MIDDAY LUNCH

Dow 10488.66  -59.47, Nasdaq 2285.42  -5.70, S&P 1122.58  -3.72

The markets have moved off their session low but remain in negative territory on slim volume. 

U.S. stocks fell after a better-than-expected weekly unemployment report.  This cause many to fear that a strengthening economic recovery could prompt the Federal Reserve to move more quickly to raise interest rates.

Citigroup (C) 3.35 +0.02 and Bank of America (BAC) 15.22 +0.14 are the two most active stocks today. This is helping the Financial Sector to be a leading group today.

A descent since the open of pit trade has left crude oil prices with a fractional gain at $79.88 per barrel.

Pressure has picked up since the release of the latest natural gas inventory numbers. Natural gas inventories had a draw of 124 bcf, which is less than the consensus call for a draw of 145 bcf. Prices for the commodity have dropped sharply to trade with a -2.0% loss at $5.58 per contract.

MORNING COFFEE

Today is the last day of trading for 2009 and the markets a poised to post a remarkable comeback for the year.  From the March lows the Dow has gained over 60% and should post a 20% return for the year.  While the S&P 500 is set to post 25% returns for the year.

GMAC Gets More Cash.  As expected auto and mortgage lender GMAC, which is jointly owned by Cerberus and General Motors received an additional $3.8 billion in bailout funds bringing the total received by the company to over $12 billion. The Tresuary also said it would convert enough existing preferred stock into common equity to raise its stake to 56% from 35%, making it the majority shareholder. This was the third bailout the troubled company received for its Ally Bank and ResCap units.

No Fox Network On New Year’s Day.  It appears that a deal will not be in place between News Corp. (NWS) and Time Warner Cable (TWC) setting the stage for NWS programming to be pulled on News Years Day.  This would leave millions without the college football bowl games and Fox News. News Corp wants TWC to pay $1 per subscriber per month for its shows, which would set a new precedent in an industry that has thus far relied primarily on ad revenue.

Chicago ISM Topps Estimates.  Midwest business activity expanded far more than expected in December, hitting an almost four-year high.  The ISM’S Chicago index rose to 60 from 56.1 in November, vs. economist consensus of 55.1. Employment posted the biggest monthly gain in more than a year.  All index components are now in expansion, except for inventories, but the most encouraging news came from the labor component, which jumped to 51.2 from 41.9, breaking the 50 threshold for the first time in 24 months. 

·         Futures at 8:36: Dow 10501.0 +11.00 S&P 1124.3 +2.2001, Nasdaq 1879.0 +2.25
30-year Tsy -0.27% to 115-18. 10-year -0.13%. 5-year -0.09%.
Euro +0.6% vs. dollar. Yen +0.3%. Pound +0.8%.
Crude +0.2% to $79.40. Gold +1.3% to $1,106.60.

·         Asia: Shanghai +0.5% to 3277. BSE +0.7% to 17465. Hong Kong and Japan were closed.

·         Europe at midday: FTSE +0.1% to 5402. CAC +0.2% to 3944. Frankfurt is closed.

CLOSING BELL

Dow 10548.51  +3.10, Nasdaq 2291.28  +2.88, S&P 1126.42  +0.22 

The stock market spent most of today in negative territory before gaining strength and finishing the day with a small gain.  The gain today came without any real leadership and low volume.

I am not surprised by the recent lack of leadership and low volume since most on Wall Street packed their bags for the year and won’t return until 2010.

The Chicago Purchasing Managers Index, which came in at 60.0 to top expectations and hit its best level since 2006.  Yet stock didn’t really react to the positive news.

Oil prices closed with a +0.5% gain at $79.30 per barrel. The advance by oil came even though weekly oil inventories showed a smaller-than-expected draw of 1.54 million barrels.  I would expect oil to remain volatile as long as the demonstrations continue in Iran, Yemen remains a new terrorist threat and Israel may make a pre-emptive strike against Iran’s nuclear facilities.

Tech was this session's best performing sector. It booked a +0.5% gain with help from semiconductor stocks, which advanced +1.5%. Semiconductor stocks are on track for a 70% annual gain this year, which is more than double the near 25% gain that the broader market is headed for.

MIDDAY LUNCH

Dow 10542.84  -2.79, Nasdaq 2285.53  -2.94, S&P 1124.69  -1.54,

Stocks have managed to move from the session lows, but all three indices remain in negative territory. The Material Sector is doing the best today with a +0.2% gain.  While the Consumer discretionary stocks are in the red showing a -0.4% decline.

Large cap tech stocks are mixed:  Microsoft (MSFT) 31.02 -0.38 -1.18%, is lower, while Google (GOOG), Apple (AAPL), Cisco Systems (CSCO) and Hewlett Packard (HPQ) are trading fractionally higher.

The Chicago PMI came in well ahead of expectations as the index rose from 56.1 to 60.0 in December. The consensus estimate expected the PMI to fall 55.1.

