Dow Jones 30: Industrials Index

[setravis]

Upbeat Data Spark Rally.......


Wednesday into the close 12/5/2007


Stocks in the U.S. shook off two days of declines and rose Wednesday as a string of positive economic data lured in buyers.

The Dow Jones Industrial Average jumped 196.23 points, or 1.48%, to 13,444.96. Twenty-nine of the Dow's 30 components finished in positive territory, led by gains of 4.9% and 4.2%, respectively, in AIG (AIG:) and Microsoft (MSFT:) .

Only McDonald's (MCD:) lost ground.

The S&P 500 was up 22.22 points, or 1.52%, at 1485.01, and the Nasdaq Composite climbed 46.53 points, or 1.78%, to 2666.36.

Breadth was decidedly positive. On the New York Stock Exchange 3.60 billion shares changed hands, as advancers beat decliners by a 5-to-2 margin. Volume on the Nasdaq reached 2.20 billion shares, with winners topping losers nearly 2 to 1.

"We had a really good rally on good economic numbers that, at least today, point to an economy that isn't slowing as much as people thought," said Paul Nolte, director of investments with Hinsdale Associates. "We may yet be able to gracefully work out of the subprime and housing problems."

Investors bid up stocks after ADP's monthly private employment survey showed an increase of 189,000 workers in November, nearly four times what was expected. Payroll additions for October were revised upward by 13,000 to 119,000.

The ADP report is a fairly new entrant to the economic calendar, and it doesn't always move markets, but this time it contributed to a brighter mood.

Each month, it's released two days ahead of the government's own jobs report. The numbers sometimes disagree by a sizable margin, and indeed analysts expect the upcoming Labor Department report to indicate an increase of around 78,000 jobs.

The good news was extended with data showing that nonfarm productivity jumped 6.3% in the third quarter, up from the preliminary estimate of 4.9%. Unit labor costs fell 2%, much steeper than the earlier reading of a 0.2% decline.

Those numbers bolstered the hopes of traders who want to see signs that the economy will avoid a recession, but at the same time allow for more Federal Reserve rate cuts. Whether both can be achieved simultaneously is the question. The Fed next meets Dec. 11.

"Continued strong productivity growth helps keep inflation in check in the face of rising oil prices, and accommodates moderate wage growth," said Peter Morici, professor at the University of Maryland School of Business and former chief economist at the U.S. International Trade Commission. "The Fed can focus on the subprime crisis and stabilizing credit markets without fear of a significant surge in inflation."

Shortly after the market opened for trading, the Institute for Supply Management said its services index for November slid to 54.1, below analysts'' estimates. On Monday, the ISM's manufacturing index dipped to 50.8 last month from October's 50.9.

Also on the economic docket, the Census Bureau said factory orders for October rose 0.5%. Excluding transportation, orders rose 0.6%.

Oil prices were another focus after OPEC said it will not increase production quotas. Additionally, weekly inventory data from the Energy Department showed a decline of 8 million barells in crude stockpiles. Crude oil spent most of the session in positive territory before losing steam late, ending lower by 83 cents at $87.49 a barrel.

U.S. Treasury securities also were weak. The 10-year note was down 12/32 to yield 3.94%. The 30-year bond was off 1-6/32 in price, yielding 4.42%.

On the corporate front, Comcast (CMCSA:) slumped 12.3% after the company lowered its forecast for subscriber gains, cable revenue growth and operating cash flow. Comcast shed $2.55 to $18.18.

Another loser was bond insurer MBIA (MBI:) , who sank 16% after Moody's raised the possibility of cutting its financial strength rating. MBIA lost $5.21 to close at $27.42.

Also, Fannie Mae (FNM:) said it will cut its dividend by 30% next year due to worsening conditions. Still, shares closed higher by 95 cents, or 2.7%, at $36.13.

Following the move, Credit Suisse downgraded Fannie Mae and the other government-sponsored mortgage buyer Freddie Mac (FRE:) to underperform from neutral. Piper Jaffray also downgraded the stock and Friedman Billings cut its price target on the shares by $5 to $30. Additionally, Fitch downgraded Freddie Mac's preferred stock rating to A-plus from AA-minus.

Shares of Freddie, though, finished with a gain of $2.36, or 7.3%, to $34.67.

As for other analyst calls, Citigroup sliced its fourth-quarter estimates on Goldman Sachs (GS:) , Lehman Brothers (LEH:) and Merrill Lynch (MER:) , while Thomas Weisel upgraded Intel (INTC:) .

The Wall Street Journal reported that New York prosecutors have subpoenaed a number of financial firms and are asking for information on mortgage-backed securities. The report, citing people who are aware of the situation, said Merrill, Bear Stearns (BSC:) and Deutsche Bank (DB:) are among those getting subpoenas.

Both Deutsche Bank and Merrill Lynch added 1.1%, while Bear Stearns was off 1.1%.

Elsewhere, Chico's FAS (CHS:) said after the previous close that third-quarter earnings fell 44% from a year ago as same-store sales dropped nearly 10% during the quarter. The stock fell by $1.44, or 12.5%, to $10.06.

Overseas markets were mostly higher. In Asia, Hong Kong's Hang Seng rose 1.6% overnight, and Japan's Nikkei 225 added 0.8%. Among European bourses, London's FTSE 100 rose 2.8%, and Germany's Xetra Dax was up 1.7%.

[setravis]

The mini-uptrend pause by the market indices, expected to end yesterday, appears to have done so. The DJIA retreated close to its 13,200 floor of support, and is expected to begin a climb this morning, headed for its ceiling of resistance at 13,600.

The intermediate-term trend indicators continued to confirm this uptrend has commenced.

Thus, the DJIA sits just above its intermediate-term trend support level, which is enjoying a shallow up slope and is expected to provide a base from which the leg up by the market indices can launch.

The main driving force at the moment is the near-term trend, which is also uptrending and which also is the principal reason behind the mini-uptrend pause by the market indices in the last two days.
The near-term trend indicators are all positioned to move up.

Whether the DJIA can reach 13,600 in the next few days, in part, hinges on the robustness of the rebound up expected today. The trade-term trend indicators are near oversold levels, and thus are positioned for a rally. Last week the trade-term trends were the main cause of substantial swings in the market indices both intra- and inter- day; this week has not brought similar volatility. The announcement that a bailout plan is shortly to be announced for homeowners with impending mortgage defaults and foreclosures, seemingly has allayed some of the anxiety that the credit crunch could cause a recession. But the concern remains and any negative unexpected news could trigger a change in trade-term trend direction. It appears more likely that the sentiment will remain in a continuing state of uncertainty, leaving the market indices to drift along in a shallow uptrend. Perhaps today or tomorrow some conviction to that uptrend will be forthcoming.


Ultimately, the only story that counts is your own. Whether you buy the story of a soaring or a souring stock, your own research is more important than collective opinions. But these collective opinions make an individual's due diligence much easier.     

[setravis]

Mortgage Plan Props Up Stocks.......


Thursday into the close 12/6/2007


Stocks in the U.S. closed sharply higher Thursday as investors hoped a government plan to help struggling homeowners would also allow lenders to get a handle on the damage being done to their earnings by the subprime meltdown.

The Dow Jones Industrial Average rose 174.93 points, or 1.3%, to 13,619.89, and the S&P 500 added 22.33 points, or 1.5%, to 1507.34. The Nasdaq Composite gained 42.67 points, or 1.6%, to 2709.03.

Breadth was strong, and on the New York Stock Exchange advancers topped decliners by nearly a 4-to-1 margin as 3.38 billion shares changed hands. Volume on the Nasdaq reached 1.97 billion shares, with winners beating losers 7 to 3.

The market climbed after President Bush endorsed a much-anticipated proposal to aid troubled borrowers in saving their houses from foreclosure. Treasury Secretary Henry Paulson outlined the plan, characterizing it as "not a silver bullet" or a bailout.

Countrywide (CFC:) , the nation's biggest mortgage lender, jumped 16.1% after the proposal's official unveiling. Government-sponsored mortgage buyer Freddie Mac (FRE:) closed 7% higher, and Fannie Mae (FNM:) added 7.2%.


The plan was revealed on the same day that homebuilder Toll Brothers (TOL:) posted its first quarterly loss in more than two decades and said the just-completed fiscal year was in many ways its most challenging in 40 years of business. Still, Toll Brothers rallied by $2.70, or 13%, at $23.42.

