THREE MORE POSITIVE SIGNS FOR THE ECONOMY
The University of Michigan’s initial May consumer sentiment survey came in at 83.7 – its highest level since July 2007, 7.3 points above the final April mark. After falling 0.2% for March, the Conference Board’s index of U.S. leading indicators rose 0.6% for April. Census Bureau data showed retail sales ticking up 0.1% in April and 3.7% in the past year.

HOUSING STARTS PLUNGE, BUILDING PERMITS SOAR
While the year-over-year increase was 13.1%, housing starts plummeted 16.5% in April, largely due to a 37.8% drop in apartment starts. On the other hand, last month brought a 14.3% rise in building permits … marked by a 40.6% jump in permits for apartment construction.

BULLS KEEP RUNNING
The S&P 500 is now on a 4-week winning streak. It rose another 1.98% last week to settle at 1,666.12 Friday. Complementing that 5-day gain, the NASDAQ went +1.82% last week while the DJIA went +1.56%; at Friday’s closing bell, the NASDAQ settled at 3,498.97 and the Dow at 15,354.40. A truly impressive factoid: the NASDAQ and S&P have gained 1% or more in each of the past four weeks.

FED RAMPS UP ITS FINANCIAL SCRUTINY
Federal Reserve chairman Ben Bernanke said Friday that the central bank was now keeping close tabs on the “shadow banking” sector that bred the toxic assets associated with the last credit crisis. At the Chicago Fed’s banking conference, he noted that “careful monitoring for signs of emerging vulnerabilities” constituted “probably our best defense against complacency during extended periods of calm”. In widening its oversight, the Fed is also watching asset markets, consumers and businesses for signs of systemic risk in addition to banks.

OIL MOVES HIGHER, GOLD LOSES GROUND
COMEX gold retreated 1.76% last week, and that was mirrored by silver’s 1.25% weekly loss; the dollar gained 1.25% across five days. NYMEX crude rose 0.45% for the week. At Friday’s close, oil settled at $96.04 and gold at $1,443.30.

ANOTHER WEEK OF GAINS, MORE ALL-TIME HIGHS
The Dow went +0.97% last week to close at 15,118.49 Friday – a record high. The S&P 500 gained 1.19% last week to settle at another all-time peak of 1,633.70 Friday. After a 1.72% weekly gain, the NASDAQ ended Friday’s trading session at 3,436.58.

CONSUMER SPENDING, OUTLOOK IMPROVE
Household spending increased 0.2% in March, the Commerce Department noted – part of a broader 3.2% advance for the first quarter. The Conference Board’s April consumer confidence index soared 6.2 points to 69.1, far exceeding the 61.0 consensus forecast of economists polled by Bloomberg.

STRONG SIGNALS OF A HOUSING COMEBACK
Home equity is definitely being restored: the latest 20-city S&P/Case-Shiller Home Price Index (February) shows a 9.3% year-over-year increase, the largest annual gain recorded in six years. The National Association of Realtors reported a 1.5% March gain in its pending home sales index, with the yearly gain at 7.0%.

IS MANUFACTURING COOLING DOWN?
The Institute for Supply Management’s April factory index came in at 50.7 last week, the weakest reading in nine months and down from 0.6 from March. ISM’s April service sector index also declined 1.3 points off the March reading of 53.1.

S&P TOPS 1,600, FED REASSURES INVESTORS
Last week brought major gains for the Dow (+1.78% to 14,973.96), S&P 500 (+2.03% to 1,614.42) and NASDAQ (+3.03% to 3,378.63). On May 1, the Federal Reserve said it would keep buying $85 billion in bonds per month for the near future, noting that the pace of asset purchases could even increase if needed.

EXISTING HOME SALES FALL; NEW HOME SALES RISE
While March brought a 0.6% dip in residential resales, the National Association of Realtors also noted the 10.3% gain in the pace of home buying from a year before. The Census Bureau reported a 1.5% gain in new home sales last month, with the year-over-year improvement in the sales pace at 18.5%.

CONSUMERS GROW MORE POSITIVE AS APRIL ENDS
Economists polled by Reuters had forecast April’s final consumer sentiment reading from the University of Michigan to rise mildly to 73.2. Instead, it jumped to 76.4. That was still underneath the final March mark of 78.6.

