Financial Headline News for Friday 12/30

HAPPY NEW YEAR!!! BEST OF LUCK IN 2012

1) Phil's Financial Tip of the Day:
Great goal setting tips from Harvey Mackay.

Making a New Year's resolution is like setting any other type of goal. You have to choose wisely if you want to achieve something significant. Remember that a good resolution, like a solid goal, usually has a few definable characteristics:

• Focus. Set a definite target: "Lose 10 pounds by June" is better than "Lose some weight."
• Challenge. Your resolution should be neither too difficult, nor too easy.
• Commitment. Share your resolutions with others. That will help you work on them.
• Presence. Write down your resolutions in detail, and post your list where you'll see it often.
• Vision. Visualize the results you want to achieve every day.

For the rest of the article:
http://myemail.constantcontact.com/How-to-make-New-Year-s-resolutions-you-ll-actually-keep.html?soid=1101309807919&aid=SL-0cEs_mHo

2) In the Markets today:
After big climbs and falls, stocks end year where they started. A surprising winner: Utilities

After many ups and downs, stocks end flat for 2011-From AP

The stock market ended a tumultuous year right where it started.

In the final tally, despite big climbs and falls, unexpected blows and surprising triumphs, all the hullabaloo proved for naught. On Friday, the Standard & Poor's 500 index closed at 1,257.60. That's exactly 0.04 point below where it started the year.

"If you fell asleep January 1 and woke up today, you'd think nothing had happened," says Jack Ablin, chief investment officer of Harris Private Bank. "But it's been up and down all year. It's been crazy."

It was a year when U.S. companies were supposed to run out of ways to make big profits. But they didn't, and in fact generated more than ever. It was a year when the U.S. lost its prized triple-A credit rating, which should have spooked buyers of its bonds. Instead investors bought more of them and made Treasurys one of the best bets of 2011. It was a year when stocks caught fire, then collapsed to near bear-market lows.

Among stocks, there were some surprising winners. Scaredy-cat investors who bought the most conservative and dullest of stocks — utilities — gained 15 percent this year, the biggest price rise of the ten industry sectors in the S&P 500. Other winning groups were consumer staples, up 11 percent, and health care companies, 10 percent.

Other market curiosities:
— Bad year, great quarter. Despite disappointing returns in 2011, the last three months of the year were impressive, which could bode well for the new year. The S&P 500 rose 11 percent. The Dow Jones industrial average, comprising 30 big stocks, climbed 1,344 points, or 12 percent. That was the largest quarterly point gain in its history. The Dow closed up 5.5 percent for the year.
— Best of the bad. U.S. stocks delivered little this year, but other markets did even worse, including ones in fast-growing economies. Brazil's Bovespa index fell 18 percent in 2011. Hong Kong's Hang Seng dropped 20 percent. In Europe, many of the biggest markets ended down in 2011. Britain's FTSE 100 lost 5.6 percent, Germany's DAX 14.7 percent.
— Buy American is back. A broad index of the Treasury market gained 9.6 percent, despite the fact that the U.S. government is now slightly less likely to repay its debt, at least according to Standard & Poor's. In August, the rating agency stripped the U.S. of its triple-A rating, citing mounting U.S. debt and political squabbling over what to do about it.

For stock investors, 2011 wasn't supposed to end this way.

At the start of the year, the Great Recession was officially 1½ years behind us and the recovery was finally gaining momentum. The economy added an average of more than 200,000 jobs a month in February, March and April. And U.S. companies kept reporting big jumps in profits, defying naysayers.

The stock market roared in approval. On April 29, the S&P closed at 1,363, double its recessionary low of March 2009.

Then manufacturing slowed, companies stopped hiring and consumer confidence plummeted, taking with it those hopes of big stock gains for the year. Adding to the misery, Japan was rocked by an earthquake and tsunami. That shut down factories run by crucial parts suppliers to U.S. firms, in particular auto makers.

Gridlock in Washington didn't help. After much squabbling, politicians eventually decided to raise the cap on how much the federal government can borrow in early August. But the heated debate took its toll. The Dow Jones industrial average swung more than 400 points four days in a row — down and up and down and up.

Overhanging it all was fear that the debt crisis in Greece had spread to Italy and Spain, countries too large for other European nations to bail out.

Talk of another blockbuster year for stocks turned to dark musings about the possibility of another U.S. recession. And so stocks kept falling. On Oct. 3, stocks had dropped 19 percent from their April high. That was just one point short of an official bear market.

Since then, U.S. housing starts have increased, factories are producing more, unemployment claims fell and U.S. economic growth rose. And companies are still generating impressive profits. Those in the S&P 500 have increased profits by double-digits percentages for nine quarters in a row.

The good news pushed stocks up in the closing months of the year.

Including dividends, the S&P 500 returned 2.11 percent for 2011. That means investors lost money after inflation, which was running at 3.4 percent in the 12 months ending in November. At least they're getting more than investors in the benchmark 10-year Treasury note, which currently pays a yield of just 1.88 percent.

The outlook for stocks in the new year is either great or grim, depending on your focus.

Italy has to repay holders of $172 billion worth of it national bonds in the first three months of 2012. It will do so by selling new bonds. The question is how much interest they will demand to be paid to compensate for the risk they're taking on. If they demand too much, fear could spread that the country will default. That could sink stocks.

After Italy was forced to pay unexpectedly high rates in a bond auction earlier this month, stocks fell hard around the world.

There are also questions about whether China's economy is slowing too much and whether the U.S. politicians will agree to raise the debt ceiling again in 2012 or extend Bush-era tax cuts.

On the bright side, stocks seem to be well-priced.

The S&P 500 is trading at 12 times its expected earnings per share for 2012 versus a more typical 15 times. In other words, they appear cheaper now. Partly based on that many strategists, stock analysts and economists expect the index to end next year at 1,400 or more, up 10 percent or so.

The Standard & Poor's 500 index rose 5.42 points, or 0.4 percent on Friday. The Dow Jones industrial average lost 69.48 points, or 0.6 percent, to 12,217.60. The Nasdaq composite index fell 8.59 points, or 0.3 percent, to 2,605.15 The Nasdaq is down 1.8 percent for the year.

Trading has been quiet this week with many investors away on vacation. Volume on the New York Stock Exchange has been about half of its daily average. Markets will be closed Monday in observance of New Year's Day.

3) Top financial story of the day:
Top Investors Stumble, but Strong 4th Quarter Pushes Blue Chips Into the Black; S&P Is Flat

Dow Ends Year of Tumult Up 6%-From The Wall Street Journal

It was a year that made the smart money look dumb.

Between a U.S. credit rating downgrade and turmoil in Europe, investors in financial markets endured one of the most gut-wrenching years in recent memory in 2011. And instead of following big-name hedge fund or mutual-fund managers, investors were better off parking their money in U.S. government bonds or some of the stodgiest blue-chip companies.

The Dow Jones Industrial Average ended the year up nearly 6%—a modest rise that belied the turmoil of the last half of the year, when the blue-chip index averaged a daily intraday swing of 270 points between August and November, more than twice as wide than the same period in 2010. And for all the white-knuckle rides, the Standard & Poor's 500-stock index ended almost right back where it started, finishing down 0.003%.

On Friday, the Dow fell 69.48 to 12217.56, leaving it up 5.53% for the year. The S&P dropped 5.42 to 1257.60 Friday. "It is almost cruel that with all the tumult the markets gave us this year that the major U.S. indexes are ending up basically unchanged," said Michael Fitzpatrick, editor of the Kilduff Report.

Some of Wall Street's most celebrated investors were tripped up by seemingly rational bets that went bad. Some wrongly figured the Treasury market rally would come to an end, while others wagered on a slump in the euro that never came. Still others hung on too long to their gold, which tumbled from its peak reached in August.

"There are few smiling faces on Wall Street this year, and that includes people who made money," says Rick Bensignor, chief market strategist at Merlin Securities. "Even if people made money this year, they pulled their hair out doing so."

Hedge funds lost 5%, through the year, according to Hedge Fund Research Inc. Those funds that focus on stock picking did even worse, suffering losses of 7.2%, HFR says, a figure that is dwarfed by the returns of all the major U.S. stock averages, as well as Treasury securities.