Meanwhile, Federal Reserve Governor Randall Kroszner gave testimony before the U.S. House of Representatives on loan modifications and foreclosure prevention, saying that he and his colleagues are actively working to respond.

"Given the substantial number of resets expected from now through the end of 2008, it is in the interest of the industry to go further than it has historically to join together and explore collaborative, creative efforts to develop prudent loan-modification programs and other assistance to help large groups of borrowers systematically," he said.

Adding to the evidence of the trouble in the sector, the Mortgage Bankers Association said 5.59% of payments were delinquent during the third quarter, the worst level in 20 years.

Merrill Lynch downgraded several financials, taking Wells Fargo (WFC:) , M&T Bank (MTB:) and Old National (ONB:) to sell. The firm lowered Goldman Sachs (GS:) and Morgan Stanley (MS:) to neutral.

Even so, most stocks in the group closed higher, and the NYSE Financial Sector index was up 2.2%. The Amex Securities Broker/Dealer Index advanced 3.7%. The Philadelphia Stock Exchange Housing Sector Index soared 7.9%.

Though the bid to start righting the mortgage mess was the story of the day, investors also pored over a slew of retail same-store sales for November, which included the all-important Black Friday sales data.

Wal-Mart (WMT:) , Costco Wholesale (COST:) and Gap (GPS:) topped expectations, but Limited (LTD:) and Family Dollar (FDO:) were weaker than expected.

Target (TGT:) was one of the big disappointments, saying softness in the final days of November means it will need a strong December if it wants to meet its fourth-quarter profit numbers. Shares of Target lost $4.56, or 7.6%, to close at $55.57.

Outside the U.S., the Bank of England cut its key interest rate to 5.50% from 5.75%, citing slowing growth. It was the Bank of England's first rate reduction in more than two years.

However, the European Central Bank left rates unchanged after its own gathering, and ECB chief Jean-Claude Trichet ramped up the hawkish rhetoric, saying he wants to make sure rising oil prices don't cause consumer prices to climb too quickly.

Bloomberg quoted Trichet as saying there was "strong short-term upward pressure on inflation'''' and that he and his fellow policymakers are prepared to "counter upside risks to price stability."

Following Trichet's remarks, London's FTSE 100 and Germany's Xetra Dax dipped 0.1%.

"Trichet made comments that were very anti-inflationary, clearly showing that the ECB is not on board with any rate cut," said Paul Mendelsohn, chief investment strategist with Windham Financial.

The Federal Reserve is facing its own dilemma, and over the past few weeks, officials have offered a mixed message regarding the possibility of added cuts.

While some members appear worried that the housing and credit slump has the potential to undermine economic growth, others express concern that commodity prices are stoking inflation and that easing again will only exacerbate that. The central bank will meet next Tuesday.

Many traders are counting on a cut of at least 25 basis points.

Some analysts believe Friday's jobs report could be crucial to whether the fed funds target rate will be reduced for the third straight time. The Labor Department is expected to say that the U.S. economy added around 70,000 jobs in November. The unemployment rate probably rose to 4.8%, while average hourly earnings, a key inflation metric, should climb 0.3%.

"I'm a little surprised with today's strong finish, especially with an important report in the nonfarm payrolls due tomorrow," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "I'm concerned this rally may not last, especially since the jobs report will be key in determining whether the Fed will cut rates or not."

Before the opening bell, the Labor Department posted the last weekly jobless claims report before employment report. Initial jobless claims fell by 15,000 to 338,000 last week, while the four-week moving average of claims rose by 4,750 to 340,250.

"The four-week average is now just over 340,000, its highest level since the aftermath of [Hurricane] Katrina," said Ian Shepherdson, chief economist with High Frequency Economics. "We doubt claims are set to explode as they did in 2001 but they are already high enough to suggest that payroll growth will slow over the next few months, regardless of what happens in tomorrow's November report."

U.S. Treasury securities were sliding. The 10-year note was down 13/32 in price to yield 4.01%. The 30-year bond was off 14/32 in price, yielding 4.47%.

Commodities reversed early weakness and ended higher on the day. Crude oil added $2.74 to $90.23 a barrel. Gold futures ended up $3.40 an ounce at $807.10, and silver tacked on 16 cents at $14.62 an ounce.

[setravis]

The market indices took off from their support bases and headed north yesterday, with a sharp move upward . The DJIA took off from its support at 13,200, moved up about 200 points, and should continue moving up, probably at a slower pace, over the next two days until it touches its 13,600 ceiling and stalls out.

Uptrends to downtends ended their one day flirtation with a negative bias, and became very positive again.
This polarization to the positive is indicative of momentum gathering for this uptrend rally and it caused the intermediate-term trend indicators to become more positive.
All this adds up to an intermediate-term uptrend, which is gaining strength, and soon is expected to be a major contributor to an upward trek by the market indices.

At the moment, the near-term uptrend is not doing too bad a job in the contributory department. In fact, it was the main driving force of yesterday's move by the market indices. All  near-term trend indicators moved in a positive direction. It is likely that these indicators will top out when the DJIA reaches the 13,600 ceiling. Thus they will be expected to retreat as the DJIA attempts, and falls back, maybe more than once, to penetrate its ceiling of resistance. The DJIA retreat when it does come, however, is not expected to be severe, as by that time the intermediate-term uptrend should have evolved to the point of being a strong buoying upward force for the market indices.

The foregoing paints a rosy outlook for the bulls and such is warranted by the movement of the indicators, but it does not mean the trade-term trends can be ignored. Investors do so at their own peril because the minute one takes his/her eye off the potential for unexpected news, the more likely it seems some surprise will ignite a quick reaction by the market indices. Consensus expectation remains focused on the potential for a recession being brought on by the still-undefined, black hole credit crisis, but the announcement today is expected to ameliorate these concerns to some degree, as it will portend relief for approximately 750,000 out of the two million troubled subprime home mortgages facing default/foreclosure. The trade-term trends became somewhat overbought by the end of trading yesterday and that is not sustainable all today without some correcting. It is likely that such correcting will be mainly a sideways intraday move by the market indices as the rally started yesterday continues this morning but tails off somewhat later in the day.


Markets rallied smartly yesterday on economic data suggesting a recession might be avoided in the US, bringing back such terms as "soft landing" to pundits' texts. Furthermore, markets cheered a mortgage aid plan reportedly in the works, as well as retail sales numbers that might top expectations. Data on inflationary pressures were positive, with third quarter nonfarm productivity up at a 6.3% annual rate, the strongest in four years, and unit labor costs down 2%. Expectations are for the rise in productivity and slowing in wage growth to ease the risk of inflation, thereby permitting the Fed to lower its perceived risk to inflation and adopt a more dovish stance favoring concern for growth. The ADP numbers, however, indicated greater strength in the economy than expected, also raising the odds of a nonfarm payrolls report surprise on Friday, as it printed 189K November hiring additions, compared to expectations of 70K adds. Analysts were skeptical of the numbers, however, due to contradicting evidence of job losses in manufacturing and construction arenas. This morning's weekly jobless claims printed in line with estimates, dropping15K to 338K, with the four-week average up 4,750 to 340,250. The Organization of Economic Cooperation and Development opined the US likely to avoid a recession next year, although growth will slow. This morning's retail numbers showed Wal-Mart November same-store-sales grew 1.9%, with company projections of 1-3% for December. Costco topped expectations with sales up 9% compared to estimates of 6.6%, and Nordstrom's sales jumped 8.7% compared to estimates of 3.7% same-store-sales growth. What may weigh most heavily on next week's Fed decision may be the internal dynamics of the banking industry, in which the 3-month LIBOR rate, up 19 consecutive days to 5.15% Tuesday from 4.88% one month ago, is now 65 bp higher than the Fed funds rate. Liquidity issues then may tip Bernanke's hand in favor of a more accommodative stance than might be suggested by recent economic data. The Bank of England dropped its key rate this morning 1/4 point to 5.5%, its first hike since August 2005, with European central bankers The SIV "superfund" reportedly may reach only half the $100 billion size. OPEC's decision to hold production levels steady generated an uptick in oil companies shares, such as Chevron up 2.5% and Exxon Mobil, up 2%, although oil prices actually edged 65 cents lower to $86.84 on inventory levels reported yesterday of a domestic fuel supply increase. Among share prices gaining Wednesday, big-cap technology shares rebounded with Microsoft up 4.2%, Oracle 5.9%, Google 2.1%, Apple 3.2% and International Business Machines 1.4% as investors bought into areas believed immune to writedowns from mortgage-related exposure, and also those with significant global earnings potential.   

