December Starts with a Rally

The stock market is up nicely this morning. At one point, the Dow was up over 150 points. Perhaps the biggest news is that AIG announced that it has wiped out $25 billion in debt to the taxpayers by selling stakes in two subsidiaries to the Federal Reserve Bank of New York.

The other news is that the ISM manufacturing index fell to 53.6 from 55.7, a bit below the consensus 55.0. I doubt that’s the start of a major trend. This doesn’t match what we’ve been seeing in regional surveys.

Moving to the retail sector, Staples (SPLS) announced Q3 earnings of 39 cents a share which beat estimates by one penny. This is very good news and the stock is rallying today. This is a very competitive sector. I recently downgraded both Office Depot (ODP) and OfficeMax (OMX).

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