Attack. In the wake of this new report, how safe are our utilities . All that and more tonight on nightly Business Report for thursday, march 13th. Good evening, everyone. A massive and surprise selloff in the markets today. The worst day on wall street in more than five weeks. But it didnt start out that way. The major averages actually began the day higher after firsttime jobless claims fell by 9,000 last week dropping to a threemonth low. Retail sales in february were better than expected with americans buying more cars, clothes and furniture. But investors got spooked over developments in the ukraine, china and the euro zoen. The dow tumbled 231 points, nasdaq lost nearly 63, and the s p was down 21 points. Bob pasani has more from the New York Stock Exchange on todays Market Action and what might happen next. Reporter it was an ugly day for the markets, which were battered by events outside the u. S. In china, in the ukraine, and in germany. We saw first very poor Economic News in china where Industrial Production and retail sales were both weaker than expected in february. Thats confirming that china is slowing. We also saw rising tensions in the ukraine where the acting president there said he saw a risk of war with russia and there were reports that russia fired on a ukranian plane over crimea. Finally strongly worded comments from german chancellor in which she warned of a catastrophe unless russia backed down saying it would change the European Unions relationship are yuwithn yeah. Here in the u. S. Stocks were weak right across the board. Everything from momentum names to Consumer Discretionary and financials. One positive standout was utilities which was up as traders sought more defensive parts of the markets. In fact the yield on the 10year treasury dropped about. 10 point. Thats a sign investors were moving toward more safe investments. Little sense of panic. Most traders noted we are still only 2 from historic highs in the s p 500. For the nightly Business Report, im bob pisani at the new yo New York Stock Exchange. Concern that chinas economy could slow dramatically perhaps sandbagging the rest of world with it. Eunice yoon explains. Reporter for many years china was seen as a cushion for the world. Chinese economy clocked doubledigit growth while other countries struggled. Now the economy is slowing. Exports are falling. The currency is weakening. And the leadership seems comfortable with the slowdown even if the rest of the world is not. At the countrys annual gathering of lawmakers, t the premier investors believe chinas growth rate this year could be slower and lower than the official rate of 7. 5 . What is the slowest rate of growth that you would find acceptable without stimulating the economy . Translator theres no denying we may encounter a more complex situation this year. We set gdp growth tar get for this year about 7. 5 . This quote unquote about shows that there is a level of flexibility here. You asked me whats the lowest possible gdp growth we can live with . Well, this gdp growth needs to ensure full employment and increase peoples incomes. Were not preoccupied with the gdp growth target. A slower china means less demand for commodities like copper. Not only are investors worried about the pace of the economy but the health of it, too. The Financial System hasnt been able to keep up with the years of economic boom, fostering an underground Banking Sector here which many fear could threaten the world. Chinas premier said that some defaults are unavoidable but that the government would take steps to manage the risks. For nightly Business Report, im eunice yoon in beijing. So what would a downturn in china, combined with slipping prices on commodities like copper, mean for the u. S. Economy . And if prices start falling on chinesemade goods could that lead to a wave of deflation in our economy and across the globe . Steve liesman has more. Reporter with china now the worlds second largest economy slowing, the inevitable question being asked is, what does it mean for the rest of the world and in particular the United States . Well, that depends on how it slows. A financial meltdown for chinas Banking System could ricochet around the globe, prompting fears of financial contagion that could lap up on americas shores. Thats a worry, its not seen as the most likely outcome. Most economists see a more orderly cooling that for such a big economy would have surprisingly little impact on the developed world. Thats because while china imports a lot of stuff especially commodities, it exports even more stuff. Its a great big cog in the global trade engine, but its just not consumerdriven economy. Consumption in china is less than half of its total gdp. In the u. S. Its 83 . When china slows it hurts the rest of the emerging markets, hurts the commodity exporting countries and the u. S. Feels that in terms of its export prospects. But that hit is cushioned somewhat by lower prices. In the event that chinas weaker, you would see lower oil and gasoline prices but more broadly anything thats manufactured is going to be having some content in china and other emerging market economies. And you could see that reflected fairly broadly in the goods sector. Reporter this charts shows a strong connection between chinese export prices and prices paid by u. S. Consumers. Over the past several years declining chinese export prices have kept a lid on u. S. Consumer prices. While a china slowdown worries some u. S. Investors and companies with business takes in its economy, it would come with a financial meltdown, not just a slowdown in chinese growth. For nightly Business Report im steve liesman. Its not just the u. S. And china raising flags about the risk of deflation. The strength of the euro along with years of ultralow inflation in