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Stock Market Today

Stock Market Today: This Winner is Up Nearly 20%

The stock market today opened slightly higher as GDP unexpectedly grew at 2% in the third quarter, overshadowing another miss from tech behemoth Apple Inc. (Nasdaq: AAPL).

Here's a breakdown of the latest news, along with one stock that's soaring today.

  • 3Q GDP beats as "consumption" increases- The initial estimate for third-quarter U.S. gross domestic product (GDP) surprisingly came in at 2%, ahead of expectations for a 1.8% increase. At first glance this is a positive sign for an economy that only grew 1.25% in the previous three months – but the details of the report point otherwise. Over one-third of the 2% increase, 0.71%, came from government consumption, of which 0.64% came from defense spending. While personal consumption contributed 1.42% to GDP growth, it only grew 2% from the previous quarter, below expectations of 2.1%. "You're getting a mix of data that don't have a clear direction," Stephen Wood, the New York-based chief market strategist for North America for Russell Investments, which oversees $152 billion, told Bloomberg News. "It's important for investors' psychology to see GDP data beating estimates. Yet the earnings season has been a very challenging one." It appears that the increase in government spending, which was the biggest rise in three years, was led by defense maintenance costs. This is the last GDP estimate before the election and U.S. President Barack Obama will surely try to promote this as overall economic growth, even though it is far from it.

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This Year's Most Outrageous Examples of Wasteful Government Spending

With bloated federal budgets pushing the United States deeper and deeper into debt, you'd think Congress finally would be putting a stop to wasteful government spending.

Not a chance.

Despite all the handwringing over the rapidly approaching "fiscal cliff" and a debt exceeding $16 trillion, lawmakers have voted to squander tax money on everything from what astronauts might eat on Mars to mind-numbing musicals about global warming.

Last week Sen. Tom Coburn, R-OK, released his annual "Wastebook," which spotlights 100 examples of absurdly wasteful government spending from the previous year.

The items on this year's list add up to $18 billion in government waste. While even Coburn admits that's just a tiny fraction of the $3.7 trillion federal budget, it illustrates how carelessly Washington dispenses with taxpayers' hard-earned money.

"Each of the 100 entries highlighted by this report is a direct result of politicians who are preoccupied with running for re-election rather than running the country, which is what they were elected to do in the first place," Coburn said in the report.

Wasteful Government Spending: 13 Mind-Blowing Expenses

Instead of just bickering about wasteful government spending, Congress should get the ball rolling by going after all the low-hanging fruit in the federal budget.

Here are 13 of the most wasteful government spending examples in 2012, and they all but beg for the budget ax:

  1. Little Green Menus: NASA spends $1 million a year on developing recipes for foods which astronauts could prepare while visiting Mars, even though the agency has no plans to go there any time soon. But just in case NASA changes its mind someday, it wants to ensure that astronauts on Mars don't experience "menu fatigue."
  1. Why Fruit Flies Fall in Love: The National Institutes of Health spent $939,771 on research that has discovered male fruit flies are more sexually attracted to younger female fruit flies. "Video of the encounter," the scientists wrote, "showed that the male was much more attracted to the young fly."

If you thought those were bad, they get even worse...

Why It's Time for Unaware Consumers to Get Clued in on Fiscal Cliff

As the U.S. hurtles towards the fiscal cliff and possible recession in 2013, American consumers appear to be unfazed.

So far, most of the concern surrounding the looming threat-billions of dollars of tax increases and federal spending cuts set to take effect at the end of the year-has focused on businesses.

But while pundits in Washington and Wall Street rail against the impending calamity, most consumers just aren't paying attention, Tom Porcelli, Royal Bank of Canada's chief U.S. economist told The Wall Street Journal.

In fact, they seem to be blissfully unaware.

"Not until it makes it into the Rockland Journal News will my parents really understand about the fiscal cliff," Porcelli said. "Even if someone can acknowledge some familiarity with the topic, they probably don't know the details."

And that could mean troubled household finances in 2013 – especially with what this recent spending data has shown us.

Pre-Fiscal Cliff Spending Spree

In a sign that many consumers aren't worried about saving, Americans have been stepping up their purchases lately.

Americans spent more money at retailers in September – a buying surge that reflected growing consumer confidence and the launch of Apple Inc.'s (Nasdaq: AAPL) iPhone 5.
Retail sales jumped 1.1% last month, marking the best two months of sales in two years, according to figures released by the Commerce Department.

Even better, the buying binge was wide-spread as retailers saw gains in almost every major category.

Sales of electronics and appliances vaulted higher by 4.5%, in part because of iPhone 5 sales. Building materials, home furnishings, garden supplies and clothing sales all posted gains.