[setravis]

Wall Street Holds Steady.......


Friday into the close 12/7/2007


Stocks in New York closed little changed Friday as the latest employment report from the government failed to give traders any reason to make big bets ahead of next week's Federal Reserve meeting.

The Dow Jones Industrial Average tacked on 5.69 points at 13,625.58, and the S&P 500 slipped 2.68 points, or 0.2%, to 1504.66. The Nasdaq was off 2.87 points, or 0.1%, to 2706.16.

The generally muted action came after the Labor Department said the economy added 94,000 workers last month, about 14,000 more than had been expected by analysts surveyed for a Bloomberg poll. The unemployment rate was unchanged at 4.7%.

While November was down from October's upwardly revised 170,000, the headline number likely keeps the "Goldilocks" scenario alive. Many traders are hoping the not-too-hot, not-too-cold story can remain intact, allowing the economy to avoid a recession yet still giving the Fed room to lower rates again.

Fed policymakers will next gather on Tuesday, and much of Wall Street is looking for a cut of at least 25 basis points in the fed funds target rate, which is currently at 4.50%. Some want the Fed to go 50.

At its past two meetings, the central bank has reduced rates by a total of 75 basis points in an effort to stop the economy from succumbing to the housing downturn and credit crunch, but in recent weeks, officials have seemed divided on the next step, with some bankers suggesting new cuts might not be necessary and others appearing more dovish.

Kurt Karl, chief U.S. economist for Swiss Re, says the jobs report wasn't a great one, but it does suggest a low-growth economy rather than a recession. However, he believes there's a 45% chance a recession could become a reality over the next 12 months. "We have mixed signals out there currently," he says.

Though he would like to see a half-point reduction next week, he thinks a quarter-point is more probable. No move, he says, would be a "disaster."

"I think the report is strong enough we won't get the 50," Karl says, while adding that it still shouldn't prevent any easing at all. "The Fed needs to cut. We can't just sit on our hands."

Peter Morici, a professor at the University of Maryland School of Business and former chief economist at the U.S. International Trade Commission, agreed in an emailed statement that action is required, and he says the pace of job creation is too sluggish.

"Slow jobs growth, along with the shortage of business credit, declining home prices and falling industrial production, indicate the risk of a recession is clearly above 50 percent," he says. "Either the economy has already entered a recession or the risk that a recession will begin soon exceeds 50 percent."

Because of the upbeat productivity data released earlier this week, Morici thinks the Fed "can aggressively cut interest rates to combat a recession without risking inflation."

Brandon Thomas, chief investment officer for Envestnet Asset Management, says that considering the negativity about the economy, the report was quite good, as was the 0.5% increase in average hourly earnings, but not so much to prevent a quarter-point reduction next week.

"You actually need income growth to support consumer spending," especially in an environment of high energy prices and tight credit, he says.

Thomas thinks that even if there were a stumble in the first quarter or two of next year, the economy will be in a better position when the second half arrives. "We expect we'll avert a recession," he says.

Elsewhere, the University of Michigan's preliminary consumer sentiment survey for December came in at 74.5, its lowest reading in two years, and was a bit below what was expected.

The U.S. Treasury market was anything but quiet, and prices were off sharply on the long end. At 4 p.m. EST, the two-year note was down 4/32 in price, yielding 3.10%. The 10-year note was losing 25/32, yielding 4.10%, and the 30-year bond was sinking 1-16/32, yielding 4.56%. The dollar was mixed.

For the week, the Dow gained 1.8%, the S&P 1.6% and the Nasdaq 1.7%.

On the corporate side, a merger was in the news, as Macrovision (MVSN:Nasdaq) set plans to acquire Gemstar-TV Guide (GMST:Nasdaq) for $2.8 billion.

But shareholders on both sides weren't happy with the deal, with Macrovision plunging 21% to $20.44, a 52-week low, and Gemstar dropping 17% to $4.99.

Even though the financials bear watching every day, three names in particular were under pressure after being the subject of negative analyst calls.

Merrill Lynch downgraded Capital One (COF:NYSE) , American Express (AXP:NYSE) and Discover Financial Services (DFS:NYSE) to sell from neutral. Discover fared the best, and it declined 3.2%.

Also, Morgan Stanley cut Capital One to underweight and sliced its price target nearly in half, and Stifel lowered its rating on American Express to hold.

American Express, down 4.3%, was the worst performer on the Dow, and it offset strength in Alcoa (AA:NYSE) and Verizon (VZ:NYSE) .

The NYSE Financial Sector Index gave back 0.5%, and the Amex Securities Broker/Dealer Index was up 0.1%. The KBW Bank Index was off 1.4%.

An easing in oil prices helped transports move upward. The Dow Jones Transportation Average increased by 1.8% and the Amex Airline Index by 3%. Oil was down $1.95 to $88.28 a barrel.

Asia's major markets were mixed overnight. Hong Kong's Hang Seng tumbled 2.4%, and Tokyo's Nikkei was better by 0.5%. In Europe, London's FTSE and the Paris Cac gained 1.1% and 0.8%, respectively. Frankfurt's Dax rose 0.7%.

[setravis]

Bank Gains Lift Wall Street.......


Monday into the close 12/10/2007


Stocks in the U.S. finished Monday with gains as the financials and the homebuilders led Wall Street higher a day ahead of the Federal Reserve's last policy meeting of 2007.

The Dow Jones Industrial Average was up 101.45 points, or 0.7%, to 13,727.03, and the S&P 500 was better by 11.30 points, or 0.8%, at 1515.96. The Nasdaq rose 12.79 points, or 0.5%, to 2718.95.

Among the headliners, Switzerland's UBS (UBS:NYSE) reached a deal to get a capital infusion worth more than $11 billion from investors in Singapore and the Middle East, allowing stockholders to look past its announcement that it will write down an additional $10 billion to reflect declines in its subprime positions.

Shares of UBS were up 2.3% to $51.66.

Another winner in the financial space was JPMorgan (JPM:NYSE) , which improved 2.9% to $47.42 after being the subject of a positive report in Barron's over the weekend.

Elsewhere, bond insurer MBIA (MBI:NYSE) soared 13% to $33.95 on word it will get $1 billion in capital from the private-equity firm Warburg Pincus.

Those gains helped the broader sector make headway. The KBW Bank Index was up 2.8%, and the NYSE Financial Sector Index climbed 1.8%. The Amex Securities Broker/Dealer Index advanced 2.5%.

The financials have been the market's primary focus for months, and traders are eagerly awaiting the outcome of the Fed gathering Tuesday, when the central bank is widely expected to cut the fed funds target rate by at least 25 basis points from the current 4.50%.

Already, the Fed has eased twice, but many investors believe more is needed in order to prevent the credit crisis from leading to a recession. According to their statements, some Fed bankers appear to agree with that position, but others are concerned about the prospects for inflation.

The Philadelphia Housing Sector Index was another of the top performers, increasing 2.7%. Most subgroups ended to the upside, but drug stocks lagged.

Aside from JPMorgan, two other Dow-component stocks made news. McDonald's (MCD:NYSE) was higher by 2.9% as its global comparable-store sales rose 8.2% in November. Systemwide sales for McDonald's restaurants worldwide increased 16.3% last month, or 9.6% in constant currencies.

Honeywell (HON:NYSE) said its board approved a 10% hike in its regular annual dividend to $1.10 from $1 a share, effective with the first-quarter payment. Its stock rose 1.7%.

Separately, a round of acquisitions was being planned, and three of the deals involve U.S. companies being taken over by foreign buyers.

In one, Japan-based drugmaker Eisai will buy biotech MGI Pharma (MOGN:Nasdaq) for $41 a share, or roughly $3.9 billion. MGI was up 19.6% to $40.

Also, Adams Respiratory Therapeutics (ARXT:Nasdaq) will become part of England's Reckitt Benckiser in an arrangement worth $2.3 billion, or $60 a share. Adams jumped 35.8% to $59.30.