STOCKS KEEP ADVANCING
Across a volatile week, the Dow went +1.13% to settle at 14,712.55 Friday. The NASDAQ (+2.28% to 3,279.26) and S&P 500 (+1.74% to 1,582.24) also improved. At Friday’s close, about half of S&P 500 companies had reported quarterly results; just 42% had surpassed revenue forecasts, but 69% had beaten earnings expectations.

SURPRISE DIP FOR LEADING INDICATORS
After six straight months of advances, the Conference Board’s index of leading indicators unexpectedly retreated 0.1% for March. It had risen 0.5% across January and February. As for anecdotal evidence of the economy’s health, the latest Fed Beige Book noted “moderate” expansion, adding that household spending “grew modestly” even with the payroll tax hike and higher gas prices.

HOUSING STARTS UP 7.0% IN MARCH
The Commerce Department noted that they reached a 1.04 million annual rate last month, a pace last seen in June 2008. While single-family projects dipped 4.8% in March, apartment starts jumped 31.0% to their highest level since January 2006.

VOLATILITY KEEPS STOCKS IN CHECK
The CBOE VIX rose 24.13% last week, and the DJIA (-2.14% to 14,547.51), NASDAQ (-2.70% to 3,206.06) and S&P 500 (-2.11% to 1,555.25) basically gave back the gains realized from April 8-12. NYMEX crude lost 3.1% last week to settle Friday at $88.01; COMEX gold fell another 7.1% last week to $1,395.60 at Friday’s close.

CONSUMER SENTIMENT SLIPS
The University of Michigan’s overall index of consumer sentiment came in at 72.3 in its preliminary April reading – down significantly from the final March mark of 78.6. Last month’s imposed federal budget cuts may have had an effect.

PRODUCER PRICE INDEX DOWN 0.6%
Cheap gasoline was the big factor. Economists polled by Reuters had forecast a 0.2% retreat in the PPI for March, but the decline in pump prices made more of an impact. Core PPI (with food and energy costs subtracted) rose 0.2% last month.

GOLD ENTERS A BEAR MARKET
Friday, the precious metal settled at $1,501.40 on the COMEX after a 4.1% one-day plunge. Futures fell 4.7% across last week. The April 12 settlement price was 20.5% below the record close of $1,888.70 notched on August 22, 2011.

STOCKS CLIMB 2% IN A WEEK
Unfazed by soft economic indicators, Wall Street was in a buying mood last week. After a 2.29% gain in five days left the S&P 500 at 1,588.85 at Friday’s close, investors wondered if the index would top 1,600 soon. The Dow (+2.06% to 14,865.06), NASDAQ (+2.84% to 3,294.95) and Russell 2000 (+2.12% to 942.85) all advanced impressively on the week.

ISM: BUSINESS ACTIVITY SLOWED IN MARCH
In another disconcerting development, the Institute for Supply Management’s manufacturing and service sector PMIs both retreated last month. ISM’s manufacturing PMI fell to 51.3 from the previous 54.2, while its non-manufacturing PMI dipped 1.6 points to 54.4. On the upside, the Commerce Department did note a 3.0% rise in factory orders in February.

OIL & GOLD MOVE LOWER FOR THE WEEK
NYMEX crude settled at $92.70 a barrel Friday, representing a 4.7% five-day loss. COMEX gold gained 1.5% Friday to end the week at $1,575.90 an ounce but still slipped 1.2% last week.

CAUTION ON WALL STREET
The jobs report and North Korea’s ongoing threats gave investors pause last week, and so the Dow (-0.09% to 14,565.25), NASDAQ (-1.95% to 3,203.86) and S&P 500 (-1.01% to 1,553.28) all lost ground. Still, it was only the second down week in the past seven for the Dow.

CONSUMER POLLS TELL DIFFERENT STORIES
The University of Michigan’s final consumer sentiment survey for March came in at 78.6, improving by a full point from the end of February. The Conference Board’s March survey of consumer confidence presented a strikingly different result: it dropped to 59.7 from February’s 68.0 mark. The CB said the sequester had a negative influence, while the University of Michigan cited stock market highs, March’s lower gas prices and the housing recovery as positive factors.

SMALLER INVENTORY MAY HAVE CURBED HOME SALES
New home sales fell 4.6% in February, according to the Census Bureau; the National Association of Realtors noted a 0.4% decline in pending home sales for that month. Reduced inventory appears to have been a factor. The January S&P/Case-Shiller Home Price Index showed a one-month gain of 1.0%.