The index is now at its highest point since January 2006 and shows the third consecutive month of manufacturing expansion in the Chicago region.  The rate of production growth should continue in the future, since both new orders and order backlogs rose by their fastest rate since June 2007 and August 2008, respectively.

MORNING COFFEE

GMAC Needs More Cash.  GMAC will need more Federal money to stay afloat.  The company will likely receive another $3.5B in cash, adding to the $12.5B the feds have already used to stabilize the ailing auto lender. The additional money will help GMAC absorb losses related to its mortgage operations.

Credit Card Delinquencies Increase. November U.S. credit card chargeoffs rose half a percentage point to 10.56%, halting two-months of improvement.  Delinquencies rose, to 6.2%. Analysts believe that bad debts will continue to rise through much of the winter, and that chargeoffs could peak at 12-13% in mid-2010.

Nokia Says Apple Stole Patents.  Nokia (NOK) filed a complaint with the U.S. International Trade Commission saying that Apple infringes on seven Nokia patents in nearly all of its consumer products. The patents relate to Nokia's technology to create features in user interface, camera, antenna and power management technologies.

·         Futures: Dow -0.5% to 10431. S&P -0.6% to 1115. Nasdaq -0.4%.
30-year Tsy +0.03%. 10-year +0.03%.
Euro-0.15% vs. dollar. Yen -0.1%. Pound -0.3%.
Crude -0.2% to $78.70. Gold -0.6% to $1,091.70.

·         Asia: Nikkei -0.9% to 10546. Hang Seng -0.0% to 21497. Shanghai+1.6% to 3263. BSE -0.3% to 17344.

·         Europe at midday: FTSE -0.5% to 5409. CAC -0.7% to 3934. DAX -0.8% to 5964.

CLOSING BELL

Dow	10545.41	-1.67	(-0.02%)
Nasdaq	2288.40	-2.68	(-0.12%)
SP 500	1126.20	-1.58	(-0.14%)
10-yr Note	+9/32	3.80%
NYSE	Adv 1482	Dec 1525	Vol 638 mln
Nasdaq	Adv 1315	Dec 1358	Vol 1.19 bln

The S&P 500 saw an end to its recent gains today.  After staring off in positive terriroty a stronger dollar pushed the market into negative terriroty for the day.

Consumer discretionary stocks (+0.2%), industrial stocks (+0.2%), and consumer staples stocks (+0.1%) were the only major sectors to net gains today. Energy stocks had the weakest showing and fell to a -0.7%. The sector's weakness came even though oil prices managed to muster a fractional gain and close pit trade at $78.02 per barrel.

The October Case-Shiller Composite was down -7.28% year-over-year vs. the -7.20% consensus.  No area in the 20 city index posted a year-over-year gain in home prices for the 19th straight month.

A more upbeat outlook on jobs pushed confidence in the economy higher in December for the second month in a row. Consumers' expectations for the job market over the next six months reached their highest level in two years. The Conference Board said its Consumer Confidence Index rose to 52.9, up from a revised 50.6 in November, but the reading is still far short of the 90 that would signify a solid economy.

Results from a $42 billion auction of five-year Treasuries caused little stir among both stocks and Treasuries. The auction was met with a bid-to-cover ratio of 2.6, which is above this year's average ratio of 2.3, but below the previous auction's ratio of 2.8. The benchmark 10-year Note was able to make its way higher into the close and finish with a gain of nine ticks, though. That put its yield back near 3.80%.

Advancing Sectors: Consumer Discretionary (+0.2%), Industrials (+0.2%), Consumer Staples (+0.1%)

Declining Sectors: Energy (-0.7%), Financials (-0.4%), Health Care (-0.2%), Materials (-0.1%), Utilities (-0.1%), Tech (-0.1%)

Unchanged: Telecom

Dow 10557.66  +10.58, Nasdaq 2287.53  -3.55,S&P 1126.67  -1.11 

S&P 500 and Nasdaq continue to post slight losses, but the Dow has held strong in positive territory.  Blue chips in the Dow are currently led by 3M (MMM) 84.20, +0.75, which set a fresh 52-week high this session.  This has helped the industrial sector make its way to a 0.2% gain, which is currently the best of any major sector in the S&P 500.

Energy sector is down -0.7% Its fall came as oil prices pulled back to a -0.8% loss at $78.15 per barrel amid a run up by the U.S. dollar, which is now up a healthy +0.3% against competing currencies.

Treasury prices are down one tick after being up over 5 ticks in earlier trading today.  At 1:00PM EST the results for the 5yr Treasury auction will be announced.

The October Case-Shiller Composite was down -7.28% year-over-year vs. the -7.20% consensus.  No area in the 20 city index posted a year-over-year gain in home prices for the 19th straight month.