They may have been better off following the conservative playbook touted for small investors, the so-called widows and orphans strategy of buying dividend-paying stocks and U.S. government bonds.

Holding 10-year Treasurys earned investors a 17% return in 2011, and owning 30-year government debt earned 35%, according to Barclays Capital Indices.

"Unsophisticated investors certainly did better than the sophisticated investors this year," says Brett Barth, a founder of BBR Partners, a New York firm that manages $5.5 billion, including $1.5 billion invested in hedge funds.

Blue chips were among the stars of 2011 as the Dow completed a 12% rally for the fourth quarter. McDonald's Corp. rose 31% for the year, sending its stock above $100 for the first time. International Business Machines also reached a new high, ending the year up 25%.

"This reinforces our belief that despite the rage on Wall Street, the real way to outperform the index is old-fashioned stock-picking," said Jeff Rubin, director of research at Birinyi Associates.

The year began with high hopes of an improving U.S. economy, driving stocks to a peak at the end of April. But worries about Europe's debt woes increased as investors fretted that the troubles could spread to the large economies of Italy and Spain, and even core euro-zone countries such as France.

Then gridlock hit Washington as lawmakers battled over how to cut the nation's ballooning deficit, forcing the nation to the brink of default. If that wasn't enough, Standard & Poor's cut the government's credit rating, setting off three months of turmoil across financial markets.

Several prominent prognosticators stubbed their toes trying to decipher what it all meant. Analyst Meredith Whitney rocked the municipal-bond market early in the year by predicting waves of municipal defaults, which never came to pass, and bond-guru Bill Gross of Pacific Investment Management Co. failed to forecast the sustained rally in the Treasury market.

Value investor Bill Miller, who once beat the S&P 500 for 15 straight years, threw in the towel. He said he would step down as manager of the $2.8 billion Legg Mason Capital Management Value Trust after his latest bet, on banks recovering, failed to pay off.

Part of the problem for hedge funds was that the political uncertainty made it almost impossible to make assumptions about where markets would head. Many funds rely on momentum to score gains, piling on when the market moves in a certain direction. In 2011, however, markets jolted up and down with few sustained, long-term moves, making such trading harder.

Among the big-name losers for the year: The flagship fund run by Mark Kingdon's Kingdon Capital Management LLC saw losses of nearly 18% through November, according to a person familiar with the matter.

Even when hedge funds correctly identified a trend in 2011 they found it difficult to reap the rewards. John Paulson, the investor who scored gains of about $20 billion between 2007 and 2008 by correctly predicting the housing and financial collapse, anticipated another strong year for gold in 2011.

But his largest fund tumbled nearly 50% through November as various bullish picks turned in losses; even a fund dedicated to gold was down about 12.5% through Dec. 27, after shares of some gold-mining companies tumbled, according to an estimate of an investor in the fund. Other hedge-fund investors, including David Einhorn and George Soros, also incurred losses by holding gold shares, rather than with gold bullion, which rose on the year.

After soaring to a record $1,888.70 an ounce in August, gold prices sank 17% through the end of the year, ending up 10% for 2011 at $1,565.80.

One firm bucking the downdraft in 2011: Bridgewater Associates, which manages more than $120 billion and bets on global trends in various markets. The firm's hedge fund rose about 25% in 2011, according to an investor, through last week. The firm has long predicted a limp global economy, as various nations reduce heavy debt loads.

Another winner: James Simons's Renaissance Technologies LLC, a $17 billion hedge-fund firm that relies on computer-based trades to score gains. The firm's Renaissance Institutional Equities LP fund rose 35% through Dec. 23, according to investors. Boaz Weinstein's $4.2 billion Saba Capital Master fund ended up 9%.

Still, it was a tough slog for almost everyone. "I don't think we'll find many investors sorry to see 2011 move into the history books," says Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co.

4) Inspirational Quotes@Inspire_Us from Twitter
The difference between the impossible and the possible lies in a man's determination. -Tommy Lasorda

Financial Headline News for Thursday 12/29

1) Phil's Financial Tip of the Day:
With 2 days to go until 2012, now is the time for financial goal setting.

New Year's money-saving resolutions-From USA Today

Being financially fit is just as important as being physically fit. So it makes sense to make — and stick to —New Year's resolutions that will slim your waistline or boost your bottom line.

Step off the scale, put down the cigarettes and fire up the spreadsheet and calculators. It's time to roll out some 2012 resolutions that will make the balances in your 401(k), 529 plan and savings account go up — and make your mortgage payments, credit card debts and investment angst go down.

Here are a few must-do resolutions to put your personal finances back on track in 2012.

1. Stop trading on emotion

In 2011, it seemed as if the Dow Jones industrial average would soar 300 points one day only to swoon a few hundred points the next. Those sharp up and down swings, or "volatility," can make people super-bullish or downright scared. More often than not, investors make poor investment decisions when they let their emotions get in the way, says Michael Farr, president of money-management firm Farr Miller & Washington.

"Resist emotional trading," Farr says. "Don't let short-term volatility shake you out of your long-term investment plan. Keep saving, keep investing, keep contributing to your 401(k) no matter what."

2. Lower your mortgage payments

Interest rates remain at historically low levels, with the 30-year, fixed-rate mortgage now below 4% for qualified buyers. If you haven't already, now is the time to lower your monthly payment by refinancing your current mortgage at a lower rate, says Greg McBride, senior financial analyst at

Bankrate.com.

Homeowners, even those in hard-hit markets such as Florida, Arizona and Nevada who owe more on a mortgage than their home is worth, will have a better chance to refinance through the government's Home Affordable Refinance Program, or HARP, which has been enhanced and extended through the end of 2013, McBride says.

"Reducing your mortgage rate a full percentage point, from 5% to 4%, will save you roughly $120 a month on a $200,000 loan," McBride says.

3. Fund college 529 plans early

A coveted Ivy League education at Harvard University this year cost $52,650, and costs for college aren't going down any time soon. Start saving for Aidan and Amanda in a tax-deferred 529 as early as possible, preferably right after they're born, says Steve Janachowski of financial advisory firm Brouwer & Janachowski.

"Start saving now, as college costs keep going up," he says, adding that the sooner you invest, the more time the money has to grow.

4. Don't invest on news headlines

Hitting the sell or buy button in reaction to breaking news is a losing investment strategy, says Andy Brooks, head trader at mutual fund company T. Rowe Price.

"It's a loser's game," he says. "People watching the news or CNBC who have their finger on the trigger, that's a dangerous game. It's anything but investing. It's more like putting your money on 32 black at a casino."

Next time there's a news flash out of Europe that scares you, turn off the TV.

5. Save more for retirement

The government has boosted the maximum you can set aside in a tax-deferred 401(k) account in 2012 by $500 to $17,000. "The burden of retirement saving is increasingly falling on the individual, which means everyone has to save more," McBride says. Raise the percentage taken out of your paycheck to ensure you take advantage of the new higher savings limit. If you got a raise this year, or a bonus, plow that extra cash into your 401(k) if you're not already maxed out.

Other resolutions to consider: Stop spending foolishly and stash some money away for an emergency, such as a job loss or an unexpected car repair or medical bill, says Lewis Altfest, chief investment officer of Altfest Personal Wealth Management. To make sure you're ready when disaster strikes, he recommends having the cash deducted automatically from your paycheck into a savings account.

Daniel Seiver, a finance professor at San Diego State University, offers a few other tried-and-true personal finance tips that can also be added to your list of money-saving resolutions. "Investors should only invest money in low-cost, index mutual funds," he says, adding that the less you pay on fees the more cash you have to invest.

Lastly, Seiver recommends this resolution for everyone: "Do not run a balance on your credit cards."

2) In the Markets today:
Stocks up after new home contracts rise and unemployment claims suggest hiring could pick up

Stocks up on new home deals, job growth prospects-From AP

Better news on home sales and improved prospects for job growth sent stocks higher on Wall Street Thursday.