FINAL Q4 GDP +0.4%; HARD GOODS ORDERS JUMP
This last estimate from the Commerce Department still makes Q4 2012 growth the smallest in any quarter since 2011. More big ticket items were ordered in February: durable goods orders soared 5.7% in that month after falling 3.8% in January.

A RECORD CLOSE FOR THE S&P 500
A terrific quarter wrapped up Thursday with the S&P settling at 1,569.19, the Dow at 14,578.54 and the NASDAQ at 3,267.52. March was the fifth straight positive month for both the S&P and NASDAQ. Last week’s gains: Dow, 0.46%; NASDAQ, 0.69%; S&P, 0.79%. Gold ended the quarter at $1,595.70, losing 4.8% in three months; oil settled Thursday at $97.23, rising 5.9% in the quarter.

ANOTHER GAIN FOR THE CONFERENCE BOARD LEI
Seemingly reflective of the economy’s momentum, the Conference Board’s Leading Economic Index advanced for a third straight month. Its 0.5% February gain comes on the heels of an 0.5% rise in January and an 0.4% improvement in December.

FED WILL KEEP EASING FOR THE NEAR FUTURE
Last week, Federal Reserve Chairman Ben Bernanke said that the central bank would keep up its monthly bond-buying effort until the economy showed more than “temporary improvement,” while noting that it might soon vary the size of those purchases in response to the pace of job growth. Bernanke reaffirmed that interest rates will stay at historic lows unless the jobless rate dips below 6.5%.

RALLY WANES AS CYPRUS CRISIS BUILDS
On March 19, the Cypriot government turned down a European Central Bank offer to rescue its banking system. (The plan would have taxed depositors.) So the Dow lost 0.01% last week, the S&P 500 0.24% and the NASDAQ 0.13%. Friday, the Dow closed at 14,512.03, the S&P at 1,556.89 and the NASDAQ at 3,245.00. On the NYMEX, gold wrapped up the week at $1,607.10 and oil at $93.91.

NO SURPRISE: HIGHER GAS PRICES PROMPT CPI GAIN
February’s 0.7% gain in the Consumer Price Index was heavily influenced by the rising cost of fuel – minus food and energy costs, the core CPI rose just 0.2%. The Labor Department also reported a 0.7% rise in the Producer Price Index last month, compared with 0.2% for January.

MORTGAGE RATES HIT A 7-MONTH PEAK
In its March 14 national survey, Freddie Mac estimated the average interest rate on a conventional 30-year home loan at 3.63% (the highest since August). Average rates for 15-year fixed mortgages were at 2.79%.

HOUSEHOLD CONFIDENCE FLAGS
The University of Michigan’s preliminary March survey of consumer sentiment fell to 71.8, down 5.8 points from its final February mark. This was the lowest reading since December 2011.

DOW LOGS FOURTH STRAIGHT WEEKLY ADVANCE
The DJIA rose 0.81% from March 11-15, settling Friday at 14,514.11. (A down Friday broke a 10-day winning streak for the index.) The S&P 500 (+0.61% to 1,560.70) posted its third straight weekly gain, as did the NASDAQ (+0.14% to 3,249.07). Gold settled Friday at $1,591.30 on the COMEX, oil at $93.58 on the NYMEX.

KEY INDEX SHOWS HEALTHY SERVICE SECTOR
The Institute for Supply Management’s non-manufacturing PMI came in at 56.0 for February – the best reading in 12 months, up from 55.2 in January. ISM noted a 3.8% increase in new orders, a 5.5% rise in backlogs of orders and a 3.7% gain in prices last month.

BEIGE BOOK ENCOURAGES, BUT FACTORY ORDERS DIP
The Federal Reserve’s latest “Beige Book” survey of economic conditions noted modest growth in most of its 12 districts since January, with increased hiring a major factor. Last week, the Commerce Department reported a 1.2% rise in wholesale inventories and a 2.0% drop in factory orders for January.

MORE HISTORY IS MADE
A 2.18% weekly gain brought the DJIA to a new record close of 14,397.07 Friday. The S&P 500 (+2.17% to 1,551.18), NASDAQ (+2.35% to 3,244.37) and Russell 2000 (+3.04% to 942.50) also had terrific weeks. As for the CBOE VIX, it dropped 17.84% in five days to finish last week at 12.62. Gold ended the week at $1,577.7o per ounce on the COMEX, oil at $91.88 a barrel on the NYMEX.