What's more, the University of Michigan's monthly survey of consumer confidence jumped to 83.1 in October. That's up from 78.3 in September – the highest level since September 2007 – three months before the start of the Great Recession.

Americans are also spending more on big-ticket items.

U.S. auto companies reported that sales rose 13% in September from a year earlier to nearly 1.2 million. Analysts think sales could hit 14.3 million this year, up from 12.8 million last year.

The housing market is also roaring back, boosting home prices and the "wealth effect"-making Americans feel better about spending more.

"The consumer is back," Joel Naroff, chief economist at Naroff Economic Advisors told CBS News."They are not spending money like it is going out of style…they are spending at a more normal pace that is consistent with a moderately growing economy."

But while consumers are ready to party, American companies are raising these warning flags.

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Stock Market Today: These Earnings Expose a Huge Concern for 2013

The stock market today opened lower as yet another American corporation, Caterpillar Inc. (NYSE: CAT), disappointed investors with its earnings call.

Here's the market roundup, along with one stock that is soaring today because analysts say there is a "50% chance" it could be acquired.

  • Caterpillar lowers earnings outlook for second time this year– The world's largest construction maker reported third-quarter earnings that beat expectations but cut its 2012 sales and earnings forecasts. CAT joins a growing list of American firms including McDonald's Corp. (NYSE: MCD), Google Inc. (Nasdaq: GOOG), and General Electric Co. (NYSE: GE) that have either missed expectations or lowered their outlook this earnings season. Caterpillar reported third-quarter net income of $1.7 billion, or $2.54 per share, compared with $1.14 billion, or $1.71 per share a year ago. Adjusting for one-time items CAT earned a profit of $2.26 per share, ahead of analysts' estimate of $2.22. The troubling facts for CAT include its order backlog fell 18% from the second quarter of this year and the Peoria, IL-based company now expects to generate much lower sales for the remainder of this year and 2013.

The company currently estimates it will generate net income between $9 and $9.25 per share on sales of $66 billion for fiscal 2012. This is down from a July forecast calling for EPS of $9.60 on revenue between $68 and $70 billion. In 2013 the company said its revenue could range between 5% higher or lower than this year's results. "The biggest concern is the declining backlog, which would imply a more challenging year next year, especially for mining, and whether or not North American construction will re- accelerate," Larry De Maria, a New York-based analyst for William Blair & Co. who has a buy rating on the shares, told Bloomberg News today in a telephone interview. "Caterpillar's business is very economically sensitive. Due to the softening of the global economy and increasing uncertainty, order rates have declined." After a bad start in trading today CAT stock has rebounded and is up 1.1% as of noon.

While earnings have taken their toll on corporate giants, this stock is up almost 30% today on hopes of a buyout:

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Stock Market Today: Earnings Crush Giants as This Stock Gains 30%

The stock market today opened well in the red after earnings from industry leaders disappointed investors on the 25th anniversary of Black Friday.
Here's today's roundup and one stock that has gained over 30% this week.

  • General Electric Co. (NYSE: GE), Microsoft Corp. (Nasdaq: MSFT) fall short of estimates– Two American titans, software leader Microsoft and diversified conglomerate General Electric, reported their latest earnings. GE saw its third-quarter profit rise 8.3% to $3.49 billion, or 33 cents per share, from $3.22 billion, or 22 cents per share a year earlier. Yet the company's revenue fell short of expectations and its outlook for next year did not inspire much confidence. Microsoft saw its fiscal first-quarter earnings drop 22% from a year ago and missed analysts' forecasts for earnings and revenue. GE and Microsoft are struggling with the same obstacles that have scared investors and hurt other businesses: the global economic slowdown and uncertainty regarding the fiscal cliff. "We're not assuming that Europe gets any better," GE's Chief Executive Officer, Jeff Immelt, told investors on a conference call. "We're looking at '13 being kind of like '12, with the big variable being the fiscal cliff." GE stock is down 2.5% in early trading and MSFT stock is down almost 3%.
  • Restaurant stocks hurt by drought- McDonald's Corp. (NYSE: MCD) and Chipotle Mexican Grill Inc. (NYSE: CMG) both reported weak third-quarter earnings, an indication they are still feeling the effects of this summer's epic drought. Same-store sales were the driving negative factor for both restaurants. McDonald's posted global same-store sales growth of 1.9%, the first time that number has been below 2% since 2003. Chipotle's comparable sales rose 4.8% in the quarter, its lowest growth in almost three years. "I think that competition has certainly gotten more aggressive the past several quarters," Morningstar analyst R.J. Hottovy told Reuters. "Between commodity costs coming in and companies being able to price more aggressively, but also consumers still being very fixated on value, it's led to a very cutthroat restaurant environment." Chipotle has seen its stock plunge to under $250 from above $400 earlier this summer after two consecutive dismal earnings reports. "They're coming up against a little bit of a ceiling," Peter Saleh, a New York-based analyst at Telsey Advisory Group, told Bloomberg. "They need to do something more either on advertising or new product news to draw more customers into their stores." MCD stock is down 3.4% today and CMG stock is down over 14% as of noon.