the currency block prompted mario draghi to announce the bank is taking measures right now to fight possible widespread price and wage declines that could send the entire eurozone sliding into inflation. Chief Market Strategy at convergex, you heard all the reasons for what was going on in the markets today . What concerns you the most . And is this the beginning of a correction . Certainly the problems were having in the ukraine with russia were top of mind today. Because while the Economic Data was very sloppy out of china, it was better in the u. S. The selloff really came as the issue in ukraine began to come to the fore. As far as the beginning of a correction, i do see a lot more volatility for u. S. Stocks this year. Were coming off a long period of very low volatility. But i dont see the creation of the fundamentals for say a 10 decline. I think were going to be stuck in more a 3 to 5 decline. Is deflation a worry of yours . It has been for years. A slow Economic Growth around the world combined with chinese exports has made Monetary Policy very different. The nightmare policy, japan has had ten years of deflation and is still trying to work through the problems. Its certainly a concern. We always hear about inflation worries especially from the federal reserve, and now were talking about deflation in europe and in china. To what extent can that impact the u. S. Economy . Deflation is a funny thing. Because you would think that lower prices would encourage consumers to buy. But in fact the opposite is true. And the reason policymakers worry about it is because it can really slow down a recovery. Bottom line is its a big concern for the fed, and thats why theyve been so easy with low Interest Rates and a lot of money printing over the past couple of years because they really dread the notion of becoming japan. More volatility, possible deflation on the screen. Yet you think the market will end higher this year. How do you get there . The anchor that we use to understand the stock market is corporate earnings. The bottom line is, u. S. Companies have done a fantastic job generating very strong levels of earnings in a very lackluster Global Recovery and even a lackluster u. S. Recovery. So ultimately our confidence comes from the fact the u. S. Companies can continue to make very good profits even in a slow growth and somewhat troubled global economy. Nick, you always talk about diversification and why thats important for investors. So as you look around the globe, is the u. S. The place to be in a portfolio or should you have stocks in other International Markets . And also what about gold . Yeah. The bottom line on diversification is of course its very important to have both bonds and stocks in a portfolio. Youve seen that this year. The stock market is fed on the year, the aggregate bond index up a percent and a half. The u. S. Is the best place to be. If you look at europe for example, russia is a huge exporter of oil. Germany takes 9 of all of russian oil production. So the european economy is going to be very very troubled as we go through the problems in the euk. As far as gold goes, i think its a very efficient way to help diversify a portfolio. We believe a 3 to 5 weighting in a portfolio is an appropriate amount of gold for a standard diversified portfolio. So much good information. Nick, thanks so much. Thank you. Nick colas, chief Market Strategist at convergex. A rare show of bipartisan support in the senate its giving hope to the nations long term unemployed. Hampton pearson joins us now from washington with more. What deal, hampton, did the senate agree to and what are the chances that its going to pass . Reporter well, tyler, first of all late this afternoon there was a Bipartisan Group of ten senators announcing an agreement to reauthorize longterm Unemployment Benefits for five months. And if passed by both houses and signed by the president , those benefits woulden paid retroactively back to the end of the year when they expired. An estimated 2 million americans have lost those emergency Unemployment Insurance coverage. The key Sticking Point in breaking a political logjam all along has been how to pay for the extension. This agreement does that by extending some customs fees that were part of the recent budget deal and also making some changes in federal pension programs. Now fact that it is a bipartisan agreement is the key to getting past of course that 60vote filibusterproof threshold that you always have to deal with in the senate. Now the senate, however, is about to take a tenday st. Patricks day recess so the jobless package wont be taken up until after the senate returns. But again, this measure calls for those jobless benefits to be paid retroactively, then of course onto the house of representatives. All right. A big development. What are the prospects over in the house . Reporter well, the fact that the republicans on this Bipartisan Group found a way to pay for it, that was the real Sticking Point for both republicans in the house and senate. And it also doesnt hurt that among the leaders of this group is ohios rob portman, john boehner of course the speaker of the house, fellow colleague, leading the charge again. And its also youve got people in high republicans in high unemployment states like ohio, illinois and nevada were part of this group that crafted that extension. All right. Hampton, thanks very much. Hampton pearson reporting for us tonight from the nations capitol. Still ahead, what would it take to cause a National Blackout . A new report says not much. So how safe are our utilities . That story next. Will the trouble for General Motors worsened today. The automaker now admits thought knew about ignition switch problems in some of its compact cars as early as 2001. Now, that was three years