TERRIFIC REAL ESTATE DATA HELPS BUOY STOCKS
New home buying accelerated 16% in January – the biggest monthly rise in almost 20 years, according to the Commerce Department. Pending home sales rose 4.5% in January, the National Association of Realtors said; that was far above the 1.0% gain forecast by economists polled by Briefing.com. Finally, the December edition of the S&P/Case-Shiller Home Price Index showed a 6.8% yearly gain across 20 metro markets, bettering November’s 5.5% impressive annualized increase.

MANUFACTURING PMI RISES IN FEBRUARY
The Institute for Supply Management’s manufacturing PMI improved 1.1% in February to 54.2. While the Commerce Department noted a 5.2% overall retreat in durable goods orders in January (the first decline in four months), new orders rose 1.9% when the volatile transportation category was factored out.

CONSUMER CONFIDENCE & SPENDING HOLD UP
The Conference Board’s February consumer confidence poll soared to 69.0 from January’s 58.4 mark, and the University of Michigan’s final February consumer sentiment survey came in at 77.6, topping the Reuters consensus forecast of 76.3. The federal government revised Q4 GDP north slightly to +0.1% last week; consumer spending rose 0.2% in January, even as consumer incomes fell 3.6%.

NO CHANGE IN CPI, BUT PRODUCER PRICES ADVANCE
The Consumer Price Index was flat for a second straight month in January, with annualized inflation at just 1.6%. Core CPI (minus food and energy prices) advanced 0.3%, however – the biggest monthly gain since May 2011. The Producer Price Index rose 0.2% in January, with overall yearly wholesale inflation at 1.4%.

SEQUESTRATION SEEMS IMMINENT
On March 1, $85 billion in federal budget cuts are set to occur – and with Congress on recess last week, not much more than talk emerged about delaying them further. Friday, President Obama said he did not believe that the cuts were “inevitable” and commented that “this is not a smart way for us to reduce the deficit”. At the end of last week, no bipartisan effort to reschedule them was underway.

STOCKS STAGE FIRST WEEKLY RETREAT OF 2013
Pronounced volatility returned to Wall Street last week due to earnings surprises and the January Federal Reserve policy meeting minutes, which raised concerns over the longevity of QE3. How did the key indices do last week? The numbers: Dow, +0.13% to 14,000.57; S&P 500, -0.28% to 1,515.60; NASDAQ, -0.95% to 3,161.82.

CONSUMERS REGAIN SOME OPTIMISM
January’s preliminary consumer sentiment index from the University of Michigan showed real improvement – an increase of 2.5 points to a three-month peak of 76.3. Economists polled by Bloomberg had expected a reading of 74.8. The index averaged just 64.2 during the 2007-2009 recession.

GOLD FALLS $26 IN A DAY
The precious metal slipped 1.6% Friday and 3.4% for the week to a Friday close of $1,609.50 on the COMEX, recovering a bit from an intraday dip under $1,600. NYMEX crude futures eked out a 0.1% weekly gain, settling at $95.86 Friday.

S&P 500 ADVANCES FOR A SEVENTH STRAIGHT WEEK
When was the last time the S&P started a year with a seven-week win streak? 1967. That achievement aside, it hasn’t had a winning streak this long in more than two years. The S&P gained 0.12% across five trading days to settle at 1,519.79 Friday, while the Dow saw its second straight weekly retreat (-0.08% to 13,981.76) and the NASDAQ (-0.06% to 3,192.03) also logged a slight weekly decline. The CBOE VIX ended the week at 12.46.

ISM SERVICES REPORT SHOWS SUSTAINED GROWTH
The U.S. service sector expanded at a marginally slower pace in January, according to the Institute for Supply Management’s non-manufacturing index. The January reading of 55.2 wasn’t much removed from the December reading of 55.7, and indicated steadiness in non-manufacturing activity.