The Dow Jones industrial average rose 135 points, nearly making up its 140-point loss from the day before. The S&P 500 edged back into the black for 2011, with just one more day of trading left in the year.

The four-week average of unemployment claims fell to a three-and-a-half-year low, an indication that hiring could pick up. Also, the number of Americans who signed contracts to buy homes in November rose more than 7 percent to the highest level in a year and a half, according to the National Association of Realtors.

Quincy Krosby, Prudential Financial's market strategist, said the reports were encouraging signals for the economy going in to 2012.

"The correlation between jobs and housing has been crystal-clear this year,"

Krosby said the correlation has become more pronounced after the real estate bust, when lenders became reluctant to even consider customers for a mortgage unless they held jobs. She said it's a noticeable trend in many cities nationwide.

For instance, Boston's 1.1 percent drop in home prices since last year was one of the lowest among metro areas tracked by S&P/Case-Shiller index. The city's unemployment rate is 6.2 percent, much lower than the national average of 8.6 percent.

The positive housing news sent the stocks of home builders sharply higher. Masco Corp. soared 8.4 percent, the most in the S&P 500. PulteGroup Inc. rose 6 percent and Lennar Corp. gained 4.6 percent.

The Dow closed at 12,287.04, a gain of 135.63 points, or 1.1 percent. For the year, the Dow is up 709 points, or 6 percent.

The S&P 500 rose 13.38 points, or 1.07 percent, to 1,263.02. That's just 5 points above where the index started the year.

The technology-heavy Nasdaq composite rose 23.76 points, or 0.92 percent, to 2,613.74. The index if down 39 points for the year.

Trading was very light as investors get ready to close the books on 2011. Markets will be closed Monday in observance of New Year's Day, which falls on Sunday.

Volume on the New York Stock Exchange was 2 billion shares, less than half of its recent average. Gaining stocks led losing ones four-to-one.

The euro fell to its lowest level against the dollar in more than a year and its lowest against the Japanese yen in a decade. The euro went as low as $1.28 versus the dollar, its weakest since September 2010.

Investors continued to be worried that Italy's 10-year borrowing rate remains uncomfortably close to 7 percent, a level that economists consider unsustainable. Greece, Ireland and Portugal all had to seek relief from their creditors after their 10-year bond yields rose above 7 percent.

Italy paid 6.98 percent on a 10-year bond auction where it raised $3.3 billion. That's lower than the 7.56 percent it had to pay at an equivalent auction last month, but not low enough to assuage investors.

Italy's new premier said his government has more to do before it convinces financial markets it can manage the heavy debts that have made it the focus of the euro zone crisis.

In other corporate news:
— Chesapeake Midstream Partners rose 5 percent after the natural gas systems operator agreed to acquire Chesapeake Energy Corp.'s pipeline business.
— Hill International Inc. rose 3 percent after the construction management company was awarded a $3.3 million contract to build a new stadium in Iraq.
— Sears Holdings Corp. fell 1 percent as investors worried over the fate of the retailer, two days after it said it was closing over 100 stores nationwide.

3) Top financial story of the day:

The long-suffering job market is ending the year better off than it began.The number of people applying for unemployment benefits each week has dropped by 10 percent since January.

Data Suggest Recovery Gaining Steam-From The Wall Street Journal

Fewer Americans are filing new claims for jobless benefits than at any time since the end of the recession, the latest signal that the U.S. economy is ending a year of uncertainty on a positive note.

The Department of Labor said Thursday that a seasonally adjusted 381,000 people filed for unemployment benefits for the first time last week. That figure was up slightly from the prior week, but the four-week average, which is more closely watched by economists because it smooths out weekly volatility, fell to its lowest level since June 2008, when the economy was still mired in recession.

The unemployment data, along with other positive figures from the housing and manufacturing sectors, suggest that the economic recovery is once again gaining momentum after nearly stalling out earlier this year. Fears of a return to recession crested over the summer but ebbed in recent months, as statistics have consistently shown the economy keeps growing, albeit slowly.

"We continue to hear people say that the U.S. recovery is fragile, and that's the wrong word," said Michael Gapen, an economist with Barclays Capital. "It's durable. It's just not robust. It's a moderate expansion."

The declining number of new unemployment claims only indicates that fewer people are losing their jobs, not that more people are being hired. Nonetheless, economists said the weekly figures were a positive sign for the December employment report, which will provide a more detailed snapshot of the state of the labor market when released next week.

Other parts of the economy are also showing signs of strength. Manufacturing activity in the Midwest stayed generally steady in December after rising sharply in November, according to a report Thursday from the Institute for Supply Management, a business group.

The National Association of Realtors said Thursday that its pending-home-sales index rose in November to the highest level since in more than a year and a half. The index, which measures contracts to sell existing homes and is considered an indicator of future sales activity, rose for the third consecutive month after falling over the summer, and was up 5.9% from November 2010. The increase is the latest sign of life in the moribund housing market, following recent reports that home construction is picking up and that sales of both new and existing homes are also on the rise.

Separate reports earlier this week showed shoppers spending more and becoming more confident heading into the new year.

But some experts cautioned that the economy was sending similarly positive signals a year ago before a series of events—the earthquake in Japan, the onset of the European debt crisis, and later, the debt-ceiling battle in Washington, among other factors—sapped much of its momentum. Paul Ballew, chief economist for Nationwide Insurance, warned that there are plenty of looming threats this year, too: the continuing crisis in Europe, signs of a slowdown in China, partisan gridlock in Washington, and budget cuts in state and local governments.

"The good news is we have some momentum going into the new year," Mr. Ballew said. "The challenging news is we still have some ongoing issues that need to be resolved."

4) Inspirational Quotes@Inspire_Us from Twitter
It is the mark of an educated mind to be able to entertain a thought without accepting it. -Aristotle 

Financial Headline News for Wednesday 12/28

1) Phil's Financial Tip of the Day:
Budgeting is easier than it seems-check out this family.

This is the way budgeting should be done-excellent job by this mom!!!

Dallas Mom: How We Live on 40K a Year Without Coupons-From Financially Fit

I'm really not all that different from other moms. I take care of my home, my husband, my young son, as well as all the shopping and the family budget, too. What might make our family a little different from others is that we manage to live very comfortably without going into debt, and do so with only my husband's income of approximately $40,000 per year. Here's how we do it:

Budgeting

We've learned that budgeting is easier than it seems. We make automatic deductions for our basic expenses, such as mortgage, utilities, car payment, and insurance — we even set a small amount aside for charity — and what's left over gets split into two savings accounts: our emergency fund, and an account for our son (college, Christmas presents). My husband and I use a basic budgeting template from Excel and have adjusted it to our own needs — in fact, we adjust it every month depending on priorities. By acting responsibly before disaster strikes, we feel safeguarded against the unexpected.

We Don't Deny Ourselves

We also leave room for fun stuff by delegating a small amount for discretionary spending each month — this can go for household items, clothes, vacations, etc. It's stuff we don't need, but want. If there's something we have our eye on, we simply save up for it. It might take us a little longer to get it, but we try not to deny ourselves of life's simple pleasures. By managing our "wants" like this, we avoid impulse purchases and overspending.

Eating Well, For Less

When we first got married, I couldn't cook at all, but now I cook all the time! Cooking allows us to meet our food budget each month, a total of only about $20 per person, per week. We can't afford to buy everything organic, but since I make my own organic baby food, I jump on those deals when I see them! I also shop wholesale at Costco for bulk items (flour, sugar, cheese), and then get my basics (milk, eggs, bread) at whichever local store has the best deals that week. Surprisingly, I don't use coupons. Instead, I'm diligent about planning out our meals each week so we don't waste a morsel. Another way we save (and have fun!) is to invite friends over — if I cook an entree and they bring the sides, we've just cut our dinner costs in half!

DIY Designer Deals

Back when we had two incomes, I enjoyed decorating my home and wearing designer labels. Now, neither would be possible if I didn't think outside the box. My interior-designer mother has taught me how to choose high-quality fabrics to sew my own curtains, pillows and to re-upholster cushions. I even attempted a quilted headboard for the bed (for about $100 — a savings of nearly $300). We also saved about $1,000 on a 10x12 area rug for our bedroom by purchasing a large remnant at a rug store and having it bound. When I shop, I seek out consignment shops where gently worn couture costs about 60% less. I still have to watch my pennies, but I believe that a few high quality pieces are a better investment. Finally, I do all my own hemming and mending for my family. It saves me about $5 to $10 per sewing job. A small task like this add up!