The other pact will see Claymont Steel (PLTE:Nasdaq) be bought by Russian steelmaker Evraz for $564.8 million, or $23.50 a share. That sent Claymont shares up 5.9% to $23.29.

As for research calls, UBS downgraded Palm (PALM:Nasdaq) to sell from neutral, and Jefferies cut its rating on Red Hat (RHT:Nasdaq) . Merrill Lynch upgraded Novellus (NVLS:Nasdaq) .

Outside the stock market, Treasury prices were soft. The two-year note was down 4/32, yielding 3.17%, and the 10-year note was losing 12/32, yielding 4.15%. The 30-year bond was off 25/32 in price, yielding 4.62%.

The dollar was weaker against many other currencies, but it gained on the Canadian dollar.

Commodities were mixed. Oil surrendered 42 cents to $87.86 a barrel, and gold was up $13.30 at $813.50 an ounce.

Asia's major markets pulled back overnight. Tokyo's Nikkei was off 0.2%, and Hong Kong's Hang Seng gave back 1.2%. In Europe, London's FTSE was down 0.2%. The Paris Cac was 0.6% higher, and Frankfurt's Dax tacked on 0.5%.

[setravis]

Fed Letdown Sinks Stocks.......


Tuesday into the close 12/11/2007


Stocks in New York fell hard Tuesday after the Federal Reserve declined to give Wall Street a bigger cut in the fed funds target rate than the quarter-point that had already been priced in.

The Dow Jones Industrial Average sank 294.26 points, or 2.1%, to 13,432.77, and the S&P 500 was down 38.31 points, or 2.5%, to 1477.65. The Nasdaq was off 66.60 points, or 2.5%, to 2652.35.

Analysts and traders were expecting policymakers to lower rates for the third consecutive meeting, and most were anticipating a 25-point reduction. However, some had hoped the Fed would cut its fed funds target by 50 basis points in order to stave off a recession, and the failure to get a more pronounced easing, along with continued talk about the potential for inflation, led to the downturn in equities.

The fed funds rate, now at 4.25%, is used by banks to charge interest on overnight loans to each other. The discount rate, the rate at which banks can borrow from the Fed, was also dropped by a quarter-point, to 4.75%.

Afterward, Treasury prices soared. The two-year note was up 15/32 in price, pushing the yield down to 2.92%. The 10-year was ahead by 1-18/32, yielding 3.97%, and the 30-year bond was surging 2-19/32, yielding 4.47%. The dollar was mixed.

The Fed removed from its statement accompanying the decision language that the risks of inflation and an economic downturn were roughly balanced, as it had said after the previous meeting Oct. 31, but it didn't completely eliminate discussion of its belief that prices could rise too quickly.

"Incoming information suggests that economic growth is slowing, reflecting intensification of the housing correction and some softening in business and consumer spending," the Fed said. "Moreover, strains in financial markets have increased in recent weeks. Today's action, combined with the policy actions taken earlier, should help promote moderate growth over time."

The statement kept remarks that elevated high energy and commodity prices mean "some inflation risks remain" and will require monitoring.

"Recent developments, including the deterioration in financial market conditions, have increased the uncertainty surrounding the outlook for economic growth and inflation," it said. "The [Federal Open Market Committee] will continue to assess the effects of financial and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth."

Boston Fed President Eric Rosengren wanted to cut the fed funds rate by a half-point, but the other FOMC members supported the quarter-point move. The Fed has now taken down rates at three straight meetings.

The latest reduction came as two new surveys indicated that economists have tempered their near-term views for the U.S. economy.

A Bloomberg poll showed that experts believe the domestic economy will expand at only a 1% rate in the fourth quarter amid the housing downturn and weaker consumer spending. Last month, the same group predicted 1.5% growth.

Separately, a Wall Street Journal tally found that economists are now looking for gross domestic product to grow at just a 0.9% pace in the final quarter of this year, compared with the prior expectation of 1.6%.

Both surveys reported that first-quarter GDP forecasts have also been trimmed.

Last time out, the market in the U.S. closed higher thanks to gains in homebuilders and financials such as UBS (UBS:NYSE) and MBIA (MBI:NYSE) .

Following the close, though, a big lender had disappointing news, as Washington Mutual (WM:NYSE) sharply pared its dividend and said it would try to raise $2.5 billion from a preferred stock sale in order to protect its balance sheet from the downturn in the credit market.

Shares fell 12.4%.

Freddie Mac (FRE:NYSE) shed 10.6% after its CEO said the government-sponsored mortgage buyer could lose an added $5.5 billion to $7.5 billion in the coming years if the housing market stays weak and loan defaults increase.

Tax preparer H&R Block (HRB:NYSE) was another one of the losers. The company missed the consensus estimate for the most recent quarter, and while it affirmed its fiscal year profit outlook, it said its results will probably be closer to the lower end of $1.30 to $1.45 a share. The stock surrendered 3.3%.

Adding slightly to the late downside pressure was GE (GE:NYSE) , which reaffirmed its guidance for this year, but offered an earnings projection for 2008 that could fall short of expectations. The stock lost 1%.

On the upside was chipmaker Texas Instruments (TXN:NYSE) , who lifted the bottom end of its earnings forecast and said business in the wireless market has been better than expected. Shares gained 0.8%.

Elsewhere, AT&T (T:NYSE) said its board voted to boost its quarterly dividend by more than 12% to 40 cents from 35.5 cents. Additionally, directors authorized a new 400 million-share buyback, and AT&T's stock rose 4.1%.

Meanwhile, Hewlett-Packard (HPQ:NYSE) reaffirmed its profit guidance for fiscal 2008, but its shares decreased 2.3%.

Among research calls, Keefe Bruyette upgraded MasterCard (MA:NYSE) . The firm downgraded a number of financials, including BB&T (BBT:NYSE) , Suntrust (STI:NYSE) and JPMorgan Chase (JPM:NYSE) .

Bear Stearns lifted its rating on UBS, and Citigroup added eBay (EBAY:Nasdaq) to its recommended list.

As for commodities, energy futures rose, including a gain of $2.16 to $90.02 a barrel for crude. Gold was up $3.60 at $817.10 an ounce.

Overnight, Asia''s markets were stronger. Tokyo's Nikkei was up 0.8%, and Hong Kong's Hang Seng added 2.6%. London's FTSE and the Paris Cac slipped about 0.4%. Frankfurt's Dax decreased 0.3% after a report showed that investor confidence in Germany was at its worst level since late 1993.

[setravis]

Wall Street Survives Chaos.......


Wednesday intothe close 12/12/2007


Stocks in New York ended in positive territory after enduring a chaotic session that featured a nearly 400-point swing in the Dow Jones Industrial Average.

The Dow, which had been up 270 points just after the open and down more than 100 late in the day, closed up 41.13 points, or 0.3%, to 13,473.90.

Citigroup (C:NYSE) was the weakest component, falling 5.3%. Boeing (BA:NYSE) and McDonald's (MCD:NYSE) also lagged.

AT&T (T:NYSE) , 3M (MMM:NYSE) and Alcoa (AA:NYSE) were on the winning side.

The S&P 500 added 8.94 points, or 0.6%, at 1486.59, and the Nasdaq rose 18.79 points, or 0.7%, to 2671.14. Like the Dow, both of those began well to the upside, then turned lower, and rebounded in the final minutes.

At the outset of the session, stocks rose after the Federal Reserve said it would join forces with other Western central banks to get fresh cash circulating around the world in a bid to lift the credit markets out of their funk.

To start, the Fed is planning to lend out at least $40 billion in four term auctions that will begin in the next few days. Banks will still be allowed to use the same collateral they currently put up to borrow from the discount window, a step they generally don't like to take.

The European Central Bank, the Bank of England, the Bank of Canada and the Swiss National Bank are also taking part in the proposal. Additionally, the Fed has set up a $20 billion swap line with the ECB and a $4 billion line with the Swiss bank.

However, the momentum faded as the session wore on, culminating in a steep downturn in the last hour. Only a last-minute rally allowed equities to finish in the green.

Not unlike the broader market, the financials had a solid advance early but struggled to stay afloat. The NYSE Financial Sector Index was down fractionally, and the Amex Securities Broker/Dealer Index edged up 0.7%. The KBW Bank Index shed 1.8%.

Also, the Philadelphia Stock Exchange Housing Sector Index had a 0.4% gain, and the Amex Oil Index was up 2.6%.