OBAMA ASKS CONGRESS TO POSTPONE BUDGET CUTS
Last week, the President asked Capitol Hill lawmakers to “pass a smaller package of spending cuts and tax reforms that would delay the economically damaging effects of the sequester for a few more months.” Some analysts think Democrats will push to end tax breaks for energy firms in an effort to generate more revenue and stave off deeper cuts planned for March 1. Senate Minority Leader Mitch McConnell (R-KY) commented that “raising taxes on private jets or energy companies” amounted to “gimmicks” in lieu of “real solutions” to reducing the deficit.

NASDAQ SETTLES AT 12-YEAR PEAK
The tech-heavy index closed at 3,193.87 Friday, up 0.46% across five trading days. The S&P 500 gained 0.31% last week, settling Friday at 1,517.93. Yet the week was mixed, with the Dow pulling back 0.12% to close at 13,992.97  Friday. On the COMEX, oil ended the week at $96.40, gold at $1,668.80. Gas prices averaged $3.57 a gallon on Friday in AAA’s survey; that was nearly a four-month peak.

EXAMINING CONSUMER BAROMETERS
According to the Commerce Department, personal spending rose 0.2% in December while personal incomes rose 2.6% (thanks in part to dividends being issued ahead of the fiscal cliff). The savings rate hit 6.5%, a 43-month high; after-tax incomes improved 2.8%. Elsewhere, while the Conference Board’s January consumer confidence survey plunged 8.1 points to a 14-month low of 58.6, the University of Michigan’s final January consumer sentiment poll improved 0.9 points to 73.8.

GDP WANES; HOME PRICES, MANUFACTURING PERK UP
The economy contracted 0.1% in the past quarter, according to the initial estimate of the Bureau of Labor Statistics. Analysts termed it an anomaly, with reduced defense spending a big factor. The Institute for Supply Management’s January PMI showed an impressive gain of 2.9% to 53.1. November’s Case-Shiller Home Price Index revealed an overall 5.5% year-over-year improvement; the National Association of Realtors reported a 4.3% decline in pending home sales in December.

DOW ENDS WEEK AT 14,009.79
Friday’s close was within 200 points of the index’s 2007 peak. The Dow gained 0.82% last week, while the NASDAQ advanced 0.93% (to 3,179.10) and the S&P 500 gained 0.68% (to 1,513.17).

Last month, existing home sales slumped 1.0% and new home sales tumbled 7.3%. Year-over-year numbers, however, remain hugely positive. Residential resales improved 12.8% in 2012, with December’s median single-family home price up 11.5% from a year before to $180,300. New home sales rose 19.9% last year, representing the first annual increase since 2005 and the best year since 1983.

HOUSE VOTES TO EXTEND DEBT CEILING

The House of Representatives voted 285-144 last week to suspend the current limit on federal borrowing through May 18, in a measure demanding that both houses of Congress approve a budget by April 15 or work for free. The Senate  is expected to pass the bill this week, a formality en route to President Obama’s signature.

LEADING INDEX RISES 0.5%

The gain in the Conference Board’s Index of Leading Economic Indicators matched the expectations of analysts polled by Dow Jones Newswires. The 0.2% November retreat in the index was revised upward to show no change.

S&P 500 SETTLES ABOVE 1,500

Rising 0.54% in five days, the index ended the week at 1,502.96, its highest close since December 2007. Friday afternoon, the blue chips were on track for their best January since 1989: the Dow rose 0.51% on the week to settle at 13,895.98 Friday. The NASDAQ went +0.62% last week to close Friday at 3,149.71. Oil ended the week at $95.88, gold at $1,656.60.

Friday, House GOP leaders announced a new proposal to authorize a three-month extension of federal government borrowing authority. House Majority Leader Eric Cantor (R-VA) summed up the plan in four words: “No budget, no pay.” Under the terms of the proposed legislation, members of Congress would end up working for free if they failed to approve a federal budget by April 15. The GOP still wants major spending cuts as a condition of any long-term debt limit increase.

NO MONTHLY CHANGE IN CONSUMER PRICE INDEX

December’s CPI was flat, with core CPI rising only 0.1%. A 2.3% dip in gas prices helped, even as food prices rose 0.2%. The overall Producer Price Index posted a 0.2% decline for a third straight month. Inflation was tame in 2012: the CPI advanced only 1.7% last year compared to 3.0% for 2011, while the PPI rose just 1.3% for its smallest annual increase since 2008.