Working it Out

As a trainer, fitness is important to me. Yet, we got rid of our gym memberships, which saved us $50 a month. We found that we were only going about twice a week anyway — now, I'll take my son out in his jogging stroller or complete workout tapes at home. Guess what? I don't miss it at all!

The Rewards

By budgeting and spending wisely, I've been able to stay home with my young son and provide the loving, personal attention we believe he needs. Secondly, we continue to invest in our futures. My husband is planning to start law school next fall and, thanks to our diligent savings practices, we know our family can handle this financial challenge. Thankfully, Matt and I were raised by financially savvy parents that taught us the value of money and how to practice financial self-control. We plan to pass these same lessons on to our son — and to continue to inspire others to do the same!

2) In the Markets today:
U.S. stocks dropped, sending the S&P 500 back into the red for 2011.

S&P 500 Back to Loss for '11-From The Wall Street Journal

U.S. stocks dropped, sending the Standard & Poor's 500-stock index back into the red for 2011, as the euro sank to an 11-month low and investors fretted about Italy's long-term debt auction on Thursday.

The Dow Jones Industrial Average shed 139.94 points, or 1.14%, to 12151.41, and the S&P 500 gave up 15.79 points, or 1.25%, to 1249.64. The S&P 500's decline pushed the broad market measure back into negative territory for the year, with just two full days of trading remaining in the year.

The technology-focused Nasdaq Composite fell 35.22 points, or 1.1%, to 2595.

All 10 sectors of the S&P 500 and all 30 Dow components were lower. Financials and materials stocks fell mostly sharply. Cliffs Natural Resources, Freeport-McMoRan Copper & Gold and Nabors Industries each lost 4% or more to lead the S&P 500 decliners.

Among Dow components, Bank of America was the worst performer of the day, tumbling 3.6% to bring its slide for the year to date to 60%. Alcoa lost 3.1% and Caterpillar declined 2.4%.

Investors were pulling back from riskier assets ahead of an Italian auction of longer-term government debt on Thursday.

Before the opening bell Wednesday, U.S. stock futures pointed higher, boosted by a successful auction of short-term Treasury bills in Italy. Demand for Italian six-month bills increased from the previous auction, and the average yield of 3.251% was half of the 6.504% average, a euro-era high, paid a month earlier for the same maturity.

But that optimism faded as investors looked ahead to Thursday's auction, sending the euro lower and pushing yields for longer-term Italian debt higher throughout the U.S. morning. Italy's 10-year yield finished at 6.971%, just off the 7% threshold that economists consider unsustainable for fresh borrowings over the longer term.

Adding to the concern, the European Central bank's overnight deposit facility reached a second consecutive record, suggesting that banks would rather park cash there rather than lend it to other banks.

Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management, said that while Wednesday's auction of short-term Italian debt was strong, it may have taken some buyers out of the market for the more important auction for longer-term debt slated for Thursday.

"People are hugging the shorter end of the yield curve," he said. "There's a fear that the demand for the shorter-dated securities is a substitute for demand for the longer-dated securities."

European markets reversed their midday gains Wednesday to trade broadly lower. The Stoxx Europe 600 finished down 0.7%, and Germany's DAX index gave up 2%.

The euro fell to $1.2934, sliding 1% for the session and hitting levels not seen since January. Against the yen, the euro sank to a 10-year low.

As traders fled the common currency and other risk-sensitive assets in thin holiday markets, the dollar was boosted against nearly every major currency except a broadly stronger yen.

However, some investors warned that thin markets tend to exacerbate price movements during year-end trading. Just 2.3 billion shares changed hands in New York Stock Exchange composite volume, a touch above the 2 billion shares traded on Tuesday—the quietest full trading day of 2011.

"It's a low-volume day with just the skeleton crews around, so small moves are accentuated," said Robert Pavlik, chief market strategist at asset-management company Banyan Partners. Even so, he added: "Breaking that technical line of $1.30 has really caught people's attention."

Gold futures tumbled more than 2% to $1,562.90 a troy ounce, the lowest mark since July 12. Silver slumped 5.2% to its Jan. 27 low. Crude-oil futures fell nearly 2% to below $100 a barrel. Heightened demand for Treasurys sent the yield on the benchmark 10-year note back below 2%, at 1.913%.

In corporate news, shares of Cavium lost 1.2% after the semiconductor products maker lowered its revenue and gross margin outlook for the fourth quarter.

New York Times slipped 1.2% after the media company said it agreed to sell the 16 local newspapers that comprise its regional media group, for $143 million in cash, to Halifax Media Holdings.

3) Top financial story of the day:
This was supposed to be the year of the IPO comeback. It wasn't. About two-thirds of companies that went public in the U.S. now are trading below their IPO price. However 2012 could be different thanks to Facebook. 

Facebook to Lead Biggest U.S. Internet IPO Year Since 1999-From Bloomberg

Facebook Inc. and Yelp Inc. are set to lead the biggest year for U.S. initial public offerings by Internet companies since 1999, testing demand for IPOs after investors lost money on Zynga Inc. and Pandora Media Inc.

With Facebook considering the largest Internet IPO on record and regulatory filings showing that at least 14 other Web-related companies are planning sales, the industry may raise $11 billion next year, according to data compiled by Bloomberg. That would be the most since $18.5 billion of IPOs in 1999, just before the dot-com bubble burst.

While surging sales growth may lure investors to Facebook, the biggest social-networking site, heightened stock volatility (VIX)and Europe's sovereign-debt crisis could temper the pace of global IPOsZynga, the largest developer of games for Facebook, and online-radio company Pandora slumped following share sales this year, according to researcher Morningstar Inc.

"Technology is still a place where you can get outperformance in terms of growth against a tepid market backdrop," said David Erickson, New York-based global co-head of equity capital markets at Barclays Plc. "You might see more IPOs emerge if we get resolution in Europe or stability that makes investors more comfortable with the overall market."

Global Performance

IPOs raised $155.8 billion in 2011, compared with $252 billion a year earlier, and U.S. initial offerings generated $38.8 billion, about 10 percent less than in 2010, Bloomberg data show. In Asia, IPOs this year have raised $79.2 billion, less than half the $176.5 billion last year, Bloomberg data show.

While funds raised in Europe rose for the year, they sank more than 95 percent since August from a year earlier after the worsening debt crisis and a cut to the U.S. credit rating sapped confidence in global markets.

Morgan Stanley (MS) took the biggest share of both U.S. and global IPOs for the second year in a row after working on initial share sales by Glencore International Plc, HCA Holdings Inc. and Michael Kors Holdings Ltd. Pen Pendleton, a spokesman for New York-based Morgan Stanley, declined to comment.

The bank also was the lead underwriter on Zynga and Pandora's IPOs. The stocks' declines following those public debuts may prompt greater scrutiny of valuations in 2012, said James Krapfel, an analyst at Morningstar in Chicago.

"Investors will take a harder look at the numbers going forward and need to see strong revenue and profit growth," Krapfel said. Bookings, an indication of deferred revenue, at Zynga have increased more slowly this year, suggesting the company's IPO price was too high, according to a Dec. 9 Morningstar report.

Zynga, Groupon

Zynga, which raised $1 billion in its IPO this month, has since fallen 2.5 percent after going public at a valuation three times that of rival Electronic Arts Inc., Oakland, California- based Pandora has plunged 36 percent since its June 14 IPO.

Facebook, based in Menlo Park, California, is examining a $10 billion offering that would value it at more than $100 billion, a person with knowledge of the matter said last month. Total sales at Facebook in 2012 may surge 52 percent to 62 percent from this year's projected $4.27 billion through increased ad revenue, according to Debra Aho Williamson, an analyst at EMarketer. Industrywide, the display ad market may surge 24 percent to $12.3 billion this year.

