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After The Close - The U.S. stock market headed sharply lower this morning, and into the afternoon, but managed to pare almost all of its losses in the final minutes of trading. With little news out of Europe, traders have been fixated on the holiday sales reports and the “fiscal cliff” issues at home. Reports that the House of Representatives will meet again on Sunday have likely sparked optimism that a deal, even a partial one, may still be reached before the widely-watched January 2nd deadline.

At the close of trading, the Dow Jones Industrial Average was off about 18 points (-0.1%); the S&P 500 Index was down two points (-0.1%); and the tech-heavy NASDAQ had shed four points (-0.1%). Market breadth was only mildly negative, as declining stocks outnumbered advancers by a thin margin on the NYSE. Some market sectors managed to move higher today. There was strength in the consumer names, and in the basic materials issues, offset by weakness in the transportation and utility stocks.

Technically, the S&P 500 Index headed lower today, for the fourth consecutive session. Intra-day the Index broke through its 50-day moving average, located at 1,413, and this may have caused some panic among traders. Some flight-to-safety behavior could be seen at times today. Investors were buying U.S. Treasuries, sending the yield on the 10-year note down to 1.71%. Also, gold, now at $1,665 an ounce, had a good session. Furthermore, some apprehension was apparent at midday when the VIX soared to almost 21, one of the highest readings in the past few months. Surprisingly, the VIX actually closed lower at the end of the day, as the market reversed course, and the mood turned more positive

Meanwhile, the economic news was mixed today. The jobs situation seems to be moving in the right direction. Initial jobless claims for the week ended December 22nd, came in at 350,000, which was lower than the figure posted in the prior week, and better than many had expected. Moreover, the housing market reports was decent, as new home sales for November came in at 377,000, annualized, better than the downwardly revised 361,000 figure logged last month, and in line analyst forecasts. Consumer confidence, though, may be flagging a bit, as we received a less-than-stellar reading for December. Tomorrow, we get more information on the housing front, with the release of the pending home sales for November. The homebuilders, as a group, held up well today, suggesting investors are still looking for a recovery in this vital sector. In fact, a significant rebound in housing, and the related mortgage sector, may well be the one of the most important economic developments in the year ahead.

Finally, the corporate news was light. Still, shares of battered technology company Marvell (MRVL) headed lower, after an unfavorable court ruling. Gun manufacturer Smith & Wesson (SWHC) stock was up, on news of an expanded share repurchase program.   - Adam Rosner

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

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12:30 PM EST - Stocks are trading lower today after a weak consumer confidence reading and concerns about the fallout of going over the "fiscal cliff" took center stage.

At just past the noon hour on the East Coast, the major averages are down, with Dow Jones Industrial Average off 110 points and the NASDAQ lower by 30 points, or slightly greater on a percentage basis than the Dow. The broader market’s undertone reflects the selling pressure, with more than two stocks falling for every one rising on the Big Board.

In truth, the morning’s economic data were mixed, with a drop in initial unemployment claims filed of 12,000, to 350,000, and a rise in new-home sales to a two-and-a-half year high contrasting the disappointing consumer confidence indicator.

But consumers may be feeling a bit wary with all the dire predictions of some economic backsliding if the United States were to go over the fiscal cliff of mandated government spending reductions and tax hikes set to take effect just after the start of the new year. 

Comments by Senate Majority Leader Harry Reid earlier today suggested that no compromise is being worked on between Republicans, who control the House of Representatives, and Democrats, who predominate in the Senate. For his part, Senator Reid tossed the ball into the Republicans’ court, indicating it was up to them to come up with a bill that both parties can agree to and that the President would sign. First, though, House members need to come back to Washington from their Christmas holiday.

One of the sticking points to crafting a bill now is that it would presumably entail raising taxes on the nation’s highest earners. But with taxes broadly slated to rise in 2013 upon the expiration of the so-called Bush-era tax cuts, Congress might have an easier time passing a tax-cut in January for all but the top earners.  