While most companies are suffering this quarter as they report earnings, this company has quietly soared over 30% this week and could be set for even more gains.

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Stock Market Today: This Stock's Dip Could Be Promising

The stock market today opened flat as positive housing data was weighed down by somewhat mixed earnings.

Here's our market roundup and one stock that's soaring today.

  • Housing starts reach four-year high– The housing market continues to show signs of recovery as the rate of home building in September grew to levels not seen since July 2008. Housing starts rose to an annual pace of 872,000 homes, up 15% from August. Builders also filed for permits at an annual rate of 894,000 homes, up 11.6% from last month and 45.1% year-over-year. Demand for housing will continue to be helped by the Federal Reserve's pledge to keep interest rates near historic levels and the implementation of QE3. Housing prices have rebounded from their nadirs in part because foreclosures are at five-year lows and because the number of U.S. households grew 2% in 2011, its largest rise in 10 years. "There is going to be a continued housing recovery over the next few years," said Larry Seay, chief financial officer at Meritage Homes Corp. (NYSE: MTH) in Scottsdale, AZ, at an investor conference. "Pent-up demand that has built up from people deferring household formation is going to help buoy the recovery. High affordability not only with house prices being very low, but also interest rates being as low as they've been in decades, and all that translating into an improved buyer confidence."
  • Bank of America Corp (NYSE: BAC) delivers a mixed bag– Charlotte, NC-based Bank of America barley managed to squeeze out a profit for the third quarter after $1.6 billion in litigation charges ate away at its earnings. The financial giant earned $340 million – a little more than zero cents per share. That was better than analysts' average estimate of a loss of 7 cents per share, but well below last year's third-quarter profit of $6.2 billion, or 56 cents per share. Revenue also fell, slumping to $20.4 billion from $28.5 billion a year ago, missing expectations. A day after Citigroup CEO Vikram Pandit abruptly resigned, Bank of America's CEO Brian Moynihan sounded confident about his bank's future. "We are doing more business with our customers and clients, deposits are up, mortgage originations are up," he said. "Our strategy is taking hold even as we work through a challenging economy and continue to clean up legacy issues." BAC stock is up 0.6% in early trading.

Here's one stock that beat earnings and is poised for future success.

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Stock Market Today: It's Easy to Beat Earnings Estimates When You Aim Low

The stock market today opened higher as earnings continue to be "not as bad as expected" and industrial production shows signs of stabilizing.

Here's our market roundup for investors:

  • Earnings continue to beat estimates– The third quarter was supposed to be a dismal earnings season but lowered expectations are giving companies a boost. Johnson and Johnson (NYSE: JNJ) and Goldman Sachs Group Inc. (NYSE: GS) reported better-than-expected profits this morning and each offered investors something else to cheer about. JNJ's third-quarter profits fell 7% from last year but its adjusted EPS of $1.25 beat Wall Street's estimates of $1.21. Goldman had a third-quarter profit of $1.51 billion, compared with a year-earlier loss of $393 million and easily beat both earnings and revenue forecasts. Besides the strong earnings, Goldman announced that it would increase its quarterly dividend to 50 cents from 46 cents and JNJ raised its 2012 earnings forecast. JNJ stock is up 1.4% in early trading and GS stock is up 1.0%.

Decreased expectations have allowed companies to report numbers that might have been disappointing but now look encouraging. JNJ pulled this off as the forecast it issued today for 2012 earnings was lower than the projection it had last quarter. Even though earnings for the most part have beat expectations there is still the uncertainty of the fiscal cliff and slowing economic growth.

"Investors are cycling back into risk as earnings as well as economic numbers in the U.S. are somewhat better than expected," Chad Morganlander, a Florham Park, NJ-based fund manager at Stifel Nicolaus & Co. told Bloomberg News in a telephone interview. "Economic growth will continue to be sluggish even with the flickers of hope that we've seen this morning."

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2013 Natural Gas Price Forecast: Higher Prices Mean an End to the Bear Market

After a sustained plunge, the 2013 natural gas price forecast shows the six-and-a-half year bear market may be finally coming to an end.

In all, over the course of the current downturn, natural gas prices declined from a high of $15.78 per million btus (mmbtu) in Dec 2005 to a low of $1.90 in April 2012 — a breath-taking nosedive of 88%.