Among individual stocks, Bank of America (BAC:NYSE) fell 2.7% after its chief executive said his firm will take added writedowns and that fourth-quarter earnings will probably be "quite disappointing."

Similarly, Wachovia (WB:NYSE) said its loan-loss provision in the fourth quarter could be around $1 billion, roughly double what it had foreseen. Its shares declined 3.4%.

Earlier, both names had been downgraded by Merrill Lynch, Wachovia to sell and BofA to neutral. Merrill also cut JP Morgan Chase (JPM:NYSE) to neutral.

Another downgrade for a big banking name came from Lehman Brothers, which dropped UBS (UBS:NYSE) to underweight. Both JP Morgan and UBS rose.

Frank Holmes, CEO and chief investment officer at U.S. Global Investors (GROW:NYSE) , which has about $6 billion in assets under management, says the Fed move wasn't necessarily a surprise considering next year will have the presidential election, a time when no one in the government wants to see "even a hint" of recession.

"When push comes to shove, governments will always print money to keep the economy going," he says. "The derivative risk is a global issue, and the United States can't go it alone, especially in an election year."

The plan came just a day after the central bank disappointed investors with its latest rate actions and sent stocks into a tailspin. On Tuesday, the Fed cut its fed funds target rate and the discount rate by a quarter-point each. Many analysts and traders were hoping for a 50 basis-point reduction in at least one of them.

The Dow plunged 294.26 points, or 2.1%, to 13,432.77, and the S&P 500 was down 38.31 points, or 2.5%, to 1477.65. The Nasdaq gave back 66.60 points, or 2.5%, to 2652.35.

The fed funds rate is used by banks to charge interest on overnight loans to each other, and it's now 4.25%, down 100 basis points from this summer. The discount rate, the rate at which banks can borrow from the Fed, was taken down to 4.75%.

As for Treasury securities, they were sinking after rising sharply last time. The two-year note was down 13/32 in price, yielding 3.14%, and the 10-year note was off 31/32 to yield 4.09%. The 30-year bond was dropping 1-9/32, yielding 4.54%.

The markets in Asia were in the red overnight. Tokyo's Nikkei shed 0.7%, and Hong Kong's Hang Seng plummeted 2.4%. In Europe, stocks recovered from early losses. London's FTSE tacked on 0.4%, and the Paris Cac was up 0.3%. Frankfurt's Dax added 0.8%.

Commodities increased. Crude oil was up $4.37 to $94.39 a barrel, and gold was better by $1.70 at $818.80 an ounce.

[setravis]

Blue Chips Find Strength.......


Thursday into the close 12/13/2007


Stocks in the U.S. had a sluggish session Thursday as traders weighed mixed economic data, but a spurt of buying late helped the blue-chip averages finish with gains for day.

The Dow Jones Industrial Average rose 44.06 points, or 0.33%, to 13,517.96, after falling more than 100 points earlier in the session.

Dow component Honeywell (HON:) led the way with a 5% gain after affirming this year's forecast and predicted that next year's sales would climb 5% to 7%.

Elsewhere, the S&P 500 also overcame weakness to add 1.82 points, or 0.12%, to 1488.41. The Nasdaq Composite stayed in negative territory, slipping 2.65 points, or 0.1%, to 2668.49.

"We'll gladly take any up close, especially after a volatile day like today," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "But I'm still sensing that most participants are watching, waiting from the sidelines, keeping their powder dry while a few institutions or hedge funds push the market around."

Breadth was weak Thursday while volume was strong. On the New York Stock Exchange 3.54 billion shares changed hands, as decliners topped advancers by nearly a 2-to-1 margin. Volume on the Nasdaq reached 2.10 billion shares, with losers outpacing winners 3 to 2.

Banks and securities firms contributed to much of Wall Street's early weakness. Both the NYSE Financial Sector Index and the Amex Securities Broker/Dealer Index declined 1.2%.

"People are skeptical about what's happening with brokers and banks," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "We're still expecting more writedowns to come, and that's feeding concern."

Also soft were the Philadelphia Semiconductor Sector Index, down 1.1%, and the Philadelphia Gold and Silver Index, off 2.9%.

"This is a very nervous and uncertain market right now," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "The volatility is too high. The market is bound to struggle for the next few days."

Last time out, the Fed said it would join forces with four other Western central banks to get at least $40 billion in new cash circulating around the world in an effort to reinvigorate the credit markets.

The major averages opened sharply higher before the gains unraveled. After swinging in a range of nearly 400 points, the Dow finished up 41.13 points, or 0.3%, at 13,473.90.

As a new session arrived, doubts over the effectiveness of the Fed's move to inject cash were raised.

"Clearly, the Fed is feeling its way in the dark here," said Ian Shepherdson, chief economist with High Frequency Economics. "Current conditions are unprecedented in modern times. We think these measures are a step in the right direction, but there is simply no way to know for sure how effective they will be."

Overseas markets also were hit as many questioned the central banks'' action. Overnight in Asia, Hong Kong's Hang Sang dropped 2.7%, and Japan's Nikkei 225 slumped 2.5%. In Europe, London's FTSE 100 lost 3%, and Germany's Xetra Dax eased 1.8%.

Traders also had to contend with a set of mixed economic releases out before the open. On the inflation front, the Labor Department said its producer price index jumped 3.2% last month, doubling expectations to become the largest increase in more than 34 years.

The core PPI, which strips out food and energy from the wholesale prices, rose 0.4% and also doubled expectations. On Friday, the consumer price index -- viewed as the more important of the two reports -- will be released.

Meanwhile, the Commerce Department gave investors some positive news in the form of retail sales data for November. Sales climbed 1.2% last month, the largest increase in six months, compared with expectations of a 0.7% rise. Excluding autos, retail sales were up 1.8% last month, the biggest advance in nearly two years.

Despite the strong retail sales data, the S&P Retail Index lost 1.1%.

Also, the Labor Department said that initial jobless claims fell by 7,000 last week to 333,000 claims. The less volatile four-week moving average slipped 2,000 lower to 338,750 claims.

Elsewhere, the Commerce Department said shortly after the opening bell that business inventories rose 0.1% in October.

U.S. Treasury securities slid sharply after the economic releases. The 10-year note was down 24/32 in price, pushing the yield to 4.19%. The 30-year bond was off 1-13/32 in price, yielding 4.63%.

Crude prices retreated but did little to calm investors. Oil prices, which jumped nearly 5% last time, were down $2.14 to close at $92.25 a barrel. Gold and silver futures also finished lower.

Among U.S. corporate news, Lehman Brothers (LEH:) said fourth-quarter earnings fell from a year ago. Still, the broker's results topped the Thomson First Call average estimate. Lehman shed 45 cents, or 0.7%, to $61.37.

Costco (COST:) posted fiscal first-quarter earnings that rose 11% from last year. Earnings and sales were in line with expectations, but shares ended lower by $1.65, or 2.4%, to $68.54.

Away from earnings, Biogen Idec (BIIB:) tumbled 23.7% after company said it has still not found an acquirer after saying it would put itself up for sale. Shares lost $17.97 to $57.91.

[setravis]

Inflation Data Sink Stocks.......


Friday into the close 12/14/2007


Stocks in the U.S. fell Friday as the latest round of inflationary data led investors to fear that the Federal Reserve might be reluctant to lower rates again.

The Dow Jones Industrial Average dropped 178.11 points, or 1.32%, to 13,339.85, and the S&P 500 was down 20.46 points, or 1.37%, at 1467.95. The Nasdaq Composite was off 32.75 points, or 1.23%, at 2635.74.

The major averages finished with losses of more than 2% over the five sessions, ending a two-week winning streak.

Breadth was negative. On the New York Stock Exchange 3.36 billion shares changed hands, and volume on the Nasdaq reached 1.94 billion shares. Losers beat winners roughly 3 to 1.

"Technically, this is a bad place for the market to close, especially on a Friday," said Paul Mendelsohn, chief investment strategist with Windham Financial. "There was nothing today that was really positive. There was a lack of buying, and we may see that problem as people window-dress from here until the end of the year."

The decline followed a hotter-than-expected read on inflation at the retail level. The Labor Department's consumer price index rose 0.8%, compared with expectations of a 0.6% increase. The core number -- which excludes food and energy -- climbed 0.3%, slightly above estimates.

