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After The Close - It was a mildly disappointing session for the U.S. equity market today. Continued worries about the U.S. fiscal cliff negotiations in Washington more than offset some encouraging news on the U.S. economy and reports that Greece will get the third installment of bailout funds designed to keep the debt-encumbered nation from defaulting on its obligations. The major U.S. equity indexes were in negative territory for much of today’s session, although some selective buying did take place in the early afternoon and the losses were pared for a while. In fact, the NASDAQ even briefly moved into positive territory. However, the sellers soon returned, making it a winning day for the bears. At the closing bell, the Dow Jones Industrial Average, the broader S&P 500 Index, and, to a lesser extent, the tech-heavy NASDAQ, were in the red. Still, the victory for the bears was not very decisive as the spread between declining and advancing issues on both the Big Board and the NASDAQ was just narrowly in favor of the former. 

From a sector perspective, those groups most closely tied to the performance of the global economy (i.e., energy, basic materials, consumer cyclicals, and financials) suffered the biggest setbacks today. The aforementioned U.S. fiscal cliff scenario and the lingering sovereign-debt issues in the euro zone (more on both below) have investors worried about the near-term health of the world economies. 

Once again, investors were fixated on the looming fiscal cliff of mandated tax hikes and spending cuts—and were a bit unnerved by what they were hearing from Capitol Hill. Both political parties appear to be adamant about what reforms the new budget should include. President Obama has threatened to veto any deal that does not raise taxes on the top 2% of income earners, while the Republican-controlled House is against such a measure. Senate Majority Leader Harry Reid even said this afternoon that “little progress” has been made in the fiscal cliff discussions. Indeed, those comments seemed to be the driving force the late-day pick up in selling. Our sense is that the increased bickering in Washington, which seems to be the case since Congress reconvened, is not a good thing for the performance of the U.S. equity market, and could produce some excess volatility over the remainder of 2012. 

Meantime, the concerns about the sovereign-debt problems in the euro zone eased a bit, at least for the moment, after reports surfaced that an agreement between euro-zone finance leaders and the International Monetary Fund to reduce Greece’s debt was reached, paving the way for the release of aid loans that would prevent the struggling nation from defaulting on its loans. The European bourses moved higher on the news today, but the recent decision appears to be a case of just “kicking the can down the road” as a long-term solution on how to correct the debt problem is still elusive.

That said, not all the news was bad today. Specifically, we received three more encouraging reports on the state of the U.S. economy. The Conference Board reported that consumer confidence rose to a four-and-a-half-year high in November, as consumer became more optimistic about the outlook for the economy. This is encouraging with the holiday shopping season now under way. Meanwhile, the housing market, another major cog in the nation’s output, is showing further signs of rebounding, as home prices posted the biggest percentage gain in more than two years in the third quarter, according to the closely watched S&P/Case-Shiller Index. And lastly, durable goods orders were flat in October, which was better than what economists were expecting. Our sense that if not for this encouraging news on the U.S. economy the U.S. stock market setback would have a bit more pronounced.   - William G. Ferguson

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 - The U.S. stock market has turned mixed today. The major averages had opened lower, and spent the morning paring their losses. At just past noon in New York, the Dow Jones Industrial Average is down less than a point ; the S&P 500 Index is up one point (0.1%); and the NASDAQ is ahead five points (0.2%). Meanwhile, market breadth suggests some underlying strength to the session, as advancing issues are ahead of decliners on the NYSE and on the NASDAQ. The market sectors are still somewhat mixed, with weakness in the energy, basic materials, and consumer cyclical stocks. On balance, strength can be found in the utility issues, the transports, and in the conglomerates.

Technically, the S&P 500 Index seems to be consolidating a bit, as traders look for guidance. It is encouraging that after the weak openings in some sessions lately, traders have moved in to do some bargain hunting and support the market. From a valuation standpoint, the median price-to-earnings multiple for all Value Line stocks is at just below 15, which is reasonable even given the somewhat lackluster third quarter for earnings. This, along with the low yields on U.S. Treasuries, may also provide some support for equities.

Some progress in solving Greece’s problems may have been made, and this too, may be helping stocks. However, on the Continent, the markets are not showing too much enthusiasm. Germany’s DAX is up slightly; there are modest gains on Britain’s FTSE 100, but France’s CAC 40 is down a bit. The lackluster reaction in Europe may have kept the markets here from advancing at the start of the session.

