market-- you never know what to expect when you are purchasing produce and that. >> reporter: experts say growing demand in developing countries and crop damage from foul weather are creating a perfect storm for high food prices. commodities analyst kimberly dubord says the problem started in russia last summer. >> you had the fires that just decimated their wheat crop, and then you've had just one after another of these unusual weather events that have impacted supply. and at the same time, you have demand drivers that are secular in nature that are putting pressure on everything. >> reporter: higher prices for corn, sugar, and wheat are already squeezing margins for food companies like kellogg, general mills, and kraft. morningstar food analyst erin swanson says manufacturers are starting to recoup higher commodity costs by raising prices on some products. but she says that strategy could backfire with consumers. >> they've tried private label, and they perceive private label to be of higher quality than they did previously. and those trials probably wouldn't have occurred had the economic environment not gotten to be so difficult. >> reporter: swanson says introducing new products or brand extensions could help food companies boost sales. that's what lifeway foods is doing. the maker of the dairy drink kefir is facing higher milk prices. so, cfo edward smolyansky says lifeway is trying to attract more customers with a heart- healthy kefir, and a new juice brand it recently bought. >> with the acquisition of the first juice brand-- it's still considered a health type of a product sold in that kind of health market, but it's non- dairy, so we're not... so if we do see increasing in costs on the dairy side, we also have other products that are non- dairy based. >> reporter: lifeway hasn't raised prices on any of its products in about three years, but the company says if milk prices keep heading higher, it might have to by the end of this year. diane eastabrook, "nightly business report," palatine, illinois. >> susie: the big three auto makers are off to a great start this year, with chrysler and general motors leading the way. g.m. sales surged 22% in january, thanks to the popularity of its pickups and s.u.v.s. at ford, sales jumped 13%. its fuel-efficient fusion model was a big seller. chrysler was the big winner for the month-- a 23% sales spike driven by strong demand for the jeep brand. toyota's sales rose 17% from january of last year. that's when it temporarily stopped selling some models so it could fix faulty accelerator pedals. wall street kicked off february with a bang. as we mentioned, the dow closed above the psychologically important 12,000 level, despite the turmoil in egypt. let's get a closer look with tonight's "market focus." stocks rallied today for two main reasons: encouraging news about the economy, thanks to that surprise pickup in manufacturing activity we told you about earlier. also today, solid quarterly results from pfizer. pfizer's fourth quarter profits tripled to about $3 billion. the drug giant earned 47 cents a share, a penny above estimates. pfizer's new c.e.o. announced a shift in strategy, from buyouts like last year's takeover of wyeth to boosting its share buyback plan. he's also cutting pfizer's research and development budget by about $2 billion. that includes the closing of pfizer's largest european research facility. investors saw the changes as a prescription for growth-- pfizer stock hit a one-year high, gaining 5.5% that made pfizer the dow's best gainer, followed closely by alcoa, bank of america and exxon, all up at least 4%. in other earnings news, archer daniels midland served up tasty results. the food processor is in a sweet spot, benefiting from global shortages of grain. a-d-m earned $1.06 a share, well above estimates, and up sharply from last year. investors were hungry for the stock-- shares rose over 6% to $34.70, a 2.5 year high. also delivering strong fourth quarter results-- ups. the shipping giant earned over a billion dollars, or $1.08 a share, three cents above estimates. ups says the broader economic recovery meant it delivered more packages. record profits helped baidu shares surge to an all-time high. shares of china's biggest web search firm rose over $10 to $118.73 a share. baidu still sees room for growth, especially in e-commerce and online video. meanwhile, an fda rejection took a big bite out of orexigen therapeutics. the stock tumbled 72%. it closed at $2.50 a share after the regulator rejected the company's experimental weight loss drug contrave. the issue-- safety concerns. the fda wants to know more about heart risks. analysts believe this could set orexigen back by five years. a couple of stocks to watch tomorrow-- they were in the spotlight in after-hours trading. chipmaker broadcom fell more than 5% after hours, despite strong fourth quarter results. investors focused on a lukewarm revenue forecast for this quarter. electronic arts shares rose 8%. the story-- stronger than expected profits and a surprise $600 million stock buyback. and finally, borders group tumbled to just 47 cents a share in regular trading. it continued falling after hours, down another 21 on reports it may file for bankruptcy as soon as next week. and that's tonight's "market focus." >> susie: as we've been reporting, the crisis in egypt is impacting the oil sector-- not just prices, but also oil tanker stocks. they're see-sawing on worries that the suez canal is at risk of closing. in tonight's word on the street- - "oil tanker stocks." suzanne pratt spoke with scott eden, a reporter at thestreet.com. she began by asking him about the likelihood the canal will shut