Investors fear that the unexpected jump in the CPI affirms the Fed's concerns of rising inflation and dampens the hopes for any further rate cuts. The central bank reduced the fed funds rate by 25 basis points on Tuesday but noted higher energy prices as a potential concern for inflation.

The Federal Open Market Committee, the policymaking arm of the Fed, next meets for a two-day meeting on Jan. 29.

"The headline was boosted by energy prices, with gasoline up 9.3%," said Ian Shepherdson, chief economist with High Frequency Economics. "The year-over-year trend remains downwards and the month-over-month data are erratic, but this might be the start of a firming induced by the falling dollar."

U.S. Treasury securities were lower following the CPI report. The 10-year note lost 8/32 in price to yield 4.23%. The 30-year bond was off 7/32 in price, yielding 4.65%. The dollar rallied.

Just one day ago, the Labor Department said its producer price index jumped 3.2% last month, doubling expectations to become the largest increase in more than 34 years. The core PPI rose 0.4% and also was twice what was anticipated.

Also on the economic docket, the Fed said that industrial production rose 0.3% in November, above economists'' projections. Capacity utilization rose to 81.5% from 81.4% but was below the consensus.

Following the prior close, Citigroup (C:) said it would assume control of seven structured investment vehicles, or SIVs, totaling $49 billion it will add to its books. The rescue puts a strain on Citi's already stressed balanced sheet.

The move also hints at the death of the $100 billion superfund that Citigroup, Bank of America (BAC:) , and JPMorgan Chase (JPM:) hoped to create. After Citi's announcement, Moody's downgraded the firm's long-term debt rating. Shares of Citi were down 31 cents, or 1%, to $30.70.

Despite Citi's advance, several financial subsector indices traded lower. The NYSE Financial Sector Index fell 2%, and the Amex Financial Sub Index eased 0.9%.

Among other losing sectors, the S&P Retail Index slumped 2.4%, the Dow Jones Transportation Average was off 1.7%, and the Philadelphia Semiconductor Sector Index was down 1.6%.

Elsewhere, toolmaker Black & Decker (BDK:) slid 6% after lowering its forecast for the fourth quarter and full year. Black & Decker shed $6.82 to $73.31, having touched a 52-week low of $71.95.

As for ratings changes, UBS upgraded Dow component Disney (DIS:) to buy from neutral. Shares closed up 25 cents, or 0.8%, to $33.01.

Bear Stearns raised its rating for JetBlue (JBLU:) to peer perform from underperform a day after German airline Lufthansa bought a 19% stake in the discount carrier. After jumping 14% Thursday, shares of JetBlue gave back 0.8% to end at $7.09.

Commodity prices lost ground for the session. Crude prices were down 98 cents to $91.27 a barrel. Gold and silver futures were also finished lower.

In Asia's markets, the Hong Kong's Hang Seng fell 1% overnight, and Japan's Nikkei 225 eased 0.1%. European bourses were slightly higher, as London's FTSE 100 added 0.5%, and Germany's Xetra Dax tacked on 0.3%.

[setravis]

The turmoil in the market indices slowed Thursday. Since the DJIA's fall last Tuesday, the trend of this index has been slightly down; however, the index has vacillated within a narrowing range of support and resistance, now approaching 13,300 and 13,500. The 44- point gain chalked up at the close yesterday is expected to be given back, and the DJIA should move mainly sideways until the current near-term downtrend has bottomed out, which is now expected to happen early next week.

The intermediate-term uptrend continues to develop despite the downward effect of the near-term trend. Uptrends to downtrends turned negative, an occurrence consistent with the rapidly declining near-term trend indicators. The intermediate term indicators, and Trend Ratio (percent of stocks in uptrends) took the shock pretty much in stride, holding steady and consistent with an uptrending support level for the DJIA, now approaching 13,300.

Previously, a 1.5% correction downward in the DJIA was forecasted, but it was not expected to happen in one day. Last Tuesday and Wednesday the market became very volatile, and 2.5% swings, both up and down, occurred very rapidly. Overall the near-term trend decline over three days has been about 250 DJIA points, or 2%, since this near-term downtrend commenced. The near-term trend indicators have retreated substantially from their previously overbought circumstances, and signs are their downward treks are slowing but a couple more days are likely to be required for these indicators to find their bottoms. Thus, it is probable that the DJIA will oscillate up and down between 13,300 and 13,500 as these two support/resistance levels converge and the near-term downtrend runs its course.

Separating the trend signal from the noise created by the trade-term trend has been the name of the game recently. With intraday DJIA swings of 300-400 points, the multi-day trend directions are not only obscured, but they become of lesser moment than the intraday gyrations. Nevertheless, anticipated economic uncertainty is the mood-driving force of buyers and sellers in the stock marketplace, and as long as various measures are interpreted as leading to more uncertainty, the stock market will be volatile. Trend proprietary indicators have proved reliable measures of the trends underlying the noise, and they currently point to an emerging intermediate-term uptrend opposed by a near-term downtrend, which will tend to neutralize each other until the near-term downtrend is spent.

[setravis]

Stocks End Rocky Day Higher.......


Tuesday into the close 12/18/2007


Stocks waffled between positive and negative territory Tuesday before closing higher as investors weighed central bank interventions and strong earnings against more fears about the extent of the credit crunch.

The Dow Jones Industrial Average traded in a fairly wide range before settling up 65.27 points, or 0.5%, at 13,232.47. The S&P 500 added 9.08 points, or 0.63%, to 1454.98. The Nasdaq Composite jumped 21.57 points, or 0.84%, to 2596.03.

Once again, the financial sector was the weak link, even on an up day. The Amex Securities Broker/Dealer Index slid 1.2%, pressured by losses in Goldman Sachs (GS:) .

There was also some caution ahead of Friday's expiration of four separate derivatives contracts, an event known as quadruple witching. Single-stock futures, stock options, index futures and index options all were trading for the last time. The simultaneous expiration happens quarterly and can lead to considerable volatility.

"We'll probably continue to see this type of action into the weekend," said Peter Cardillo, chief market economist with Avalon Partners. "We're now approaching levels where we may see some bargain-hunting, but we will have to still work lower until that bounce. We need to see some conviction."

Despite the volatility, breadth was positive. On the New York Stock Exchange 3.63 billion shares changed hands, as advancers beat decliners by nearly a 2-to-1 margin. Volume on the Nasdaq reached 1.94 billion shares, with winners edging losers 3 to 2.

Earlier, the European Central Bank said it will open the spigots and allow members to borrow more than $500 billion for a two-week period. Meanwhile, the Bank of England auctioned roughly $20 billion to lenders in order to alleviate liquidity concerns.

European bourses were higher in the wake of the announcements. London's FTSE 100 added 0.1%, and Germany's Xetra Dax was up 0.3%. The euro was weakening against the U.S. dollar.

Back home, the Federal Reserve proposed a plan that will give borrowers more protection against predatory lending practices, another new measure aimed at corralling the subprime-mortgage crisis. Among the changes discussed, lenders would be prevented from paying broker fees for higher-rate loans.

Additionally, borrowers would be prevented from obtaining a mortgage if their only means of repayment would be an increase in the value of their property.

"Unfair and deceptive acts and practices hurt not just borrowers and their families but entire communities and, indeed, the economy as a whole," said Fed Chairman Ben Bernanke.

Elsewhere, Pimco's Bill Gross, in his global outlook at strategy for 2008, said that "the Fed cannot afford to see housing prices go down by 15% or 20%" and that "the dollar will be weak going forward relative to emerging-market currencies."

His comments came as the Commerce Department said housing starts fell a less-than-expected 3.7% in November to 1.19 million annualized units. Building permits dropped to 1.15 million, the worst level in 15 years, but still came in above expectations.

Ian Shepherdson, chief economist with High Frequency Economics, said the numbers aren't even as rosy as they appear on first blush.

"The headline starts number was flattered by a small rise in multifamily starts," he said. "The key single-family number dropped 5.4% to a 16-year low of 829,000. Permits continue to plunge too, so there is no end in sight to the drop in starts."

Still, the homebuilding sector was one of the best performers of the session, with the Philadelphia Housing Sector Index rising 0.9%.

In corporate news, traders were also sorting through a wave of quarterly results. Goldman Sachs was the headliner, handily beating Wall Street's fourth-quarter earnings and revenue estimates. The stock, however, closed down $6.77, or 3.2%, to $201.86.