RETAIL SALES STRONG IN DECEMBER

The Census Bureau notes that they increased 0.5% last month, bringing the yearly advance to 4.7%. Purchases made through non-store retailers rose 12.6% in 2012.

CONSUMER SENTIMENT DECLINES

The University of Michigan’s preliminary January consumer sentiment index came in at 71.3 Friday, well under the 75.0 consensus forecast of economists surveyed by Reuters. This represents a 13-month low.

STOCKS REACH A 5-YEAR PEAK

After a 0.95% weekly advance, the S&P 500 settled at 1,485.98 Friday.  The DJIA (+1.20% to 13,649.70) and NASDAQ (+0.29% to 3,134.71) also extended their win streaks. On the COMEX Friday, gold settled at $1,687.00, oil at $95.56.

Singles earning more than $200,000 and couples earning more than $250,000 will face a 3.8% Medicare surtax and a 0.9% increase in Medicare payroll tax. Tax rates on dividends and long-term capital gains remain at 15% for most, but have risen to 20% for the wealthiest. A scheduled 2% cut to Medicare spending has been delayed until at least March. Social Security recipients will see benefits rise 1.7% this year.

HUGE CHANGES AHEAD FOR HOME LOANS

Last week, the Consumer Financial Protection Bureau presented new rules for the mortgage industry – rules that will ban teaser-rate mortgages and “liar loans” in 2014. Next year, no legal protection will be available for banks offering interest-only or negative-amortization loans, and restrictions will prevent lenders from originating mortgages with balloon payments and severe upfront points and fees. Banks will also be barred from offering mortgages with a payment-to-income ratio exceeding 43%, though FHA/VA loans or mortgages backed by Fannie Mae or Freddie Mac could be exempt from this restriction.

JACK LEW NOMINATED FOR TREASURY SECRETARY

The former hedge fund manager and current White House chief of staff has strong ties to Wall Street, which worries some members of Congress. Still, opposition to the nomination does not seem to be widespread. If confirmed, Lew could start his new job in late January, when Timothy Geithner is slated to leave the post.

A SECOND STRAIGHT WINNING WEEK

The S&P 500 settled at 1,472.05 Friday, up 0.38% in five trading days. The Dow rose 0.40% last week to 13,488.43, while the NASDAQ gained 0.77% to settle at 3,125.63. The CBOE VIX fell 3.33% on the week to go -25.80% YTD.

Employers added 155,000 jobs in December. The encouraging news is that non-farm payrolls continued to expand while businesses fretted about the fiscal cliff. The discouraging news is that December’s job growth roughly approximated that seen in September, October and November – and at the current pace, it would take about seven years to bring the jobless rate down to prerecession levels. The Labor Department reported 7.8% unemployment in December.

MAJOR TAX LAW CHANGES PASSED IN CONGRESS

As a result of the fiscal cliff deal approved on Capitol Hill last week, the top marginal tax rate was raised to 39.6% and the top estate tax rate was hiked to 40%. While the Bush-era tax cuts were preserved permanently for individuals with taxable incomes of $400,000 or less and couples with incomes of $450,000 or less, the payroll tax holiday came to an end. The Alternative Minimum Tax was permanently patched, long-term jobless benefits were extended through the end of the year, and dividend and capital gains taxes were given a new 20% ceiling.

ISM GAUGES BOTH RISE

U.S. manufacturing and service sectors both expanded last month, according to the purchasing manager indices released by the Institute for Supply Management. ISM’s manufacturing PMI rose from 49.5 to 50.7 in December; its service sector index increased to 56.1 from November’s 54.7 reading.

CONFIDENCE GROWS, STOCKS SOAR

Wall Street saw fantastic gains last week. Across four market days, the S&P 500 climbed 4.57% to 1,466.47, the NASDAQ jumped 4.66% to 3,101.66 and the Dow rose 3.84% to 13,435.21. The CBOE VIX ended the week below 14 after its largest weekly drop since 1987. On the NYMEX, gold ended last week at $1,657.90 while oil wrapped up the week at a settlement price of $93.19..

After a bipartisan meeting failed to produce a deal to avert the fiscal cliff, President Obama had a terse message for Congress Friday evening: if the Senate couldn’t come up with a new proposal during the weekend, he would urge its leaders to arrange a simple up-or-down vote on a small-scale fix, a bill that would extend long-term jobless benefits into 2013 and sustain the Bush-era tax cuts for those earning $250,000 or less. “I’m optimistic we may still be able to reach an agreement that can pass both houses in time,” the President noted Friday. That certainly contrasted with Senate Majority Leader Harry Reid’s view of prospects for a deal last Thursday: “I don’t know timewise how it can happen now.”

