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After The Close - Stocks traded nicely higher today, closing at their session highs, on signs of progress in Washington that the effects of the so-called fiscal cliff might be lessened through a budget agreement between Republicans and Democrats.

At the end of the day, the Dow Jones Industrial Average had gained 100 points and the NASDAQ had tacked on 39 points. Market breadth was broadly positive, with about two stocks gaining for every one declining on the New York Stock Exchange.

Consumer discretionary stocks, such as Ford Motor (F) and Nike (NKE) did well. The utilities sector was near the top of the positive column, too, with shares of Duke Energy (DUK) and Southern Company (SO) among the winners.

The financial sector also enjoyed some renewed investor enthusiasm, helped by signs of increased lending and improving credit quality. Big bank stocks, including Bank of America (BAC - Free Bank of America Stock Report), Citigroup (C), and Wells Fargo (WFC) got a lift in today’s session.

Meantime, the Treasury Department sold $35 billion of two-year notes at a yield of 0.245%. The issue wasn’t quite as oversubscribed as usual, with offers for 3.6 times the amount sold, versus an average of 3.9 times for the previous four auctions. But the sale did suggest that there is quite a bit of cash on the sidelines that could go into stocks, under the right conditions. Elsewhere, government bond prices dipped slightly, with the yield on the 10-year note rising from 1.71% to 1.75% (bond prices and yields move in opposite directions).

In other markets, the price of oil rose around 70 cents a barrel, to $87.40, on the New York Mercantile Exchange. However, the cost of a gallon of gasoline has been falling noticeably of late and, in fact, has reached its lowest level this year. According to AAA, a gallon of gas now costs $3.25, which is $0.62 lower than it was three months earlier, and the lowest since December 28th, 2011. That is a plus for consumers, and may help this season’s holiday shopping numbers turn out to be better than expected.

Tomorrow brings a report on the nation’s third-quarter current account deficit, which is expected to have eased from the previous three months. And, after the closing bell, tech bellwether Oracle (ORCL) is due to report a solid increase in its November period earnings. Otherwise, the focus on Washington’s budget negotiations is set to remain in the spotlight.   - Robert Mitkowski 

At the time of this writing, the author did not have positions in any of the stocks mentioned. 

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12:30 PM EST - The U.S. stock market got off to a decent start this morning, and is now moving further into positive territory. At just past noon in New York, the Dow Jones Industrial Average is up 85 points (0.7%); the S&P 500 Index is ahead by 13 points (0.9%); and the NASDAQ is tacking on 28 points (0.9%). Market breadth suggests a positive bias to the session, with advancing issues ahead of decliners on both the NYSE and on the NASDAQ. All of the market sectors are trading higher, with leadership in the consumer cyclical, capital goods, and utility stocks. There is some relative weakness in the energy area today.

Technically, the S&P 500 Index is likely finding some support at its 50-day moving average, currently located at 1,415. Given that the market has moved higher in late November and early December, some periods of consolidation are to be expected. Importantly, buyers have moved in, supporting equities, on weakness, which is always a good sign. 

The economic news was light today. The Empire Manufacturing Survey, covering the New York region, came in with a reading of -8.1 for December, which was lower than the -5.2 figure logged in November. The showing also stands in direct contrast to the small gain that most analysts had been anticipating. Investors largely looked past the weak report. Tomorrow, the housing market will be the center of attention, as we will get a look at the NAHB Housing Market Index for December. This will be followed by reports on housing starts and building permits on Wednesday.

In the corporate realm, shares of Caribou Coffee (CBOU) are up sharply on news that the company will be acquired by Joh. A Benckiser for $16 per share. Also in the merger and acquisition area, Compuware (CPWR) is seeing its stock trade higher after Elliott Management Corp. agreed to purchase the company for $11 per share. Increased M&A activity is always good to see, and generally is a positive indicator. Meanwhile, corporate earnings reports have been minimal today, but things will soon pick up as we close out the year and prepare for the fourth-quarter earnings season.

Widely traded stocks moving higher today include: Polypore (PPO), VIVUS (VVUS), and home builder Pulte Group (PHM). Issues headed lower include: Cabela’s (CAB) and Groupon (GRPN). - Adam Rosner

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

Stocks to Watch from The Survey The earnings calendar is light, with most companies on today’s docket scheduled to release quarterly results after the market closes. These include snack maker Diamond Foods (DMND), SHFL Entertainment (SHFL), a provider of technology and services to casinos, and funeral services company Stewart Enterprises (STEI).