Yelp, ExactTarget

"Tech offerings generally offer real growth, and investors get very excited when they can't find growth in the broader market," JD Moriarty, New York-based co-head of equity capital markets for technology in the Americas at Bank of America Corp., said at a briefing this month.

Yelp, the consumer-review website operator, and e-mail marketer ExactTarget Inc. both filed for IPOs in November. This year, 19 Internet companies generated $6.6 billion in U.S. initial share sales.

Glam Media Inc., a Web-advertising company that targets women, plans to make its first IPO filing by the end of the second quarter, people familiar with the matter said on Dec. 14. AppNexus Inc., the online-ad company backed by Microsoft Corp., may go public in late 2012, Chief Executive Officer Brian O'Kelley said in September. Companies like MobiTV Inc. and Eloqua Ltd., which rely on the Internet to distribute cloud- based software products to clients, may seek an additional $650 million, regulatory filings show.

Europe's Woes

In Europe, the IPO market has "essentially come to a halt" as the sovereign-debt crisis spread from Greece to Portugal and Italy, said Mary Ann Deignan, New York-based head of equity capital markets for the Americas at Bank of America. In September, Siemens AG suspended an IPO of its Osram lighting unit and Spain pulled the initial public offering of its lottery operator as global stocks headed for a one-year low.

"There are companies that would like to go public, but are waiting for the right market environment to do so," said Deignan, speaking at a briefing this month. "As long as policymakers and politicians control the headlines, Europe remains a challenge."

RIB Software AG (RSTA) raised 145 million euros ($189 million) in February, this year's biggest technology IPO in Western Europe. Yandex NV, owner of Russia's most popular Internet search engine, raised $1.4 billion in a U.S. IPO in May, while VKontakte, the largest Russian social networking website, also may sell shares in New York next year, people with knowledge of the matter said in June.

Months Behind

"The IPO market in Europe is probably six months behind where we are in Asia and the U.S.," Brad Miller, New York-based global co-head of equity syndicate at Deutsche Bank AG, said at a briefing this month. The first pickup of stock-sale activity in Europe may come as governments sell state-owned assets to the public through spinoffs, Miller said.

Still, even in Hong Kong, where growth from mainland China will spur demand, a busier calendar may not come until the second half, said John Lydon, co-head of Asia equity capital markets at Deutsche Bank.

Chow Tai Fook Jewellery Group Ltd. and New China Life Insurance Co. both fell on their first day of trading in Hong Kong this month after selling shares at or near the bottom of proposed price ranges. Others such as Perfect Shape (PRC) Holdings Ltd. pulled offerings.

Private-Equity IPOs

IPOs by private-equity firms have also dried up this year, with owners instead pursuing secondary offerings. Last month, firms including Bain Capital LLC, Carlyle Group and Thomas H. Lee Partners LP raised $613 million from selling shares in Dunkin' Brands Group Inc., the doughnut chain they took public in July. This year, KKR & Co. (KKR) and other investors generated $2.1 billion from secondary offerings of stock in Dollar General Corp., whose IPO occurred in 2009.

Private-equity firms seeking to unravel investments made during the record buyout boom from 2005 to 2007 may follow through with IPOs if markets stabilize, said Robert H. McCooey Jr., senior vice president of new listings and capital markets at Nasdaq OMX Group Inc. in New York.

"Given the right market conditions, there will certainly be some of those companies that will be looking to exit into the public markets," McCooey said. Toys "R" Us Inc., backed by buyout firms including KKR, filed for an IPO in May 2010 and has yet to complete a sale.

Some technology companies have also held off. Travel- website operator Kayak Software Corp. filed plans for a $50 million IPO in November 2010. LivingSocial.com, which considered a $1 billion IPO earlier this year, instead chose to raise $400 million from private investors, people familiar with the matter said this month.

Hot Names

Many Web-focused companies that completed IPOs in 1999, such as EToys Inc. and Drkoop.com Inc., fell victim to the subsequent technology-stock collapse as shareholders abandoned the unprofitable ventures. The performance of new Internet stocks (RGUSTL) next year will show whether investors are ready to dive back into the Web, said Laurent Morel of Societe Generale SA.

"Technology IPOs are definitely the theme there, with lots of hot names like Zynga coming to the market," said Morel, the Paris-based global head of equity capital markets. "But if you look at their performance, most of them are struggling. Next year will be the real test."

4) Inspirational Quotes@Inspire_Us from Twitter
When you follow the dream in your heart, you're energised, inspired, & motivated. -Dr. John F. Demartini

Financial Headline News for Tuesday 12/27

1) Phil's Financial Tip of the Day:
Gold is out and munis are in when it comes to trendy investment picks, but the larger lesson from a tumultuous year is to stick with a diversified plan.

It is that time of year to start thinking of rearranging your financial portfolio for 2012.

For 2012, Investing Pros Say Reshuffle the Deck-From SmartMoney 

Gold is out, munis are in. REITs are trendy, but don't forget to balance out with Steady Eddies like dividend-paying stocks. And, oh yes, if you thought 2011 was full of drama, prepare for even more.

Across the country, financial advisers are reviewing portfolios and prepping clients on the plan for the year ahead. By most accounts, the advice regular investors are getting is to reshuffle the deck because so many investments have shifted so quickly.

Look no further than the stock market. Since the summer, when a dizzying plunge had some commentators advocating small investors get out of the market altogether, equities have turned north:

The Dow Jones Industrial Average is now up 6%.

Those who fled the market should return, advisers say, stressing that clients find the appropriate allocation determined by age and risk tolerance.

The same goes with munis. A year ago, the $3.7 trillion dollar municipal-bond market was rocked when Wall Street analyst Meredith Whitney predicted hundreds of billions of dollars' worth of municipal-bond defaults. Advisers say they had little choice but to tell nervous clients to pull back on what had been a staple of investing for decades for millions of Americans, especially retirees.

But the catastrophe never came to pass, and investors who stuck with muni-bond funds were rewarded: The average long-term national muni-bond fund is up 9% this year through Dec. 16, compared with a 4% loss for large blend funds, according to Morningstar.

That has many investors rushing back, but Jeff Sica, president and chief investment officer at Sica Wealth Management in Morristown, N.J., is telling clients not to overdo it. He is recommending muni-bond funds in small doses, and also placing some clients in individual muni bonds pegged to cities in Colorado, Wyoming and North Dakota that have high credit ratings and strong balance sheets.

The larger lesson from 2011, advisers say, is to stick with a plan rather than trying to keep pace with market fluctuations.

"Focus on appropriate long-term allocation and stick with that through all the ups and downs," says Sheryl Garrett, a fee-only financial planner in Shawnee Mission, Kan.

Within that framework, of course, investors should add exposure to those assets that could outperform in the short to medium term.

Aaron Schindler, managing director at Wealth Advisory Group in New York, is telling clients to add more dividend-paying stocks to their portfolios, especially those in sectors with higher payouts, such as telecom and energy. He also suggests REITs, which must pay at least 90% of their taxable income (rents less expenses) to shareholders as Americans continue to favor renting over buying real estate.

In Atlanta, Paul Jacobs, a certified financial planner at Palisades Hudson Financial Group, says he is telling clients to abandon the gold rush. If the economy picks up next year, he says, investors will quickly dump the shiny metal for stocks. "We definitely think that gold is overvalued," he says.

2) In the Markets today:
The Dow industrials fell 2.65 points, snapping a four-session winning streak for stocks as investors weighed improved consumer confidence against oil's return above $100 a barrel.

Stock Rally Hits the Wall-From The Wall Street Journal

U.S. blue-chips' year-end rally ran out of steam Tuesday, slipping slightly to snap a four-day string of gains as investors weighed a better-than-expected reading on consumer confidence against crude oil's rise back above $100 a barrel.

The Dow Jones Industrial Average edged down 2.65 points, or 0.02%, to 12291.35. The Standard & Poor's 500-stock index inched up 0.10 points, or 0.01%, to 1265.43 and the Nasdaq Composite gained 6.56 points, or 0.25%, to 2625.20.

Crude-oil futures shot up 1.7% to finish at $101.34 a barrel, a six-week high.

