Stocks Maintain Record Highs

U.S. stocks rallied into the close, with the Dow and S&P 500 ending the day at records amid encouraging economic reports on Wednesday.
Earlier, stocks held modest gains on the release of the Federal Reserve's Beige Book that said the economy continues to expand.
The energy sector rose about 1 percent and was a leader on the S&P 500, helped by stabilization in oil prices and a report that showed a drop in oil supply for the last week.
In the morning, the ISM services index beat expectations with a leap to a three-month high of 59.3 for November. Before the open, ADP report on private payrolls showed sector employment is keeping up its recent pace in November, although the 208,000 new jobs was a shade below expectations.
U.S. non farm productivity grew a bit faster than initially thought in the third quarter, while sharp downward revisions to compensation pointed to muted wage inflation that should give the Federal Reserve room to keep interest rates low for a while.
Weekly jobless claims come out on Thursday, and the all-important jobs report is due on Friday.
Philadelphia Fed President Charles Plosser said the Fed's preferred inflation measure is running somewhat below its longer-term target but is above the level that should stoke concerns of deflation.
The Federal Reserve is only in the early stages of developing a set of macroprudential tools to ensure financial stability and faces limits because of the divided nature of U.S. financial sector oversight, Fed governor Lael Brainard said on Wednesday at a seminar on financial stability at the Brookings Institution in Washington, D.C.
The Dow Jones Industrial Average closed up 32.94 points, or 0.18 percent, at 17,912.49, withUnitedHealth leading gains among 17 blue chips and American Express the greatest laggard.
The S&P 500 gained 7.78 points, or 0.38 percent, at 2,074.33, with materials leading sector gains and consumer staples the greatest of three laggards.
The Nasdaq closed up 18.66 points, or 0.39 percent, at 4,774.47.
Two stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 757 million and a composite volume of 3.5 billion in the close.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, traded above 12.
The Dow Jones Transports gained nearly 1 percent.
The benchmark 10 year Treasury note yield fell to 2.28 percent. The U.S. dollar touched five-and-a-half-year highs against major world currencies.
Crude oil futures for January delivery settled up 50 cents at $67.38 a barrel on the New York Mercantile Exchange. Gold futures for February closed up $9.30 to $1,208.70 an ounce.

Markets Little Changed Pending News

U.S. stocks opened little changed from Tuesday's close, which had the Dow at a record high, as investors weigh a slew of data expected over the next two days.

The European Central Bank is expected to discuss monetary policy on Thursday.

U.S. stock index futures point to a flat to slightly lower start on Wednesday, as a record Wall Street finish on Tuesday fueled gains in Asian and European trade. 

The day is a busy one for U.S. data. First out was the ADP report on private payrolls,  showing sector employment is keeping up its recent pace in November, though the 208,000 new jobs was a shade below expectations.

U.S. non farm productivity grew a bit faster than initially thought in the third quarter, while sharp downward revisions to compensation pointed to muted wage inflation  that should give the Federal Reserve room to keep interest rates low for a while.

Other data for Wednesday include the ISM services survey and the Federal Reserve's Beige Book report on the economy.

The Dow Jones Industrial Average opened down 10.1 points, or 0.06 percent, at 17,867.58, with P&P the greatest decliner and Caterpillar leading the 12 blue-chip advancers.

The S&P 500 gained 0.77 points, or 0.04 percent, at 2,067.20, with energy and industrials leading sector gains and telecommunications the greatest of four sector decliners.

The Nasdaq opened up 2.16 points, or 0.05 percent, at 4,758.95.

Eight stocks advanced for every five decliners on the New York Stock Exchange, with an exchange volume of 59.1 million and a composite volume of 158.7 million in the open.

The benchmark 10 year Treasury note yield rose to 2.30 percent. The U.S. dollar traded at highs against major world currencies.

US Markets Strong Again

U.S. stocks rose on Tuesday, with the Dow striking another peak, as investors cheered better-than-expected November sales from Ford Motor, General Motor, and Fiat Chrysler.  Remember me pimping Ford a couple of months ago?  Well, I bought it.  Hope you did as well.
U.S. automobile sales rose 4.6 percent in November to 1.3 million, Autodata reported, with the auto sales rate coming to 17.2 million last month in the strongest pace for the month since 2003.
The auto sales "indicate the economy's momentum remains on track, and is moving along, basically on all fronts," said Peter Cardillo, chief market economist at Rockwell Global Capital.
Stocks maintained gains after the Commerce Department reported construction spending rose 1.1 percent in October.
BP climbed on unconfirmed talk of a takeover bid for the U.K. energy company from Royal Dutch Shell; RadioShack fell as the electronics retailer rejected claims it had breached covenants on a term loan from Harbinger Group unit Salus Capital Partners.
Apple fell, extending losses that followed its largest single-day decline since September.
Energy costs were on the retreat again, with crude futures for January delivery falling $2.12, or 3.1 percent, to $66.88 a barrel.
At or near session highs, the Dow Jones Industrial Average rose 102.75 points, or 0.6 percent, to 17,879.55, with Chevron and Exxon Mobil lately leading blue-chip gains that extended to 21 of 30 components.
The S&P 500 advanced 13.11 points, or 0.6 percent, to 2,066.55, with energy pacing sector gains and telecommunications the sole laggard of its 10 major industries.
The Nasdaq gained 28.46 points, or 0.6 percent, to 4,755.81.
For every share falling, two rose on the New York Stock Exchange, where 813 million shares traded. Composite volume neared 3.7 billion.
The CBOE Volatility Index, one measure of investor uncertainty, fell 10.1 percent to 12.85.
The yield on the 10 year Treasury note used to figure mortgage rates and other consumer loans added 6 basis points to 2.2923 percent.
The U.S. dollar rose against the currencies of major U.S. trading partners and dollar-denominated commodities including oil and gold fell, with the gold futures contract for February down $18.70, or 1.5 percent, to $1,199.40 an ounce.
The European Central Bank is slated to meet on its monetary policy later in the week in Frankfort, with investors waiting to see whether the ECB opts to purchase government bonds in widening its effort to stimulate the euro-zone economy.