Meanwhile, the economic news released today was generally positive. Durable goods orders were unchanged in October, where analysts had expected a decline. Notably, capital goods orders, excluding transportation, actually improved. Furthermore, the consumer seems to be holding up well. The Conference Board’s Consumer Confidence Index came in at 73.7 for November, which was better than had been anticipated.  Elsewhere, the housing market is still recovering. Investors received decent September readings on the Case Schiller 20-City Index, and on the FHFA Housing Price Index. Tomorrow, we get a look at October new home sales, which is an important release.

Today’s corporate news was generally supportive. Shares of Ralcorp (RAH) are up sharply after food giant ConAgra (CAG) agreed to acquire that company. Corning (GLW) stock is higher, after the glass maker announced a positive outlook. In the small cap arena, shares of ACADIA Pharmaceuticals (ACAD) are rising on favorable drug-related news.  - 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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Stocks to Watch from The Survey There is some M&A news in the headlines this morning. After a long courtship, packaged foods company Ralcorp (RAH) has agreed to be acquired by industry peer ConAgra Foods (CAG) for $90 a share, a 28% premium to the stock’s preannouncement closing price. Shares of Ralcorp are soaring in the premarket, indicating an opening of close to $89 a share. CAG stock is noting a slightly higher opening, as well.

Shares of Las Vegas Sands (LVS) could also see active trading today. That issue is up notably in the premarket, after the casino operator declared a special dividend in the amount of $2.75 a share.

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 held its ground yesterday, following some outsized gains this past Friday on a hoped-for budget compromise that would allow this nation to avoid the dreaded fiscal cliff that is now set to throw cold water on the coming New Year's celebration.

That optimism, which seemed to evolve late last week, may well prove to be premature, as the respective political parties are still far away from a settlement, and their positions remain fairly hard as the days tick down to the looming January 2nd deadline. Our position remains unchanged, as well, as we sense that either a deal will get done by that time or the two sides will agree on a short-term accommodation that will pass the buck off to the new Congress.

As to the stock market, it was a virtual standoff yesterday, with the Dow Jones Industrial Average backing off of the 13,000 plateau, losing 42 points, while the Standard and Poor's 500 Index eased by a mere three points, and the NASDAQ, boosted by nifty gains in the shares of Apple (AAPL), which rose 18 points, and more modest increases in the shares of eBay (EBAY) and Facebook (FB), gained almost 10 points.

One depressant yesterday, in addition to the ongoing standoff in Washington, was news that Thanksgiving-weekend retail sales growth came in below last year's levels. That seems to be the pattern in recent years. Excitement greets the sheer volume of visitors to the nation's shopping malls on Black Friday, but once the sales figures for those visits are calculated, the end result is less than welcoming. That appears to be the pattern again this year. However, some plain-old-vanilla profit taking may also have been at work here, following last week's better-than-400 point climb in the aforementioned Dow Jones Industrials.  

Anyway, shares of a number of large retailers fell back yesterday, after those issues had rallied earlier last week. Our thinking is that sales will be decent, but not eye catching this year, reflecting the incrementally better economic performance that is now under way and will probably persist through much of the new year, presuming that the fiscal cliff is avoided and Europe does not have a full meltdown.

And as to Europe, there seems to be some better sentiment this morning as a deal to give debt-encumbered Greece more cash was greeted by a measure of relief in the markets over there. Specifically, the FTSE 100 index of leading shares in Great Britain was ahead by 0.4% earlier this morning, while shares in Germany (up 0.5%) and France (ahead 0.2%) were higher, as well. And over here, the equity futures are now grudgingly higher with less than an hour to go before the start of the new trading day. In all, the Standard and Poor's 500 Index futures are up by less than a point, while the NASDAQ futures are better by more than four points.

Finally, in other news, food processing giant ConAgra Foods (CAG) is buying private-label food producer Ralcorp (RAH) for just under $5 billion. ConAgra shares are indicated a bit higher at this moment, while Ralcorp shares are soaring in the pre-market, suggesting an open at close to $89 a share. That issue closed at just over $70 a share yesterday.

And in economic news, a report just out minutes ago noted that U.S. durable goods orders were unchanged in October. Expectations had been for a decline of 1.2%. Orders had soared in September, gaining 9.2%, but had dropped sharply in August. This is a very volatile series and one that few put that much stock into. At 10:00 (EST), meanwhile, the Conference Board will issue its monthly survey on consumer confidence. Here, a slight gain is the consensus forecast.   - Harvey S. Katz

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