In a sign of continuing investor cautiousness, conservative utilities and telecommunications stocks led the day's gains. The utilities sector has been the best performer on the S&P 500 this year, gaining 15%.

Technology stocks were also strong. Intel and Cisco Systems led Dow components with gains of 1% and 0.8%, respectively.

Pulling market indexes downward were financial stocks. Bank of America fell 2.1% and J.P. Morgan Chase dropped 1.6% to lead the Dow's decliners.

The moves in the holiday-shortened week come after a week that saw the Dow gain 3.6%, including a 124-point rally on Friday that sent the blue-chip index to a five-month high. The S&P 500 also moved back into positive territory for the year, and is up 0.6% with just three sessions remaining in 2011.

"It was a real rollercoaster ride, but all things considered, it wasn't that bad a year for stocks—it could've been a lot worse given all the uncertainty and political headwinds," said Brian Gendreau, market strategist with Cetera Financial Group.

In recent weeks, Mr. Gendreau added, investor sentiment seems to have improved, thanks to improving economic data. "There's a feeling that 2012 is not going to be as bad as 2011, though that's a pretty low bar," he said.

"What we're seeing is that people see there are more jobs are around," said Dan Greenhaus, chief global strategist at BTIG. "We've seen a lot of improvement in labor market numbers lately. Clearly there's something going on here."

The consumer-confidence number helped a handful of household brands push to all-time highs. McDonald's gained 0.4% after breaking above $100 a share level for the first time in its history on Friday. Starbucks gained 1.1% and Intuitive Surgical rose 1.3% to reach new all-time highs. Google also rose 1.1% to hit a four-year high.

However, trading volumes were subdued as most investors took the week off. Just over two billion shares changed hands in New York Stock Exchange composite volume, less than half the daily average of 4.3 billion shares this year.

European markets finished the day flat, with the Stoxx Europe 600 inching up less than 0.1%. The U.K. market is closed, and activity and news flow elsewhere remain light. Asian bourses finished broadly lower. China's Shanghai Composite shedding 1.1% to close at its lowest level since March 2009.

Gold futures fell back below $1,600 an ounce, shedding 0.7% to $1,594.20. The U.S. dollar lost some ground against the euro and the yen. Treasurys inched higher, sending the yield on the benchmark 10-year note down to 2.009%.

The S&P/Case-Shiller index of home prices in 20 major U.S. cities showed a year-on-year decline of 3.4% in October, giving little solace to investors looking for a slowdown in the recent months' accelerating decline. However, regional Federal Reserve reports on Richmond and Dallas-area manufacturing came in below expectations.

In corporate news, Sears Holdings slumped 27% to lead the S&P 500 losers after the retailer said it would close 100 to 120 Kmart and Sears stores to reduce costs, and added it expects take fourth-quarter non-cash charges between $1.6 billion and $2.4 billion related to a valuation allowance and impairment on some goodwill balances. The company also said quarter-to-date same-store sales through Dec. 25 declined 5.2%.

Mead Johnson Nutrition rallied 5.8% after the company said over the weekend that a new round of sample testing of its Enfamil Premium Newborn formula didn't detect any presence of a potentially deadly bacteria.

Cal-Maine Foods climbed 4.4% after the egg producer reported fiscal second-quarter earnings and revenue that exceeded expectations.

Elsewhere, Parlux Fragrances soared 71% after the company said late Friday that it agreed to be acquired by Perfumania Holdings for about $170 million in cash and stock. Perfumania tumbled 33%.

3) Top financial story of the day:
Consumer confidence surged to its highest level since April, but the housing market continued to weigh on the economy.

Consumer confidence shoots higher again-From CNN Money

Consumer confidence shot higher for the second month in a row in December, according to a survey from The Conference Board.

The research firm's overall confidence index, released Tuesday, jumped 9.3 points to 64.5. The increase follows a 14.3-point rise in November.

"After two months of considerable gains, the index is now back to levels seen last spring," said Lynn Franco, director of the group's research center. "Consumers are more optimistic that business conditions, employment prospects and their financial situations will continue to get better."

Still, Franco cautioned that it's too soon to tell if the year-end optimism is simply a rebound from declines earlier this year or a sustainable shift in attitudes.

The jump of almost 24 points since October is the biggest two-month increase since March 1991, when consumer confidence got a shot in the arm from the quick U.S. victory in the first Gulf War. But the recent increases follow sharp declines that occurred from July through October as both economists and the general public became worried that the U.S. was at risk of falling into a new recession.

"When we get to our low point in October, that was probably overdoing it," said Tim Quinlan, economist with Wells Fargo Securities, who said that reading was below the levels of the 2001 and 1990 recessions. "I don't think things were that bad then. I don't know that things are that great now, but it does signal that consumers were feeling better going into the holidays, which is a key time for retailers."

Helping to lift confidence is the fact that since mid October stocks have rallied, gas prices have fallen and the labor market improved with both better hiring and a decrease in the number of layoffs.

While the survey found that only 6.7% of consumers believe jobs are now plentiful, that's nearly double the 3.6% who felt that way in October. Those who believe the job picture will be better six months from now rose to 13.3% from 10.8%.

Most importantly for consumer spending, those who expect their own income to increase in the next six months rose to 17.1%, outpacing the 14.4% who expect their income to fall. This is the first time since April that the percentage of people who expect their income to improve topped those who expect it to drop.

4) Inspirational Quotes@Inspire_Us from Twitter
Life is really simple, but we insist on making it complicated. -Confucius

Financial Headline News for Friday 12/23

MERRY CHRISTMAS!!!

1) Phil's Financial Tip of the Day:
Low income workers who save for retirement using a 401(k) or IRA can earn a tax credit worth up to $1,000 for individuals and $2,000 for couples in 2011 and future years.

I have no more Christmas shopping tips. If you haven't bought anything by now, you are on your own. Now it is time to start focusing on tax tips for the upcoming filing.

How to Get the Saver's Credit-From USA Today

Low income workers who save for retirement using a 401(k) or IRA can earn a tax credit worth up to $1,000 for individuals and $2,000 for couples in 2011 and future years.

The saver's credit can be claimed by workers whose modified adjusted gross incomes are up to $28,250 for singles, $42,375 for heads of households, and $56,500 for married couples in 2011. In 2012 those income limits will increase to $28,750 for singles, $43,125 for heads of households, and $57,500 for couples.

The first $2,000 workers contribute to an IRA, 401(k), or similar workplace retirement account can count towards the saver's credit. The credit can be used to increase your refund or reduce the tax you owe. This tax credit is available in addition to the tax deferral you get for making a traditional 401(k) and IRA contribution and any 401(k) match you get from your employer.

Consider a married couple who earned $30,000 in 2011 and contributed $1,000 to an IRA. They will be able to claim a $500 tax credit for their $1,000 IRA contribution.

[See 11 Retirement Benefit Changes Coming in 2012.]

Saver's credits totaling just over $1 billion were claimed on approximately 6.25 million individual income tax returns in 2009. The credit varies based on your income and tax filing status and ranges from 10 percent to 50 percent of the amount you saved up to $2,000. Most taxpayers received modest tax credits for their retirement account contributions. Saver's credits averaged $121 for single filers, $159 for heads of households, and $202 for married couples. "Though the maximum saver's credit is $1,000, $2,000 for married couples, it is often much less and, due in part to the impact of other deductions and credits, may, in fact, be zero for some taxpayers," the IRS says in a statement.

Awareness of the saver's credit is increasing, but remains low. Just 21 percent of people earning less than $50,000 say they are aware of the saver's credit, according to a Transamerica Center for Retirement Studies online survey of 4,080 workers age 18 and older at for-profit companies, but that's up from 12 percent in 2010.

The saver's credit was first added to the tax code in 2002 as a temporary provision, and was then made permanent in 2006. Income limits are now adjusted annually to keep pace with inflation. Workers under age 18, full-time students, and individuals claimed as dependents on someone else's tax return are not eligible for the credit. Rollovers and trustee-to-trustee transfers into retirement accounts don't count toward the credit. Your eligible contributions may be reduced by recent distributions you have taken from a retirement account.