Nevertheless, Wall Street does not like to see the delays and lack of cooperation in Washington on a matter deemed so important. Part of the worry is that negotiations will drag on until the nation’s debt ceiling is reached, complicating matters further.

As for the Dow, nearly all of its 30 components are in the red, with financial stocks, including Bank of America (BAC - Free Bank of America Stock Report), JPMorgan Chase (JPM - Free JPMorgan Chase Stock Report), and American Express (AXP - Free American Express Stock Report) among the worst performers. 

Heading into afternoon trading, sentiment toward stocks is worsening on the feeling that budget talks in Washington are going nowhere. -Robert Mitkowski

At the time this article was written, the author did not have positions in any of the companies mentioned.
 

Stocks to Watch from The Survey While earnings news is very light today, there are some legal developments that will likely influence trading of specific stocks. To wit, pre-market indications show that shares of Marvell Technologies (MRVL) are poised to continue their slide, which began late in yesterday’s session, after a jury said that the chipmaker should pay $1.17 billion to Carnegie Mellon University for infringing on patents held by the school. Similarly, automaker Toyota Motor (TM) has agreed to pay roughly $1.1 billion to settle a class-action lawsuit related to unintended acceleration in some of its vehicles. Toyota stock is up slightly ahead of the bell, however. – 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 - Wall Street returned from its brief Christmas break yesterday and found that the bears were back in charge. In truth, there was no wholesale rush for the exits, but the generally quiet market action on this semi-holiday week was largely to the downside, with the small- and mid-cap indexes clearly underperforming their larger weighted brethren.

Specifically, the day found the Dow Jones Industrial Average in the minus column at the close by a modest 24 points, meaning that for a change, this composite of mostly blue chip equities turned in a relatively decent showing. By comparison, the NASDAQ, weighed down by selectively weakening tech issues, fell 22 points; the broader Standard and Poor's composite shed almost seven points; and the S&P Mid-Cap 400 lost eight points, or nearly a full percentage point. Finally, the small-cap Russell 2000 Composite dropped six points, or 0.7%. The Dow's loss, by way of comparison, was just 0.2%.

Once again, the direction of the equity market was principally dictated by the goings on in Congress relating to the budget, or more accurately, to the lack of any appreciable progress on the fast-approaching fiscal cliff. A failure to reach an agreement by January 2nd would unleash a series of tax increases, including a payroll tax hike, and a succession of spending cuts. Both of these dire adjustments would likely help bring on at least a slowdown in the economy over the coming months--if not an outright recession at some point in the new year. In addition to the political winds, the market also was burdened to an extent yesterday by the dour news that the just-ended holiday shopping season was clearly unspectacular. A number of retailing issues fell yesterday in response to the lackluster sales performances in November and December.

Now, Congress and President Obama are set to renew their efforts at structuring at least a short-term accord that would hold off on some of the more Draconian spending reductions and tax increases, while they move, as well, to broker a longer-term "Grand Bargain'' as some are now calling a more definitive effort. The budget talks are set to resume today.

Meanwhile, there is other news at hand, as just moments ago, the Labor Department reported that weekly jobless claims fell by 12,000 in the latest seven-day stretch, to 350,000. Expectations had been for a flattish reading of 360,000. Also, the Chicago Federal Reserve manufacturing index rose modestly in the latest month, in another welcome development. Then, later this morning, we will get data on consumer confidence from the U.S. Conference Board. A modest decline in sentiment is expected, while at the same time, the government will issue November data on sales of new homes. Here, a further gain is the forecast.

But the real action will be on the budget, where our leaders are working to hopefully avert going over the proverbial fiscal cliff in less than a week from now. The odds would currently seem to be against them averting the "cliff'', but we shall see. Finally, hope seems to be mounting again, at least to a degree, as the equity futures, lifted as well by the improving economic metrics, are pointing to a higher start when trading begins anew in less than an hour from now. – Harvey S. Katz

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