Elsewhere, shares of telecommunications services provider Clearwire Corp. (CLWR) are poised for a sharply lower opening this morning. Industry peer Sprint Nextel (S) has increased its bid to buy the portion of Clearwire it does not already own to $2.97 a share, up from $2.90. Investors clearly thought a richer offer was in the cards, as CLWR stock closed at $3.37 a share on Friday. On the other hand, shares of Enzon Pharmaceuticals (ENZN) are up sharply in pre-market trading, after the drug company said that it has hired investment bank Lazard to explore the possible sale of assets or the company as a whole. – Matthew E. Spencer 

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

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Before The Bell - The final fortnight of the trading year comes on the heels of a pretty nondescript week in which the Dow Jones Industrial Average and the NASDAQ were 0.2% lower and the S&P 500 Index was down 0.3%. The small-cap Russell 2000 fared a bit better, finishing 0.3% higher for the five-day stretch. The fact that the major U.S. equity indexes were not far removed from the neutral line would suggest some hesitancy on the part of the investment community. Traders are not making sizable commitments in either direction with the decision, or lack thereof, on the looming “fiscal cliff” of automatic tax hikes and spending cuts still uncertain.

Still, it has been a good year for those long equities. Year to date, the Dow 30, the tech-heavy NASDAQ, the broader S&P 500 Index, and the small-cap Russell 2000 are 7.5%, 14.1%, 12.4%, and 11.2% higher, respectively. However, the NASDAQ, which has been the best performer among the aforementioned indexes so far in 2012, has retreated in recent weeks, hurt by a slump in the technology sector.

Sticking with that theme, the biggest laggard on Friday was the NASDAQ Composite, which was once again under pressure due to the sluggish performance of technology stocks. Specifically, shares of tech behemoth Apple (AAPL) fell notably—down nearly $20 (or -3.8%)—after a major investment banking firm lowered its price target for Apple stock due to an expected decline in iPhone and iPad shipments. Then, last night, reports surfaced that Apple sold more than two million of its new iPhone 5 in China over the weekend after its launch there on Friday, marking China's best-selling iPhone rollout ever. Apple shares are currently lower in pre-market trading.

The new week will bring several key reports on the U.S. economy, with a heavy bent toward the housing sector. We will receive the National Association of Home Builders’ housing market index, as well as data on housing starts, building permits, and existing home sales. The consensus is that these reports will be encouraging, as the long-suffering sector continues to make significant strides on the road to recovery. Also due this week are the final revision for third-quarter GDP, data on personal income and spending, and the latest report on the leading indicators. These reports should provide more clarity on how the economy is currently faring in the final quarter of 2012, which we continue to believe will show a marked slowdown from the third-quarter pace of expansion.

It will also be the busiest week on the earnings front in some time, with many companies looking to report before the Christmas and New Year’s holidays. Notable reporters this week include Oracle (ORCL), General Mills (GIS), ConAgra Foods (CAG), Research in Motion (RIMM), KB Home (KBH), Accenture (ACN), Nike (NKE), and FedEx (FDX). The FedEx results and more importantly guidance, which is often seen as gauge to how the economy is faring, will be closely scrutinized, especially with the all-important holiday shopping season in high gear.

Overnight, the news from Asia was mixed. Japan’s Nikkei was up sharply as the Liberal Democratic Party of Japan's electoral triumph propelled the yen to a 20-month low against the dollar. The expectations are that Japanese companies will report good earnings in the coming quarter, which had investors gobbling up Japanese equities. However, China’s Hang Seng and the Shanghai Composite finished lower. The China Academy of Social Sciences, which advises the State Council, warned that the nation’s economic imbalance has worsened with investment growth overshadowing consumption. Meantime, the major European bourses are in negative territory as trading moves into the latter stages on the Continent.

With less than an hour to go before the start of trading on these shores, the stock futures are indicating a mixed open. With economic and earnings news light today, the investment community’s attention is likely to be on the “fiscal cliff” negotiations. Yesterday, reports surfaced that Republican House Speaker John Boehner is moving slightly closer to President Barack Obama's key demands as they try to avert the tax hikes and spending cuts set to take effect unless Congress intervenes by December 31st. While seen as slightly encouraging, it should be noted that Boehner's new positions were still far from those held by President Obama. Stay tuned. – William G. Ferguson


At the time of this article’s writing, the author did not have positions in any of the companies mentioned.