Workers interested in getting the saver's credit in 2011 must make 401(k), 403(b), 457, or Thrift Savings Plan contributions by the end of the calendar year. However, retirement savers have until April 17, 2012 to add money to an IRA that will allow them to get the credit in tax year 2011.

2) In the Markets today:
Stocks rose in quiet, pre-holiday trading Friday. The S&P 500 index turned positive for the year.Traders were relieved by news that Congress extended a payroll tax holiday for workers and emergency unemployment.

Stocks close higher; S&P turns positive for 2011-From the AP
Stocks closed higher Friday after a quiet, pre-holiday session that turned the S&P 500 index positive for the year.

Traders were relieved by news that Congress extended a payroll tax holiday for workers and emergency unemployment benefits. Both programs were set to expire at the end of the year. Letting that happen would have reduced economic growth by about 1 percent, analysts said.

The final business day before Christmas also was the slowest full day of trading so far this year.

Traders exchanged just 2.22 billion shares, about half of the recent average. The market will be closed on Monday because Christmas falls on a Sunday this year.

Stocks have risen steadily since Tuesday on hopeful signs about the pace of economic growth in the fourth quarter, which ends next week. New claims for unemployment benefits fell last week to the lowest level since April 2008, long before anyone realized the nation was in a recession.

A series of mixed economic reports Friday did little to derail that optimism. The Standard & Poor's 500 index added 11.33 points, or 0.9 percent, to 1,265.33. It started the year at 1,257.64.

Stocks might surge into the new year if the S&P 500 passes a couple of key technical thresholds, said Todd Salamone, research director at Schaeffer's Investment Research.

Fund managers currently hold relatively few stocks, Salamone noted, and many of their funds have underperformed the market and are negative for the year. If the index rises farther above its break-even point for the year or its average over the past several months, fund managers might flood into the market in a last-ditch attempt to improve their annual returns, he said.

"The worst thing that can happen for a fund manager is to underperform and be in the red when your benchmark, the S&P index, is in the green" for the year, Salamone said.

The Dow Jones industrial average rose 124.35 points, or 1 percent, to 12,294. Bank of America Corp. was the Dow's biggest gainer, adding 2.4 percent. All but two of the 30 Dow stocks rose, Alcoa Inc. and Boeing Co.

The Dow has risen 527.74 points, or 4.5 percent in the past four days. It was the first four-day winning streak for the Dow since mid-September.

The Nasdaq composite index gained 19.19 points, or 0.7 percent, to 2,618.64.

Earlier Friday, the government said that consumer spending and incomes barely grew in November.

The weak gains suggest that consumers may have trouble sustaining their spending into 2012.

In another worrying sign, a measure of business investment decreased for the second straight month.

Business investment has been a pocket of strong demand and spending amid a sluggish recovery. A tax break that encouraged companies to invest in new equipment and facilities expires at the end of the year.

Yet hopes for the economy remained high after this week's encouraging news about the job market and strong holiday sales for retailers.

Among the companies making big moves:
— Rambus Inc. jumped 12.2 percent after the technology licensing company said it reached a patent license deal with Broadcom Corp. and settled a lawsuit with the chip maker.
— TripAdvisor Inc. rose 6.1 percent, the most in the S&P 500, as traders reassessed the value of the newly-spun off travel review website. The stock had fallen sharply since it officially started trading on Wednesday. It recovered some losses on Friday as analysts weighed its rapidly growing revenue and market share.
— Eastman Kodak Co. rose 9.5 percent after the struggling photography company said its general counsel, Laura Quatela, would become co-president on Jan. 1.                 

3) Top financial story of the day:
Consumer spending and personal incomes show weak gains; core durable goods orders fall.

Spending and incomes show weak November gains-From AP

Consumers spent at a lackluster rate in November as their incomes barely grew, suggesting that Americans may struggle to keep spending more into 2012.

Consumer spending rose just 0.1 percent in November, matching the modest October increase, the Commerce Department reported Friday. Incomes also rose 0.1 percent. That was the weakest showing since a 0.1 percent decline in August.

Both the spending and income gains fell below expectations. Economists have said that solid increases in spending could boost economic growth in the final three months of what has been a disappointing year.

Paul Ashworth, chief U.S. economist at Capital Economics, called the consumer spending figure disappointing. He said it would probably mean lower economic growth than had been expected.

Rather than grow at an annual rate of up to 3 percent in the October-December quarter, the economy will likely expand at a rate of about 2.5 percent this quarter, Ashworth says. That would still be an improvement from the 1.8 percent growth in the July-September quarter.

Separately, the government said companies' demand for long-lasting manufactured goods rose by the largest amount in four months in November, driven by a jump in orders for planes.

Orders to U.S. factories for durable goods rose 3.8 percent in November. It was the biggest gain since July. But so-called core capital goods, a proxy for business investment spending, dropped for a second straight month. They fell 1.2 percent.

The declines in business capital goods excluding aircraft raise doubts about a pocket of strength for the economy this year. Business investment spending has surged as companies stepped up orders to take advantage of tax breaks that are set to expire at year's end.

While the economy remains vulnerable to threats, particularly a recession in Europe, the job market has improved, lifting hopes for next year.

The government said this week that applications for unemployment benefits fell by 4,000 last week to 364,000. It was the third straight weekly drop. And it pushed applications to the lowest level since April 2008, in the midst of the Great Recession.

The weakness in incomes reflected a decline in wages and salaries, the biggest component of incomes, in November.

The sluggish gain in spending was held back by a 0.3 percent fall in spending on non-durable goods such as food, clothing and gasoline. Spending on durable goods jumped 0.8 percent. It reflected the solid auto sales during the month.

Spending on services, which includes such items as medical treatments and rent, rose a modest 0.1 percent.

After-tax incomes showed no growth in November. The savings rate dipped to 3.5 percent of after-tax incomes, down from 3.6 percent in October. Both months marked the lowest savings rate since late 2007. They show that consumers are having to tap their savings to finance their spending because of the weak income growth.

The small rise in overall consumer spending was puzzling given that other reports have shown solid holiday shopping this season. Those reports had caused many economists to revise up their growth forecasts for the current quarter.

Analysts at JPMorgan think the economy is growing at an annual rate of 3.5 percent in the current October-December quarter. That would be up from 1.8 percent growth in the July-September quarter and would be the best quarterly gain since the spring of 2010.

Economists still expect that growth to be driven by an improvement in consumer spending, which accounts for 70 percent of economic activity. Spending rose at a 1.7 percent rate in the third quarter, more than double the second-quarter gain. JPMorgan analysts expect consumer spending to grow at a 3 percent pace in the current quarter.

Even with the spurt of activity at the end of the year, economists think growth for all of 2011 will be a lackluster 1.7 percent.

They had much higher expectations when the year began. But then a spike in gasoline prices held back consumer spending for other items. And the earthquake in Japan disrupted supply chains for auto and electronic parts, dampening factory production in the United States.

Many analysts do not expect growth in 2012 to be significantly better than in 2011. JPMorgan economists predict the economy will expand 1.9 percent in 2012, only slightly better than this year.

4) Inspirational Quotes@Inspire_Us from Twitter
Those that know, do. Those that understand, teach. -Aristotle

Financial Headline News for Thursday 12/22

1) Phil's Financial Tip of the Day:
Automation, Other Distribution-Center Efficiencies Mean More Websites Guarantee Christmas Delivery at Later Dates.

This article is unbelievable how technology has made it possible to still get presents via mail this late in the game of Christmas shopping. I took advantage of it today!

Pushing Envelope on Last-Minute Shipping-From The Wall Street Journal

Procrastinators rejoice. Last-minute shopping just got easier.

A number of retailers including Children's Place Retail Stores Inc., Charming Shoppes Inc.'s Lane Bryant and Kohl's Corp., are guaranteeing Christmas delivery for online orders placed later than they did last year, thanks to new distribution centers, robotic technology and other changes they've made over the last year to speed up delivery times.