Goldman is the first of several investment banks to report quarterly results this week. Morgan Stanley (MS:) is out on Wednesday, and Bear Stearns (BSC:) is due to report Thursday. Lehman (LEH:) released its numbers last week. Lately, all three names were trading lower.

Electronics retailer Best Buy (BBY:) was also out with earnings, posting a 52% surge in third-quarter profits and easily topping the Thomson First Call average estimate. For the full fiscal year, the company now expects earnings of $3.10 to $3.20 a share, compared with analysts'' target of $3.12.

Shares of Best Buy tacked on 30 cents, or 0.6%, at $51.44. Rival Circuit City (CC:) , which posts results Friday, dipped 0.8% to $6.64.

Darden Restaurants (DRI:) , Palm (PALM:) , homebuilder Hovnanian (HOV:) and video game makerTake-Two (TTWO:) will report later.

Among ratings changes, Deutsche Bank upgraded Adobe Systems (ADBE:) to buy from hold after the company posted a fourth-quarter profit late Monday that jumped 21% from a year ago. Adobe gained $1.08, or 2.6%, to $41.98.

U.S. Treasury securities were rallying. The 10-year note rose 6/32 in price, pushing the yield down to 4.13%. The 30-year bond climbed 19/32 in price, yielding 4.54%.

Much like equities, commodity prices endured a wild ride. Crude oil ended lower by 14 cents at $90.49 a barrel. Gold and silver futures finished in positive territory.

[setravis]

Stocks Stumble to Mixed Close.......


Wednesday into the close 12/19/2007


Stocks endured another wobbly session Wednesday before ending narrowly mixed, as traders weighed a strong outcome from the Federal Reserve's first loan auction against a lowered ratings outlook for two big bond insurers.

The Dow Jones Industrial Average wavered between positive and negative territory, ultimately ending down 25.20 points, or 0.19%, to 13,207.27. The S&P 500 slipped 1.98 points, or 0.14%, to 1453.

The tech-heavy Nasdaq Composite managed to gain 4.98 points, or 0.19%, to close at 2601.01. The index was buoyed by gains in Yahoo! (YHOO:) , Amazon.com (AMZN:) , Research in Motion (RIMM:) , and Intel (INTC:) .

"There is a lot of volatility, and instead of stabilizing, we keep seeing more selling," said Paul Mendelsohn, chief investment strategist at Windham Financial Services. "We should be seeing at least a small Santa Claus rally. It's disheartening that there are no buyers out there."

Breadth was mixed Wednesday. On the New York Stock Exchange 3.33 billion shares changed hands, as decliners edged advancers by a 9-to-7 margin. Volume on the Nasdaq reached 1.83 billion shares, with winners matching losers.

Among subsector indices, the Dow Jones Transportation led laggards with a 1.7% decline. The NYSE Financial Index, the S&P Retail Index, and the Philadelphia Housing Sector Index also finished in the red.

Stocks started on an upbeat note, but early gains unraveled after Standard & Poor's cut its outlook on MBIA (MBI:) and Ambac (ABK:) to negative from stable. That sent shares of MBIA down 2.5% to $27.01. Ambac rose 1.9% to $27.50 after it said it was taking measures to increase capital and regain a stable rating.

Steven Sheldon, principal with SMS Capital Management, said that it seems as though every financial name throws cold water on the market, reducing the likelihood that a year-end rally will materialize.

"The market can't seem to get any traction," said Sheldon. "The fact that we are still positive for the year still supports the idea that sentiment is decent. Every day that goes by without a Santa Claus rally, though, isn't encouraging."

The S&P news overshadowed the significant demand that came with the first of four planned Federal Reserve loan auctions. The market initially rose after the Fed said it has accepted $20 billion in propositions from U.S. banks who will borrow money for 28 days at 4.65%, which is below the current discount rate. Overall, 93 banks bid $61.6 billion in the auction.

"This is a temporary move and merely another vehicle for the Fed to add liquidity to the market," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "If this encourages banks to make additional loans and to lend to each other, then it is another step in the right direction in order to avoid a recession."

Even so, troubling signs continue to emerge on an almost daily basis -- and that was before the S&P action on the bond insurers. Mortgage research company RealtyTrac said foreclosure filings in November jumped 68% from a year ago to 201,950, but on a slightly positive note, filings fell 10% from October.

Additionally, the Mortgage Bankers Association said that mortgage applications slid nearly 20% last week, an indication that refinancing is grinding slower.

The reports come one day after the Fed proposed a plan to give borrowers more protection against predatory lending practices.

The housing data wasn't much better on the earnings front. After the last close, homebuilder Hovnanian (HOV:) posted a fourth-quarter loss that quadrupled from a year ago. Shares closed down 97 cents, or 11.6%, $7.43.

Among other companies out with earnings late, handheld device maker Palm (PALM:) posted a fiscal second-quarter loss and offered disappointing guidance. Video-game maker Take-Two (TTWO:) had a fourth-quarter loss that shrank from a year ago but still disappointed Wall Street analysts.

Palm lost 6.9% to $5.52, while Take-Two climbed 4% to $18.75.

Shares of Darden Restaurants (DRI:) fell more than 20% after the company reported fiscal second-quarter earnings that fell sharply from a year ago. Darden also said fiscal 2008 profits would come in below forecasts.

Ahead of the open, Morgan Stanley (MS:) reported a fourth-quarter loss of $3.61 a share and said it had to write down the value of its mortgage-related assets by $9.4 billion. Also, a Chinese investment group is putting $5 billion in the company. Morgan was higher by $2.09, or 4.4%, to end at $50.16.

Morgan is the latest investment bank to post results in the last week. Already, Lehman Brothers (LEH:) and Goldman Sachs (GS:) have posted earnings, while Bear Stearns (BSC:) is due to report Thursday.

Traders are also gearing up for Friday's expiration of four separate derivatives contracts, an event known as quadruple witching. Single-stock futures, stock options, index futures and index options all will trade for the last time. The simultaneous expiration happens quarterly and can increase volatility.

With no economic data, U.S. Treasury securities rallied. The 10-year note was up 24/32 in price to yield 4.03%. The 30-year bond added 1-17/32, yielding 4.45%.

Commodity prices were mixed. Crude oil rose $1.16 to $91.24 a barrel following a bullish inventory report. Gold futures ended lower amid a stronger dollar, while silver finished with a slight gain.

Overseas markets were mixed. In Asia, Hong Kong's Hang Seng rose 1.1%, but Japan's Nikkei 225 slipped 1.2%. In Europe, London's FTSE 100 tacked on 0.1%, and Germany's Xetra Dax was off 0.2%.

[setravis]

Stocks Mixed on Earnings News.......


Thursday into the close 12/20/2007


Tech stocks benefited from a strong profit report from Oracle (ORCL:) Thursday, but blue chips faltered under the weight of mixed earnings and economic data.

The Dow Jones Industrial Average was continuing a string of uneven trading sessions, recently trading down 31 points, or 0.2%, to 13,175 after opening higher. The S&P 500 was lower by 3.5 points, or 0.2%, to 1459.

The tech-heavy Nasdaq Composite was the market's best performer, rising 9 points, or 0.4%, to 2610, helped by a glowing earnings report from business-software giant Oracle.

After the previous close, Oracle reported a fiscal second-quarter profit that jumped 35% from a year ago, surpassing Wall Street's estimates. Software license sales soared 38%, and Oracle offered rosy guidance for the current period. Shares were higher by $1.40, or 6.8%, to $22.16.

Bear Stearns (BSC:) , however, countered that strong report with a dismal update on the subprime mess. The investment bank to posted the first quarterly loss in its history, due to a $1.9 billion writedown from mortgage-related losses. Shares recently were down $1.30, or 1.4%, to $89.30.

Elsewhere on the earnings front, Nike (NKE:) said its fiscal second-quarter profit rose 10% from a year ago, easily beating the Thomson First Call average estimate. Shares of Nike were recently adding $2.73, or 4.3%, to $66.53.

Accenture (ACN:NYSE) topped Wall Street estimates with a 34% rise in first-quarter earnings. The tech services firm also lifted its forecast for the full year. Accenture was climbing $2.27, or 6.5%, to $37.23.

