All that and more for this tuesday, december 24th, 2013. Good evening, everyone, on this christmas eve. Im suzy. Tyler is off tonight. So it looks like santa started his rounds a little early today. Stocks edged higher thanks to some encouraging data about manufacturing and housing and well have more on both those topics in just a few minutes. Traders called todays gains the start of a socalled santa claus rally. Thats when stocks rise in the final five trading sessions of the year and on wall street thats a bullish signal for the new year. Today investors and traders spread a little Holiday Cheer to each of the major averages. The dow and the s p posted new alltime highs and the nasdaq had its best close in more than 13 years. The dow rose another 63 points. The nasdaq was up 6. And the s p added 5 points. Over in the bond market, worries about whether the Federal Reserve would taper its stimulus and cause a sharp spike in Interest Rates has been a big headache for bond investors. Just ahead of the feds taper announcement last week, investors in mutual funds pulled more than 8 million out of bonds. That makes 12 beweeks in a row d the most in one week since august. More now on that Strong Manufacturing data. Orders for longlasting durable goods rose a better than expected 3. 5 in november. The Commerce Department said demand increased for a range of goods including commercial aircraft, machinery, computers and electronics. Business investment and new manufacture goods saw its biggest jump since january. Well, that rising demand in manufactured goods especially for autos, aircraft and heavy machinery may have led to a comeback of sorts in steel. Prices are higher and so are shares in some of the nations biggest steelmakers. Morgan brennan has more. Reporter feel yourself for a rebound in steel . Strong auto sales, the u. S. Housing recovery and a flood of orders for longlasting manufactured goods all helping push demand higher for the hardhit commodity. Experts say global appetite for steel could grow in 2014. As we head into 2014, were looking very positively at the demand side. We expect that you could see demand as much as 6 to 8 higher led by nonresidential construction. Why does that matter . Steel is one of the Industries Hit hardest. As construction ground to a halt and as the Auto Industry faced bailouts. Nearly five years later steel has yet to recover. But Stronger Economic growth in both the u. S. And in europe could be leading the way for steels longawaited rebound. Adding more proof that a recovery is here to stay. Ratings firm moodys recently upping its outlook for the industry to stable. Saying steel saw its bottom earlier this year. And investors seemed to agree. Several steelmakers posting strong stock gains in the final days of 2013. United States Steel Corporation climbing more than 6 this week and up 80 over the past six months. Another industry giant ak steel has jumped more than 10 through tuesday. Clocking sixmonth gains of 150 . These companies have been beating the street with recent earning reports, posting surprise but still modest profits and inspiring a number of analysts from cohen and company to Goldman Sachs to issue stock upgrades. Still, headwinds persist for steel. Steel production in china is forecast to go down. Pollution controls are shutting down Steel Production at a rate that is considerably higher than anyone had forecast. So we think that its going to come in for a rude awakening. For nightly Business Report, im morgan brennan. More now on todays housing news. Contracts to buy newly built homes declined more than 2 in november from the month before. But there was a big upward revision to octobers already strong sales. New home sales are now running at a fiveyear high, but not all the housing numbers may be squaring up. Diana olick explains. Reporter u. S. Home builders are putting up more homes. And more importantly, theyre selling them. Contracts to buy newly built homes were running at an annualized pace of 464,000 in november, down slightly from october, but october saw a huge surge. Its right. Theres a huge demand. Reporter brian coaster is an appraiser and works with Home Builders polty and taylor morrison. I think theres a sense of urgency with people that they should have, that if you dont do it now within a couple months or within, you know, six months, rates will keep going up and up, and youre going to miss the opportunity to, you know, get a 5 or 4 rate. Reporter stocks of the builders surged on the days news. This after miamibased lenar, one of the largest public builders, last week reported a 13 quarterly jump in new contracts. Stronger than its peers but a sign that the higherend new home market is recovering nicely. The lower end, however, for both new and existing homes is slowing dramatically. Investors have depleted most of the distressed Housing Stock and firsttime homebuyers are still locked out of the market by tight credit. Witness Mortgage Applications to purchase a home, down 4 last week and down over 10 from a year ago. This as rates moved only very slightly higher. The culprit may be higher premiums at the fha, the governments mortgage insurer and a favorite among firsttime buyers. Fha Mortgage Applications are down 25 from a year ago. So if firsttime buyers are out, whats pushing the demand for newly built homes . Well, some of it is still tight supply of existing homes for sale. But there may also be a new wild card in the new home market. Investors using all cash are turning to new construction. Its the next step in the rental play. For nightly Business Report, im diana olick in washington. Now, even with all those new homes getting sold, applications for new mortgages fell to a 13year