down. >> diminished, there is going to be any kind of closure, but other people i talked to say the situation is so volatile, it is hard to say that the risk is gone completely. especially when you consider labor shortages that are starting to -- there is evidence that some tug captains are not going to work. at least according to one person i talked to who works for a major multi-national oil concern. the risk, i think, is still out there. >> so let's bring up the chart of the four of the oil tanker stocks we're going to talk about. nordic, american tanker, overseas ship holding, general maritime, and frontline. what would -- i know it's unlikely, but what would a closing of the canal mean for this sector? >> well, rates would almost ainsuredly go higher. they would have all of the sort bargaining chiption bargain their corner. they would hold all of the cards, so they would convince oil companies to drive rates higher. >> rates would go higher, and i assume the stocks would go higher as well. this has not been a particularly good stretch for oil tanker stocks. they are down sharply. why is that? >> there is a glut of new ships. you can almost set your watch to the cycle to the industry. when times are good, companies will buy new vessels. and all of the orders that came in in 2007 and 2008 are now being delivered. there are too many ships for too little oil. >> absent of what is going on in egypt, is there any chance this is a buying opportunity? perhaps this sector is bottoming out at this point? >> the conventional wisdom is it will take a year or two to work through all of the new ships coming on line. it would be almost risky now to call it a bottom. on the other hand, there is something called forward freight futures, which is kind of a derivative. the smart money is saying rates will average around $22,000 per super tanker in may. some people are more optmistic that rates will rise. >> if you were to pick one stock, which would it be? >> frontline would be the big daddy. tha have the biggest ships and the most ships. that's the stock to play, and scheduled to go higher. >> any disclosures for you, scot? >> editorial policies that we're not allow to own stocks. >> you can read scott's article on thestreet.com, and you can also find it on a link on our website. thank you for joining us, scot. >> thank you. >> our guest, scott eden o >> susie: here's what we're watching for tomorrow. quarterly results from hershey, visa, yum brands, and news corp. and it's a big day for news corp for another reason-- the media giant joins forces with apple to unveil "the daily." this is the first ipad-only newspaper. also, hilary kramer is back as our "street critique" guest. send us your questions-- streetcritique@nbr.com. citigroup now owns the beatles. the bank took over music label emi today, and agreed to write off most of the company's debt. a citi loan helped a british private equity firm buy emi four years ago. but despite big name acts on emi's roster, that takeover failed because music sales slumped. citi is expected to sell emi to another record label, with warner music and sony among the likely candidates. the executive who oversaw gap's bungled logo redesign has fallen out of fashion with the retailer. marka hansen is leaving this week. her departure as president of gap's north american division comes after a disappointing holiday season. on her watch, sales at north american stores slumped. when the gap updated its logo, hansen initially defended it, but customer backlash led the company to scrap it and return to the original. when it comes to the world's top risk managers, tonight's commentator says they were all asleep at the wheel in davos this year. here's daniel gross, columnist and economics editor at yahoo finance. >> the world economic forum in davos, which ended last week, is always an otherworldly event-- the alpine setting, the concentration of global rock stars, including the three bs: bill clinton, bill gates, and bono. this year, something else made it seem out of touch with reality-- the almost complete lack of panel discussions on the rolling revolts in north africa and the middle east. none had been planned. here was the world's premiere gathering of risk managers of all sorts-- bankers, diplomats, consultants, policy analysts. but none foresaw the events that are now roiling markets and upsetting the established political and economic order. instead, there were plenty of talks about how to prevent the next banking crisis or the next ireland. and this isn't new. in january 2008, when sub-prime first exploded, davos man was similarly caught unawares. global risk managers, it seems, always prepare for the last big debacle. so my big takeaway from davos 2011? when it comes to figuring out where the next big risk lies, the rich and powerful are rather poor and impotent. i'm daniel gross. >> susie: and finally tonight-- pretzels, peanuts, and facebook? starting today, seven major airlines are offering the social network for free on their wi-fi networks all month. it's part of a promotion with go-go in-flight internet. the free facebook service is available on north american flights for virgin america, united, delta, air tran, american, u.s. airways, and alaska airlines. if you want to use services other than facebook, you'll have to pay between $5 and $13. and that's "nightly business report" for tuesday, february 1. i'm susie gharib. good night, everyone. 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. thank you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org @p >> more information about investing is available in: to order this dvd, call 1-800- play-pbs or visit online at shoppbs.org. >> be more. pbs.