FedEx (FDX:) posted a 6% decline in fiscal second-quarter earnings, though that managed to top Wall Street's estimates. The company, however, projected fiscal third-quarter earnings below analysts'' forecasts, and the stock was lower in the premarket session. FedEx was recently off $1.22, or 1.3%, to $93.41. Rival UPS (UPS:) was off 1.1% to $70.53.

FedEx weighed on the Dow Jones Transportation Average, which was down 1.3%. Among other losers, the Philadelphia Housing Sector Index lost 1.9%, the S&P Retail Index shed 1.5%, and the NYSE Financial Index fell 1%.

Tech subsector indices, on the other hand, benefited from Oracle's earnings beat. The Software HOLDRS Index added 1.3%, the Amex Computer Technology Index was up 0.9%, and the Philadelphia Semiconductor Sector Index rose 0.5%.

Traders were also digesting several economic reports. Before the bell, the Commerce Department said its final read of third-quarter gross domestic product came in at 4.9%, unchanged from the preliminary read.

The core personal consumption expenditure price index -- which the Federal Reserve closely monitors as an inflation measure -- is now up 2% over the previous year, slightly above preliminary reports.

"There were no surprises in the GDP report, so the market will be looking more closely at the corporate news," said Peter Cardillo, chief market economist with Avalon Partners. "The market remains skittish, but we're in the lower end of the trading range, so we should see a technical bounce. We should now begin to see holiday volume creep in."

Also on the economic docket, the Labor Department said initial jobless claims rose a greater-than-expected 12,000 last week to 346,000 claims, which was above consensus. Elsewhere, the Conference Board said that leading economic indicators fell 0.4% last month, more than economists expected.

Also, the Philadelphia Fed said its manufacturing index plunged to a reading of minus 5.7 in December from 8.2 last month, far below estimates. The reading was the lowest since April 2003.

Later, the Federal Reserve will hold its second of four scheduled loan auctions. On Monday, the Fed accepted $20 billion in propositions from U.S. banks that will borrow money for 28 days at 4.65%, which is below the current discount rate. Overall, 93 banks bid $61.6 billion in the first auction.

Last time out, the major averages wavered between positive and negative ground before ultimately finishing close to the unchanged mark. The Dow ended down 25.20 points, or 0.2%, to 13,207.27. The S&P slipped 1.98 points, or 0.1%, to 1453, while the Nasdaq managed to gain 4.98 points, or 0.2%, to close at 2601.01.

This week's shakiness comes ahead of Friday's expiration of four separate derivatives contracts, an event known as quadruple witching. Single-stock futures, stock options, index futures and index options all were trading for the last time. The simultaneous expiration happens quarterly and can lead to considerable volatility.

U.S. Treasuries were edging higher. The 10-year note was up 6/32 in price, dropping the yield to 4.00%. The 30-year bond was adding 8/32 in price, yielding 4.43%.

Commodity prices were mixed. Crude oil was up 69 cents to $91.93 a barrel, while gold and silver futures were sliding.

Overseas markets were mixed. In Asia, Hong Kong's Hang Seng eased 0.1%, while Japan's Nikkei 225 was unchanged. Among European bourses, London's FTSE 100 tacked on 1%, and Germany's Xetra Dax was up 0.4%.

[setravis]

Santa Visits Wall Street

Friday into the close 12/21/2007


Stocks surged Friday as a host of cheery news, from strong economic data to another blowout tech profit report, put traders in a buying mood ahead of the Christmas holiday week.

The Dow Jones Industrial Average rose 205.01 points, or 1.55%, to 13,450.65. Each of the Dow's 30 components finished the session with gains, with AT&T (T:) leading the pack with a 3% rise.

Elsewhere, the S&P 500 added 24.34 points, or 1.67%, to 1484.46. The Nasdaq Composite jumped 51.13 points, or 1.94%, to 2691.99.

With the rally, the major averages each finished a week of uneven trading with modest gains. The Dow was higher 0.8% for the week, and the S&P 500 ended up 1.1%.

The Nasdaq was the best performer, adding 2.1% over the five sessions as strong earnings from Research In Motion (RIMM:Nasdaq) and Oracle (ORCL:Nasdaq) invigorated the tech sector.

Stocks raced out of the gates after the Commerce Department said personal income rose 0.5% last month, as expected, while spending jumped 1.1%, much higher than forecasts. It was the largest surge in spending since May 2004.

The report also said the Federal Reserves preferred inflation measure, the core personal consumption expenditures deflator, rose 0.2%, in line with expectations. The core inflation measure is up 2.2% over the last year, outside the Fed's so-called comfort zone of 1% to 2%.

Ian Shepherdson, chief economist with High Frequency Economics, said that the spending number came in much higher than forecasts due to an early Thanksgiving holiday last month.

"Given the strong core retail sales numbers and the surge in energy prices, the consensus forecasts for both nominal and real spending were bafflingly low," said Shepherdson. "You should now expect a wave of modest [gross domestic product] forecast upgrades for the fourth quarter."

Stocks also celebrated the results of the second of four planned Federal Reserve loan auctions. The Fed said it has accepted $20 billion in propositions from U.S. banks, which will borrow money for 35 days at 4.67%, below the current discount rate banks would normally borrow at. Overall, 73 banks bid $57.7 billion in the auction.

The Fed added that it intends to conduct the biweekly auctions as long as needed in order to address the pressures in short-term funding markets.

"This is a definite plus, and it will hopefully break the logjam in the credit arena," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "This is a different environment than we've had in the past, so we're hoping to see a freeing up of these credit concerns."

Research In Motion's blockbuster report after the prior close also provided a boost. The BlackBerry maker posted third-quarter earnings and revenue that more than doubled from a year ago.

RIM also said that income should top projections for the fourth quarter. Shares added $11.64, or 10.9%, to $118.63.

The RIM report came on the heels of strong earnings from software maker Oracle, which helped spur a tech rally last time out. In the prior session, the Nasdaq surged 39.85 points, or 1.5%, to 2640.86. The Dow rose 38.37 points, or 0.3%, to 13,245.64, while the S&P 500 added 7.12 points, or 0.5%, to 1460.12.

"This is a tech-led rally thanks to RIM and Oracle," said Pavlik. "There's a positive feeling among tech stocks. There's been cash building up on the sidelines, so there's some rotation into these tech names."

Ahead of the new session, a report circulated that Merrill Lynch (MER:) may become the latest investment bank to receive a cash boost from overseas funding. Singapore's Temasek Holdings is in talks with Merrill to deliver a $5 billion cash infusion, according to The Wall Street Journal. Shares of Merrill rose $1.04, or 1.9%, to $55.54.

Friday's gains came despite expectations of increased volatility during the expiration of four separate derivatives contracts, an event known as quadruple witching. Single-stock futures, stock options, index futures and index options all were trading for the last time. The simultaneous expiration happens quarterly and can lead to considerable volatility.

Amid the options expiration, the New York Stock Exchange said it set trading volume records during the first 30 and 60 minutes of the trading day. In the first half hour, the exchange saw 790 million shares traded, topping the old record of 704 million. During the first hour, the NYSE saw a record 903 million shares traded, beating the old record by more than 100 million

By the end of trading, volume on the NYSE hit 4.37 billion shares, with advancers beating decliners by a 3-to-1 margin. On the Nasdaq, volume touched 2.46 billion shares as winners outpaced losers 2 to 1.

Elsewhere on the economic front, the University of Michigan revised its final read of its consumer sentiment index for December to 75.5. Economists had expected no revision from the preliminary read of 74.5.

U.S. Treasury's were tumbling. The 10-year note was down 28/32 in price, pushing the yield to 4.16%. The 30-year bond was losing 1-21/32 in price, yielding 4.58%.

Commodity prices climbed. Crude oil was up $2.25 to close at $93.31 a barrel, and gold and silver futures finished sharply higher.

In other corporate news, shares of Circuit City (CC:) plunged 28.7% early after the retailer posted a much wider-than-expected third-quarter loss. Shares were down $1.91 to $4.75.

Walgreen (WAG:) , on the other hand, traded higher after posting a fiscal first-quarter profit that rose almost 6% from a year ago. Walgreen climbed $2.22, or 6.1%, to end at $38.47.

Overseas markets rallied overnight. In Asia, Hong Kong's Hang Seng jumped 2.3% and Japan's Nikkei 225 added 1.5%. Among European bourses, London's FTSE 100 tacked on 1.4% and Germany's Xetra Dax was up 1.7%.