Looking For An Oil Play? Check out EOG

EOG is one of the largest independent oil and natural gas companies in the United States. With premium acreage in the Eagle Ford, Bakken and the Delaware Basin, EOG has been the fastest-organic growing major oil producer in the US. Over the past 5 years, the company has increased daily oil production by a CAGR of 39%, making EOG the largest crude oil producer in the lower 48. Even more impressive is the company has achieved this remarkable growth while maintaining strict financial discipline by working within its operating cash flow.
EOG's performance over the past several years is nothing short of amazing. Combined with some of the best acreage in the Eagle Ford and Delaware Basin and the company's technical expertise at successfully drilling wells, EOG has emerged as the leader in the US shale oil revolution. Over the last 4 years, the company has the highest annual organic crude oil growth in its large cap E&P peer group. Sustaining high-double digit year-over-year growth is easy for a small cap E&P company, but when you're talking about high-double digit growth on over 200 MBbld, it's clear how efficient and effective EOG has become.
For E&P companies to stay relevant and successful, they must continually increase production, while keeping costs down. The past few weeks have been extremely hard on oil producers, as the price of oil is in a free fall. The OPEC's recent decision not to cut production is a clear sign that they intend to keep the pressure on US oil producers in the hope that any sustained low oil prices will cripple the industry, so they can maintain their market dominance. While some US producers with ugly balance sheets and high production costs may suffer and eventually go out of business, EOG is a model of efficiency that has evolved to endure anything OPEC can throw at it. Aside from being one of the largest independent oil producers in the shale industry, EOG is also one of the low-cost producers.
EOG is the model company in the US shale industry. It has maintained the highest organic growth relative to peers, and is also one of the lowest-cost producers. In addition, EOG has one of the cleanest balance sheets, with $5.9 billion in outstanding debt and $1.5 billion in cash. The company has a low net debt-to-total capitalization at 20%, and continues to work to lower it. EOG also has some of the best acreage assets in the Eagle Ford and Delaware Basin.
What really sets EOG apart from its competitors is its efficiency. The fact that the company can produce a 10% after-tax return on all of its US assets at $50/barrel, and that its largest oil producing assets can produce a 10% after-tax return at $40/barrel, should help investors sleep at night.
The sharp decline in oil prices has scared away traders and investors with short time frames, giving long-term investors a great entry point. At $86/share, EOG is cheap. It has a P/E under 16 and an EV/EBITDA of just over 6. In the short term, the price will remain volatile, but any drop can be viewed as a way to lower your position price. Fundamentally, EOG is an extremely strong company that has the ability to endure a price war. Investors shouldn't be scared away by the current conditions. They should look at EOG as a best-of-breed company with a strong history of industry-leading performance and a management team dedicated to returning value to shareholders in a financially responsible matter. In my previous articles, I encouraged investors to wait for a pullback before buying Lockheed Martin, 3M, Automatic Data Processing and Becton, Dickinson, but I believe investors can pull the trigger on EOG at any time. If oil continues to fall, investors can increase their position knowing the company will remain profitable and a good long-term play.  The stock also appears to be oversold and is trading near support levels.

U.S. Markets to Open Higher

U.S. and Brent crude oil, as well as gold, rallied overnight, following weeks of declines. This helped mining and commodity stocks post strong gains early on Tuesday, with an additional boost coming from reports that the Chinese central bank might cut bank reserve requirements.
Reuters reported early on Tuesday that the People's Bank of China might unveil a cut to banks' reserve requirements on the back of recent weak economic data.  China mainland shares closed at a fresh three-year peak, resuming their gains after snapping a seven-session winning streak on Monday. Official factory activity data earlier this week fell to an eight-month low, prompting talk of further stimulus.  If you want to play the China large cap stocks, you can go long the ETF FXI.
In the U.S. on Monday,  New York Federal Reserve President William Dudley said falling oil prices would boost income growth in the U.S. This echoed words from International Monetary Fund Managing Director Christine Lagarde, who said on Monday that lower energy prices would help accelerate economic growth to 3.5 percent next year, according to the Wall Street Journal.
No major earnings are due on Tuesday. Economic data out include construction spending for October, which is expected to increase.

Weird Day For Apple

Apple acted in a peculiar fashion today.  Shares were down as much as 6.4%, closing off about $4.00.  There was no real news on the stock that would have caused this type of a drop.  Apple's market cap is currently at nearly $700 billion.  The volume was rather strong as well.

Futures Pointed Lower

Dow futures are off 63 points, as ratings agency Moody's downgraded Japan's credit rating and commodity prices continued to tumble.

The only major economic data due from the U.S. is the ISM Index for November, expected at 10 a.m.  The markets have lacked any real stimulus to move them off current levels.

Earnings of note include online payment service MOL Global's rescheduled results. Its Nasdaq-listed shares tumbled when its CFO resigned only one month after the firm went public.

Earlier in the day, Moody's cut Japans credit rating to A1 from AA3, shortly after the country's benchmark stock index, the Nikkei 225, closed at a seven-year high. The credit ratings agency cited doubts as to whether Japan could meet its deficit-cutting goals and the timing and effectiveness of its growth-enhancing policy measures.  Things in Japan are a bit of a mess at the moment.  Their rising stock market is soley the function of easy money.