low last week. The Mortgage BankersAssociation Says demand dropped off when rates ticked higher following the feds decision to taper back on its bondbuying stimulus. There are just four trading days left this year, and james expects that santa claus rally to continue right through new years eve. Hes managing executive of investments at pnc Asset Management group. So jim, we end this year obviously on a very high note, but when youre this high up, it makes you wonder how much higher can stocks go in the new year. Well, thats the question on investors mind these days, suzy, as you said, but certainly santa has delivered. Ended up the year with an up day today. We do believe this santa claus rally which will go through the first couple of days of january will continue. On the backs of very strong economic data. So what is your outlook for 2014 in terms of how much the major averages could go up . I mean, youre coming off a really strong year, up 30 or so. As you say, we have benefited from the asset purchases of the Federal Reserve over the last couple of years, but particularly in 2013, well see almost a plus 30 year on the s p. If you include dividends, not likely well see that in 2014. Were more in the singledigit range, something in the 8 to 12 range, depending on how earnings go. But it will be a month year for equities, just not investors should not forecast what weve seen in the last 12 months. Well, theres been a lot of talk among market strategists about a correction or two coming up in the new year. Now, investors are always told you cant time the market, but im still going to ask you a question about that. If there is some kind of correction, are investors better off waiting for that pullback to happen before they put any fresh money into the markets . Well, if you look back at 2013, suzy, investors who tried that were not very successful. So all we got was a 6 correction. Now, on average, over the last 33 years, the entryyear decline is about 14 . So in all likelihood, well see a decline in 2014 larger than the 6 we saw, probably something in the range of 10 , maybe to 15 , hard to predict when that would be. So i would suggest investors not try to time that market but understand what their plan is, if theyre underallocated to equities, underinvested in equities, they put a plan in place early in the year to invest throughout the year over that time frame, theyll be mostly right, not likely theyll get it all the way right by trying to time the downturn. Weve got four trading days left for this year. You talk about an investor plan, portfolio plan. What should investors be doing . Is there anything they should do within this deadline time, or does it make a difference . Should they be buying things . Selling stocks . Thats the question. And certainly with an up 30 year, not likely they have as many losses in their portfolio, but certainly the first thing you should do is take any losses, see if you can offset that against any gains you have in your account. I would suggest probably not recognizing gains here in the last four days of the year. But investors should take this opportunity, if youve been fully allocated to stocks, youre now overweighted, so id start to take the opportunity to rebalance your portfolio. Certainly opportunities in developed countries, europe, emerging markets. So to allocate away from u. S. Stocks if you have been if you have benefited from this rally and this market. And then look at the risk in your fixedincome portfolio. This will be a year well see negative returns in bond indexes. Look where your durations are, where your risk is and try to derisk some of your fixedincome portfolio against what we would suggest is a rising rate environment in 2014. A lot of important decisions you have to make. Thank you so much, jim, for coming on the program. Happy holidays. Thank you, suzy, and happy holidays to you. Thank you so much. Jim dunegan. American express agreed to pay at least 75 million in fines and to repay customers for what authorities called misleading Marketing Tactics and bogus billings. The credit card giant was accused by three regulators including the fdic for charging some cardholders for extra Services Like i. D. Theft protection when they didnt even enroll in the program. Amex was also charged for overstating the benefits and coverage time for an account protection product. Now, this settlement is the latest in a series of actions against other Credit Card Companies for misleading consumers of the benefits of addon products. Coming up next, its all about the consumer. Retailers are making one final push this year for the customers dollar. And our market monitor has the consumer names for you to own for 2014. Thats coming up. In case you werent keeping track, there are now zero shopping days left before christmas. So retailers have pulled out all the stops to get more consumers inside their stores. Sara eisen has more on the final push to get a piece of your Holiday Shopping dollar. Reporter its 4 30 a. M. Christmas eve, and shirley ruiz is leaving toys r us with a shopping cart full of presents. Its very full here. We have a lot of toys. Reporter if you think thats early, think again. Across the country, thousands hit stores before dawn because, well, they were open. I think its a great idea. Some people, unfortunately, have to wait until the last minute. So its a great idea. I think its awesome. I think its awesome were here. Reporter kohls locations like this one have been open 24 hours since early friday morning. Select macys stores as well and toys r us opened its says stores early saturday morning. Its Flagship Store in times square has literally been open since december 1st. The question is, is it going