UNSURPRISINGLY, CONSUMER CONFIDENCE WANES

Worries over the fiscal cliff presumably factored into the big December drop in the Conference Board’s Consumer Confidence Index. It tumbled down to 65.1 from November’s 71.5 mark, declining for a second consecutive month.

HOME SALES, HOME PRICES IMPROVE

New home sales rose 4.4% in November, according to the Census Bureau; the National Association of Realtors announced a 1.7% gain in pending home sales for that month. These increases took new home sales and pending home sales to their highest levels since April 2010. October’s S&P/Case-Shiller Home Price Index came out last week and showed prices up 4.3% overall from a year before.

S&P 500 GIVES BACK ITS DECEMBER GAINS

The S&P slipped 1.94% last week to 1,402.43 as doubts over a fiscal cliff deal mounted. The NASDAQ dropped 2.01% last week to settle at 2,960.31 Friday; the DJIA slipped 1.92% in five days to end the week at 12,938.11. As for the CBOE VIX, it closed above 22 on Friday. On the NYMEX, oil gained 2.4% last week to a Friday close of $90.80 a barrel; gold futures lost 0.3% on the week to settle Friday at $1,656.30 an ounce.

Hopes for a fiscal cliff deal dwindled last week as the “Plan B” proposal backed by House Speaker John Boehner failed to attract enough support. Friday, President Obama urged lawmakers to craft a smaller-scale bill that could at least protect long-term jobless benefits and sustain the Bush-era tax cuts for Americans making $250,000 or less. The “Plan B” bill proposed a tax hike for those making more than $1 million; the President has proposed raising taxes on those with incomes of $400,000 or greater. Negotiations resume this week; House Minority Leader Nancy Pelosi believes that “there’s still a chance” of a deal happening before 2013.

BIG ANNUAL GAINS IN HOME SALES, HOUSING STARTS

Existing home sales rose 5.9% in November, according to the National Association of Realtors; they were up 14.5% from a year before. While housing starts fell 3.0% last month, the Census Bureau noted a 21.6% yearly gain in the indicator. November also saw a 3.6% rise in building permits, with the annual gain at 26.8%.

MORE SPENDING, LESS OPTIMISM

Consumer spending advanced 0.4% in November, rebounding after a 0.1% retreat in October. The Bureau of Economic Analysis also cited a 0.6% gain in personal incomes last month. However, December’s final consumer sentiment survey from the University of Michigan hit a five-month low of 72.9, down 1.6% from November.

HARD GOODS ORDERS TOP EXPECTATIONS

Durable goods orders rose 0.7% in November, the Census Bureau noted. Economists polled by MarketWatch had expected only a 0.1% overall gain.

AS CLIFF TALKS STALL, STOCKS MANAGE TO RISE

The S&P 500 rose 1.17% last week even with uncertainty lingering on Wall Street. It settled Friday at 1,430.15. The NASDAQ (+1.67% to 3,021.21) and Dow (+0.43% to 13,190.84) also advanced across the last full trading week of 2012. Gold ended the week at just $1,660.10 an ounce on the COMEX after a $14.20 Friday gain. NYMEX crude settled at $88.66 per barrel Friday.

With gasoline costs falling 7.4% in November and energy costs dipping 4.1% on the whole, it is hardly a surprise that the federal government’s Consumer Price Index fell 0.3% last month – its first decline since May. Core consumer prices rose 0.1%. The Producer Price Index also retreated 0.8% in November. In the past 12 months, America has seen 1.8% overall consumer inflation and 1.5% overall wholesale inflation. In AAA’s December 13 survey, unleaded gasoline was averaging $3.29 per gallon nationally – down 68¢ from its 2012 peak.

IF JOBLESS RATE HITS 6.5%, FED MIGHT RAISE RATES

In a remarkably specific policy announcement, the Federal Reserve’s Open Market Committee said that the central bank would keep interest rates at historic lows “at least as long” as unemployment exceeds 6.5% and inflation is projected at 2.5% or less. If the jobless rate continues to fall as it has since July, the Fed could end up adjusting rates prior to 2015. The central bank also said it will buy more debt – it will purchase $45 billion of Treasury bonds per month starting in January.