A more upbeat outlook on jobs pushed confidence in the economy higher in December for the second month in a row. Consumers' expectations for the job market over the next six months reached their highest level in two years. The Conference Board said its Consumer Confidence Index rose to 52.9, up from a revised 50.6 in November, but the reading is still far short of the 90 that would signify a solid economy.

MORNING COFFEE

AIG Lawyer Quits.  
AIG's (AIG) general counsel, Anastasia Kelly, will receive several million dollars in severance pay after resigning over federal pay curbs.  Executives can resign and collect severance if their pay is reduced significantly, under the company's severance plan. The news questions the wisdom of pay caps imposed at TARP at recipient firms.  Critics of pay czar Kenneth Feinberg say high-level executives will leave companies like AIG and move to banks and hedge funds that are not subject to pay caps.

Hiring Increases In 2010?
According to CareerBuilder.com’s 2010 Job Forecast   U.S. employers expect to hire more new workers in 2010 than they did in 2009. 20% of employers plan to add full-time positions next year, up from 14% in 2009, while just 9% plan to cut head count in 2010, down from 16%. But, 61% said they have no plans to change staffing levels, indicating ongoing caution. "Employers are waiting to see what the economy does and what the new year brings," CareerBuilder's Michael Erwin said.

Hong Kong Warns Of Double Dip.  
Hong Kong leader Donald Tsang said he is pessimistic about the pace of the city's economic recovery, and warned of a double dip in 2010. Last month, Tsang expressed concern that money flowing into Asia because of low U.S. interest rates could spark another financial crisis in the region.

• Futures at 7:00: Dow +0.3% to 10519. S&P +0.4% to 1027.50. Nasdaq+0.3%.
Crude -0.5% to $78.38. Gold -0.2% to $1,105.40.
30-year Tsy flat at 115-00. 10-year -0.12%. 5-year -0.13%.
Euro +0.4% vs. dollar. Yen flat. Pound flat.
• Asia: Nikkei +0.0% to 10638. Hang Seng +0.1% to 21499. Shanghai+0.7% to 3212. BSE +0.2% to 17402.
• Europe at midday: FTSE +0.7% to 5440. CAC +0.5% to 3966. DAX+0.2% to 6017. 

CLOSING BELL

Dow 10547.08  +26.98, Nasdaq 2291.08  +5.39, S&P 1127.78  +1.30,

The stock market drifted from gains to losses and back to gains with little conviction today. Stocks started the day on the plus side taking a clue from overseas markets and a weaker dollar.

Japan had some better than expected economic data and China announced that they would leave their stimulus policies intact.

But by afternoon Financials pressured the market into negative territory.

Retailers helped pull the market back to the plus side. According to MasterCard’s SpendingPulse total retail sales rose 3.6% between Thanksgiving and Christmas Eve. This year was a better year over 2008, store owners say they offered fewer discounts and managed to keep prices relatively steady. Additionally online retailers saw a 15% sales increase.

Treasuries prices fell. That took the benchmark 10-year Note down nine ticks and its yield to 3.84%, which puts it near four-month highs.

           

Advancing Sectors: Telecom (+0.6%), Health Care (+0.4%), Energy (+0.3%), Tech (+0.2%), Utilities (+0.2%), Materials (+0.2%), Consumer Staples (+0.1%)

Declining Sectors: Financials (-0.3%), Industrials (-0.1%)

Unchanged: Consumer Discretionary

MIDDAY LUNCH

Dow 10533.70  +13.60, Nasdaq 2290.89  +5.20, S&P 1126.94  +0.46,

Stocks are in positive territory today after being closed for the Christmas holiday.  There has not been much news today to move the market in either direction.

Oil is higher today +1.0% to 78.80 per barrel on news that antigovernment protest in Iran continues and have become violent.

MORNING COFFEE

Shoppers Spent Despite Economy.  According to MasterCard’s SpendingPulse total retail sales rose 3.6% between Thanksgiving and Christmas Eve. This year was a better year over 2008, store owners say they offered fewer discounts and managed to keep prices relatively steady.

Great Weekend To See A Movie.  Box office receipts shattered previous records, with Americans spending an estimated $278M over the three-day Christmas weekend. Avatar (NWS) led with $75M in sales, fueled by strong sales at large-screen Imax (IMAX) locations. The movie, which cost more than $300M to produce and another $150M to market, has already tallied global sales of $617M.

·         Futures: Dow +0.1% to 10473. S&P +0.2% to 1124. Nasdaq +0.4%.
Crude +0.35% to $78.32. Gold +0.7% to $1,112.30.
30-year Tsy -0.27% to 114-29. 10-year -0.24%. 5-year -0.19%. 2-year -0.05%.
Euro +0.2% vs. dollar. Yen flat. Pound +0.2%.

·         Asia: Nikkei +1.3% to 10634. Hang Seng -0.2% to 21480. Shanghai+1.5% to 3189. India: closed.

·         Europe at midday: CAC +0.8% to 3943. DAX +0.7% to 6001. London: closed.