earlier than previously reported. Those faulty switches resulted in dozens of accidents and 12 deaths. Phil lebeau joins us now from chicago with more on the deepening crisis at g. M. You know whats questionable here, phil, if g. M. Knew about the ignition all the way back to 2001 why didnt they do more about it . Reporter whats unclear when you look at the documents is whether or not this was looked at as an isolated incidents. The 2001 incident was actually a preproduction model, saturn ion that a technician saw stall. They looked at it, did some analysis, filed a report. There wasnt another report until 2003 when a dealership had a technician realize that there was a saturn ion that had a stall. Another report was filed. So the question becomes, did they look at these as isolated incidents or did they look at this and say, this could be the tip of the iceberg of something bigger here . Thats what investigators are still trying to determine. Seems like they did fail to put two and two together or one and one together in this particular case. Why i guess is really the story here. Phil, the transportation secretary was up on the hill today and he was getting questioned about the recall. Right. Did the government drop the ball on this at all . Reporter a lot of people in washington seem to think so. You had three accident investigations that were done by the national highway Traffic Safety administration, and there was no recall. In fact, there wasnt a recall until february of this year after they had a chance to analyze a multitude of more cases and examples. Heres the transportation secretary defending how ntsba conducted itself over the last ten years. Over the last decade there were complaints related to this particular vehicle, and despite three crash investigations and other research, the data was inconclusive. It just didnt point to a formal investigation. Reporter now, i know what a lot of people are going to say. You had more than 240 complaints about vehicles stalling an average of two per month. How could you not connect the dots here . Thats the main question thats going to national highway Traffic Safety administration. Thats a question that a lot of customers are going to be asking as well. What do you think customers need to hear from g. M. At this point . And how forgiving can g. M. Customers be . Reporter a lot more forgiving than you think. What do they need to hear from General Motors . I think when its all said and done whether that comes out in the next three weeks or two months from now when the investigations are over, they want to hear everything. Not partial, not we think, not, well, there were some incidents but we looked the other way or we misjudged things. Everything. Get it out there. And i believe that mary barra, the ceo is going to take that approach. Throw it all the out there, in effect saying we made a mistake here. They will be forgiving to a large extent, susie. Remember what happened with toyota . They still had a lot of customers come back even after everything. That was some four years ago with the floor mats in the car. Phil lebeau, thank you very much. Things still troublesome at target. Still feeling the effects of last years massive credit card data breach that affected millions of its customers. Published reports now say that a team of Indian Security experts working for the discount retailer and using a new Malware Detection tool alerted target about a possible data breach on november 30th but that officials blew off the warning that. Same team found more evidence of a hack attack on december 2nd and again there was no action taken at Corporate Headquarters in minnesota for weeks to come. Investors, however, did take notice today. They sent shares of target more than 2 lower. Shares of fire eye up about 3 on this down day for stocks. And heres another crucial security issue that poses big risks to the u. S. We could suffer a National Blackout that could last for months if attackers knocked out the countrys electric transmission substations. That warning came from a frightening new report from the government. So just how vulnerable is our electricity grid . Eamon javers takes a look. Reporter a relatively small attack on u. S. Electrical substations could render the country powerless for as long as 18 months. The u. S. Government report was first revealed by the wall street journal this morning. Anytime the government estimated that a strategic physical attack on just nine of the countrys nearly 60,000 substations on a hot day could cause an epic economic and social disruption. But industry representatives say theyre already taking steps to shore up the system. We are facing new kinds of threats. I dont want to suggest were complacent at all. What i do want to stress is that we are continually looking at ways to enhance physical security. Reporter last year, unknown gunmen fired weapons at this substation in san jose, california. The attackers fired for 19 minutes and knocked out 17 transformers. The attackers fled and have never been caught. Although it didnt cause a blackout last year, the attack rattled Power Industry experts. The day after that attack we had companies on the phone talking to pacific gas and electric about what happened, how they dealt with it, sharing information. So we worked together in mutual assistance type approach in these sort of situations. Reporter today the federal Energy Regulatory commission responded to the disclosure calling the wall street journals reporting a sensitive information, highly irresponsible. He also said just last being it had issued new mandatory security guidelines for certain facilities. For nightly Business Report, im eamon javers in washington. Coming up, General Electric is making a big move to focus more on its industrial business. Well bring yo