RETAIL SALES IMPROVE 0.3%

November’s increase was a nice rebound from the 0.3% slip the Commerce Department had reported for October. Economists surveyed by Bloomberg had projected a November gain of 0.5%, however.

STOCKS LOSE GROUND, NO PROGRESS IN WASHINGTON

Major stock indices declined last week as follows: S&P 500, -0.32% to 1,413.58; NASDAQ, -0.23% to 2,971.33; DJIA, -0.15% to 13,135.01. While President Obama and House Speaker John Boehner met privately last Thursday, there was no sign of a fiscal cliff deal emerging in the nation’s capital. Oil settled Friday at $86.73, and gold settled Friday at $1,697.00.

Non-farm payrolls expanded by 146,000 positions in November. Economists polled by Reuters had expected only 93,000 new jobs because of the impact of Superstorm Sandy. Yet while the jobless rate dipped to 7.7% last month, it was largely because fewer people sought work; the labor force participation rate was 63.6%, scraping an all-time low. The economy has added an average of 151,000 jobs a month in 2012, about 25% less than the growth needed to dramatically reduce unemployment.

SENTIMENT INDEX SLIPS

The fiscal cliff issue and ferocious weather may have been big factors in the sudden 8.2% drop in the University of Michigan’s consumer sentiment index. November’s 74.5 preliminary reading was far from the number (82.7) that economists surveyed by Reuters had forecast.

MANUFACTURING CONTRACTS

For November, the Institute for Supply Management gauged service sector expansion and manufacturing sector contraction. ISM’s manufacturing index fell to 49.5 for the month, down from 51.7 in October. The non-manufacturing index was at 54.7, improved from October’s 54.2 mark.

MIXED WEEK FOR STOCKS, NO PROGRESS AT THE CLIFF

With the fiscal cliff less than four weeks away, neither Democrats nor Republicans were citing any compromise on tax rates on Capitol Hill (though the idea of setting the top federal tax bracket at 37% rather than 39.6% had emerged). House Speaker John Boehner said that the White House had “wasted another week” due to the Obama administration’s stubbornness; House Democratic leader Nancy Pelosi felt that the Republican leadership was just as inflexible. The major index performance for the week: Dow, +0.99% to 13,155.13; NASDAQ, -1.07% to 2,978.04; S&P 500, +0.13% to 1,418.07. Oil ended the week at just $85.93 a barrel on the NYMEX and gold settled Friday at $1,705.50 an ounce on the COMEX.

Personal spending decreased 0.2% in October, the first monthly retreat since June, possibly attributable to Superstorm Sandy. (Consumer spending dipped 0.3% when adjusted for inflation.) Personal income was flat in October for the first time since April. Even so, November’s Conference Board index of consumer confidence measured 73.7, a 57-month high. The Bureau of Economic Analysis revised Q3 GDP up to 2.7%, although federal spending and restocking of goods were the major factors in the quarter’s improved output.

ANOTHER ROUND OF POSITIVE HOUSING NEWS

New home sales have increased 17.2% in the last 12 months, even with a 0.3% retreat in October. In addition to that news from the Census Bureau, the latest edition of the S&P/Case-Shiller Home Price Index showed home values in the third quarter rising 3.6% from Q3 2011. The National Association of Realtors reported a 5.2% jump in its pending home sales index in October, which at 104.8 reached its highest point since March 2007.

BUSINESSES KEEP PURCHASING AS CLIFF NEARS

Durable goods orders were flat in October, but they rose 1.5% minus transportation orders. Increasing orders for electrical components (+4.1%), computers (+0.9%) and machinery (+2.9%) showed confidence on the part of companies.

NEGOTIATIONS STALL, BUT STOCKS ADVANCE

Even with very little progress in the fiscal cliff talks in Washington, the S&P 500 managed a 0.50% gain last week to reach 1,416.25 at the closing bell on Friday. The NASDAQ (+1.46% to 3,010.24) and Dow (+0.12% to 13,025.04) also advanced last week. The NASDAQ and S&P respectively gained 1.11% and 0.29% in November; the DJIA, on the other hand, slipped 0.55% on the month. Gold closed Friday at $1,710.90; oil settled Friday at $88.91.