The reason was an enormous supply glut driven largely by major new unconventional shale plays like the Marcellus and the Bakken where hydraulic fracturing (fracking) has revolutionized the industry.

In fact, fracking helped drillers to produce over 24 trillion cubic feet of natural gas last year, with over 70 billion cubic feet coming from the Bakken Shale alone.

These new finds meant the U.S. natural-gas market was flooded with an average of three billion cubic feet more natural gas every day than the United States consumed.

But those days are coming to an end as supply and demand begin to balance out, setting the stage for rising natural gas prices.

In fact, natural gas prices have already rallied to $3.40 per mmbtu, up 79% in just six months

But regardless the day-to-day movements, the long-term outlook for natural gas prices remains bullish, particularly in light of a steady increase in demand.

Here's how investors can profit on the coming rally in natural gas prices.

Stock Market Today: Is this 9% Gainer a Recession-Proof Winner?

The stock market today opened lower as investors enter the third-quarter earnings season feeling very pessimistic. Alcoa's report yesterday and Chevron's announcement today only intensified this sentiment, but there is one stock that is proving to be a winner.

  • Alcoa Inc. (NYSE: AA) reports a loss to start earnings season– Alcoa reported a net loss of $143 million, or 13 cents a share for the third quarter, a reversal of last year's third-quarter profits of $172 million, or 15 cents a share. Sales fell as well, dropping 9.2% to $5.83 billion from $6.42 billion. Alcoa, the largest U.S. aluminum producer, was hurt by declining demand and aluminum prices that are 20% lower than a year ago. The company now expects aluminum demand will rise 6% this year, lower than the 7% forecast made in July. The silver lining for Alcoa is that the numbers weren't as bad as expected. Excluding environmental and legal charges the company posted a profit of 3 cents per share, ahead of Wall Street's estimate to break even. Even though sales fell they too beat projections. "The global economy is clearly slowing," Lloyd O'Carroll, a Richmond, Virginia-based analyst for Davenport & Co., told Bloomberg News yesterday. "That's what the IMF said today and so I think what Alcoa is doing is consistent with that." AA stock was down almost 4% as of noon.
  • Chevron Corp (NYSE: CVX) announces 3Q results will stumble– Chevron said on Tuesday that it expects third-quarter earnings to be "substantially lower" than its second-quarter results. The San Ramon, CA-based company cited lower production and a lower price of oil for the decline in profits. For the months of July and August the average price of a barrel of oil in the U.S. was $95.44 compared to $103.91 in the April-June quarter. Last quarter the company earned $7.2 billion, or $3.66 per share and analysts expect net income of $6.2 billion, or $3.08 per share for the third quarter. Chevron, the second-largest U.S. energy company by market value, will release full third-quarter results on Nov. 2. CVX stock is down 3.5% as of noon.

Finally, this stock is looking like it can withstand weakening growth in 2013.

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Six Stocks You Should Own If Obama Wins Election 2012

Debates and attack ads aside, the U.S. presidential election remains too close to call — all the more reason for investors to position themselves to profit whether Mitt Romney or President Barack Obama wins in November.

As we noted last month when we looked at stocks to own if Romney wins, certain industries tend to perform better under Republican policies, others under Democrats.

Here's a look at six stocks that would benefit if President Obama wins Election 2012.

Health Care Stocks Helped by an Obama Win

No matter what, one of the top issues will continue to be health care, with a particular focus on the Patient Protection and Affordable Care Act (PPACA) – otherwise known as "Obamacare."

Unless the Republicans sweep both houses of Congress and win the White House, Obamacare will remain the law of the land.

Large hospital chains benefit from the survival of Obamacare because it expands health coverage to millions of previously uninsured individuals, including those with pre-existing conditions. That will significantly reduce the burden on hospital emergency rooms, which must now treat these patients even if they can't pay.

While such major hospital operators as Tenet Healthcare Corp. (NYSE: THC) and Community Health Systems (NYSE: CYH) would get a lift from this, a better choice in this sector is:

  • Health Management Associates Inc. (NYSE: HMA), recent price $8.16 – HMA operates 66 hospitals with more than 10,300 beds, most of them located across the South and in Appalachia, where the current percentage of uninsured patients is among the highest in the country. Increased reimbursements under Obamacare could spark a turnaround in HMA revenues and earnings, which have fallen in four of the last five quarters, slipping from 20 cents a share in the second quarter of 2011 to just 16 cents in Q2 2012. The stock pays no dividend, but offers good growth potential since its current price is well off the five-year high of $11.32 set in April 2011.

Other winners under Obamacare would be companies that receive large research and/or specialized treatment grants from government agencies. The National Institute of Health (NIH), for instance, could see budget cuts of 5% or more if Romney wins and begins to rein in discretionary federal spending.

A good bet in this category is:

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