Read more: http://online.wsj.com/article/SB10001424052970204058404577108863675716908.html#ixzz1hIDiN9oR

2) In the Markets today:
Stocks headed into the last day of trading before Christmas in good cheer, notching a third straight advance on a batch of better-than-expected economic readings.

Rally brings S&P closer to break-even for 2011-From Reuters

Stocks rose on Thursday, putting the S&P 500 on the cusp of finishing out the year higher as another decline in jobless claims pointed to further improvement in the labor market.

The S&P rose for a third day in seasonally light volume that has contributed to sharp swings recently.

With the benchmark index near break-even year-to-date and the Dow already higher for 2011, U.S. stocks appeared on track to outperform such major overseas markets as China, Brazil and Europe, all of which are down more than 10 percent year-to-date.

The latest bit of optimism on Wall Street came from a drop in weekly claims for jobless benefits to a 3-1/2-year low. Also helping equities, U.S. consumer sentiment improved in December, hitting its highest level in six months as Americans felt better about the economy's prospects.

"This is supportive of the fact that the economy is gaining momentum and that the fourth quarter will be much better than people were expecting even just a month ago," said Jim McDonald, chief investment strategist at Chicago-based Northern Trust Global Investments.

Cyclicals, which have come under pressure recent from uncertainties over global growth, were the day's top gainers, with financials (:.GSPF) gaining 2.1 percent, followed by energy (SNP:^GSPE - News) up 1.1 percent and materials (:.GSPM), up 0.9 percent.

Consumer staples (:.GSPS), considered a defensive play, was the weakest sector, falling 0.2 percent.

The Dow Jones industrial average (DJI:^DJI - News) was up 61.84 points, or 0.51 percent, at 12,169.58. The Standard & Poor's 500 Index (SNP:^GSPC - News) was up 10.29 points, or 0.83 percent, at 1,254.01. The Nasdaq Composite Index (Nasdaq:^IXIC - News) was up 21.48 points, or 0.83 percent, at 2,599.45.

The CBOE Volatility index (Chicago Options:^VIX - News), a gauge of investor fear, fell 1.4 percent and is down about 13 percent so far this week, putting it on track for four weeks of declines.

Recent gains have lifted the S&P 500 above its 50-day moving average, though the index has run into trouble when it sought to move above its 200-day moving average, currently around 1,260. The levels have been key for the market this year.

Lower volume ahead of the Christmas and New Year's Day holidays has left the market susceptible to the heightened volatility this week.

Investors warned that a year-end rally would not necessarily translate into elevated expectations for 2012 because many of the issues that hit the market this year, such as slow growth and Europe's debt crisis, remained unresolved.

"Next year will be a tug of war between better economic data here and the prospects for emerging market growth to pick up on one hand, with the European debt crisis on the other side of the rope," said McDonald, who helps oversee about $650 billion in assets.

A downward revision of the U.S. Commerce Department's figures on third-quarter economic growth had little impact on stocks, with investors focused on the economy's performance in the fourth quarter.

The Commerce Department said the economy grew at a 1.8 percent annual pace in the third quarter, down from its prior estimate of 2 percent.

Micron Technology Inc (NasdaqGS:MU - News) jumped 15.7 percent to $6.41 as investors looked past limp quarterly results announced late Wednesday and focused on a potential 2012 rebound in long-stagnant memory chip demand and prices.

Tibco Software Inc (NasdaqGS:TIBX - News) climbed 8 percent to $23.76 after the business software maker forecast first-quarter revenue above estimates and said fourth-quarter profit and revenues soared.

American Greetings Corp (NYSE:AM - News) slumped 21.1 percent to $13.39 after third-quarter profit dropped nearly 40 percent and warned 2012 cash flow would be hurt by higher expenses.

Almost three-fourths of stocks traded on the New York Stock Exchange closed higher while 63 percent of Nasdaq-listed shares ended in positive territory.

Volume was light, with about 5.88 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 8.47 billion.

3) Top financial story of the day:
The number of Americans filing new claims for jobless benefits hit a 3-1/2 year low last week, bolstering views the economy was gaining momentum, even though third-quarter growth was revised down.

Jobless claims at 3.5 year low-From Reuters

The number of Americans filing new claims for jobless benefits hit a 3-1/2 year low last week, bolstering views the economy was gaining momentum, even though third-quarter growth was revised down.

Other data on Thursday underscored the firming tone in the economy, with consumer sentiment scaling a six-month high in December and a barometer of future activity rising more than expected last month.

While the economy is wrapping up 2011 with a spring in its step, bickering over budget policy in Washington and the debt crisis in Europe are casting a cloud over its prospects next year.

A payroll tax cut and benefits for the long-term unemployed, both of which are due to expire at year end, has become tangled in partisan politics and it is unclear whether and when they will be renewed.

"The economy is carrying some clear momentum into 2012," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. "If Congress doesn't kill that by failing to extend the tax breaks, we can look forward to a better year ahead."

Initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 364,000, the Labor Department said on Thursday. That was the lowest level since April 2008.

The claims data, which covered the survey period for the December nonfarm payrolls report, helped to take the sting out of a separate report from the Commerce Department showing that gross domestic product grew at a 1.8 percent annual rate in the third quarter. The December employment report will be released January 6.

Growth, which had previously been reported to have expanded at a 2 percent pace, was held back by a sharp drop in healthcare spending.

However, spending on durable goods was stronger than previously estimated, indicating household appetite to consume remains healthy.

Healthcare spending subtracted about 0.1 percentage point from the GDP change in the final revision, whereas the previous estimate had it adding 0.61 percentage point to growth.

Prospects for consumers have been boosted by the rise in sentiment this month. The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment rose to 69.9 from 64.1 in November.

LABOR MARKET IMPROVING

Stocks on Wall Street rose on the data, along with prices for long-dated U.S. Treasury debt. The dollar was little changed against a basket of currencies.

Even as much of the rest of the world is slowing down and a mild recession is forecast in Europe next year, the U.S. economy remains resilient.

The labor market is improving, households continue to spend, home building is picking up and factory output is expanding, putting the economy on course for at least a 3 percent growth pace in the fourth quarter.

That would be the fastest pace in 18 months.

While claims for unemployment benefits tend to be volatile this time of the year, the third straight week of decline suggested the labor market was gaining some traction.

In addition, the four-week moving average, considered a better measure of labor market trends, dropped to its lowest level since June 2008.

"One unexpectedly low number can easily be a fluke; two are interesting; three are telling us something real is happening in the labor market," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York.

"The drop in claims in recent weeks, if sustained, is consistent with private payrolls growth ramping up to about 200,000 per month."

Other data showed the Conference Board's leading economic index rose 0.5 percent in November after gaining 0.9 percent in October. It was the seventh straight monthly gain in the index.

Despite the downward revision, last quarter's growth is still a step-up from the April-June period's 1.3 percent pace. Part of the pick-up in output during the last quarter reflects a reversal of factors that held back growth earlier in the year.

A jump in gasoline prices had weighed on consumer spending earlier in the year, and supply disruptions from Japan's big earthquake and tsunami in March had curbed auto production.

INVENTORIES FALL

Business inventories dropped $2.0 billion, which sliced off 1.35 percentage points from GDP growth. Inventories had previously been estimated to have declined $8.5 billion.

The drag from inventories was offset by strong business spending, which increased at a 15.7 percent rate, instead of 14.8 percent.

Excluding inventories, the economy grew at a still brisk 3.2 percent rate, revised down from a 3.6 percent pace. Final sales increased at a 1.6 percent pace in the second quarter.

Export growth was stronger than previously estimated, rising at a 4.7 percent rate instead of 4.3 percent. Imports increased at a much faster 1.2 percent rate rather than 0.5 percent.

The GDP report also showed some inflation pressures in the economy. A price index for personal spending rose at an unrevised 2.3 percent rate in the third quarter.

That compared to a 3.3 percent rate in the second quarter. A core inflation measure, which strips out food and energy costs, rose at a 2.1 percent rate rather than 2.0 percent. The measure -- closely
watched by the Federal Reserve -- grew at a 2.3 percent rate in the prior three months.

4) Mackay's Moral: 
It's never too late to be "Most likely to succeed."