to pay off in what appears to so far being a pretty lackluster shopping season . There will at least be that one person who has free time at 3 00 in the morning. But in general, i dont think its helping retail. Its adding labor hours and potentially hurting margins. Reporter macys says our shoppers love that we give them options, especially with latenight and earlymorning hours. The former ceo of toys r us says its a winning strategy. The shoulder hours like from midnight to 2 00 a. M. Or from 5 00 a. M. On are actually quite busy. If you compare that for Stores Setting up all night to an average day in the middle of february, these are really busy hours so they are profitable. Reporter part of that 24 7 convenience is whats driving more shoppers online this season. Online sales the weekend before christmas surged 40 this year compared to last. 20 of that came from mobile. Keep in mind online sales only make up 6 or so of total retail sales. That means brick and mortar retailers are pulling out all the stops. Even if it means staffing a store in the middle of the night. In new jersey for nightly Business Report, im sara ei n eisen. Shares of tesla surged higher. Thats where we begin tonights market focus. Regulators reaffirmed the fivestar safety rating of teslas model s for 2014 despite recent incidents where three of those models caught fire after crashing. And those fires are still under investigation. Tesla shares popped 5 to 151. 25. La quinta has confidentially filed for ipo. Its seeking to raise as much as 4. 5 billion in the offering. The price and numbers of shares wont be known. Shares of blackstone ended the day slightly higher to 31 and change. There are also reports out today that the Carlisle Group is close to pulling off a deal with Johnson Johnson to buy j js blood unit. Its a transaction that could be worth about 4 billion. The health care giant has been looking to sell the Division Since its a small player in a market led by big rivals like roche and siemens. Shares were up slightly to 92. 06. W. R. Grace has finally reached an agreement with bank lenders. That was the only remaining appeal left in the companys bankruptcy settlement. The chemical maker will now emerge after a 12year stay in bankruptcy. It filed for chapter 11 back in 2001 after an asbestos leak led to lawsuits. Shares to 98. 53. Cal amp posted solid profit in sales and beat analysts estimates when it reported Quarterly Results today. But shares of the Satellite Technology provider tumbled after the company disappointed investors with the weak profit outlook. The Stock Plunged 7 to 25. 63. Baxter is recalling two of its Injectable Solutions after it found particles in the products. The Health Care Company has warned of blockages and organ damage but it says it hasnt received any reports as of yet. Despite the news, baxter shares rose a fraction to 69. 06. And time warner reached a Distribution Deal with viacom just a few days before the old contract was supposed to expire. The deal with viacom which is the parent of nickelodeon and mtv is in sharp contrast to time warners battle with cvs last summer. Youll remember that difficult negotiations led to a blackout of cbs programs on time warners system. Slirs were up a fraction on the news. Time warner cable also rose 1 to 134. 04. As we continue our special week of market monitors, our next guest says if you want to know how the stock market will do in 2014, follow the mood of the American Consumer. Joining us to explain, james lowell, chief Investment Officer of adviser investments. Hi, jim. Nice to have you with us. Great to be here. So tell us about your investment strategy. Whats the connection between the American Consumer and how stocks are going to do in the new year. We pay a lot of attention not to what consumers are saying but what, in fact, they are doing with their money. That has been a bellwether recipe to figure out ways to profit not just, i think, in 2014 but also over the last five years when at any given moment people were writing off the u. S. Consumer. It also has a positive Ripple Effect around the globe. We think were seeing european consumers turn a corner in an earlystage recovery there. And we think if we get earlystage recovery in europe and a midcycle stage recovery in our own economy here, thats going to lift the emerging markets with the worst performing markets in 2013. By focusing on what the consumer is doing, by focusing on what they are buying and where they are buying, we think well be able to figure out ways to profit from it. Thats great. And you have three blue chip stocks that you think are mustowns for 2014. Lets go down them quickly. You have American Express at the top of your list. Tell us why you like it, and at 88, can investors still make money on this . Look at that chart, its really had a great year. Its had a spectacular run this year. It is, though, i think going to still have some success in 2014. Probably not as spectacular as it was in 2013. But i wouldnt be surprised with a 15 gain, it is a direct reflection of not just Consumer Spending but Small Business spending and also the overall lending environment in which it finds itself as increasingly favorable. We think American Express is likely to benefit. Okay, great. You have home depot also on your list. Tell us why you like this. Also it had a good year and its trading at 80 now. One of the reasons we like home depot a lot is that its not just where homeowners go to upgrade or take care of their own home, but its where local builders go to build the one to five houses that they build. And we think we are going to continue to see a housing recovery. We know theres low inventory and pentup demand. The risk, of course, is