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The S&P 500 Standards Are Slipping

Futures moved to the highs of the day as November durable good and personal spending was not quite as bad as expected.

Elsewhere:

1) Financials lower in Europe, following a five-day downtrend in the U.S.

2) Commodities: with the dismal home sales figures yesterday, it's little wonder that copper prices have hit four-year lows. Oil and aluminum remains in the same 4-year low territory.

3) With mortgage rates hovering around 5 percent, applications to refinance mortgages rose 62 percent, the highest level since July 2003 (although the MBA does not weed out multiple applications). Applications to purchase homes, however, rose only 10.6 percent, so lower rates are still only having a small effect on purchases.

4) More sign of the times: three retailers have gone under in the U.K. in the past 24 hours: Zavvi (which was formed just 15 months ago from the Virgin Megastore division), men's wear retailer The Officers Club, and tea and coffee retailer Whittard of Chelsea.

5) The S&P 500: standards are slipping. With all those financial mergers, it's time for those companies who merged to come out of the S&P 500, and new companies to come in. On December 31:

1) Utility SCANA Corp. will replace Merrill Lynch ;

2) Glass container maker Owens-Illinois Inc. will replace Wachovia ;

3) Thermal imaging and electronics firm FLIR Systems Inc. will replace National City Corp. .

Notice two things: 1) none of the replacements are financial firms, and 2) all three of the firms going in have market caps below $4 billion. That used to mean they were small caps and ineligible for inclusion.

Not any more. Due to the market decline, there are now 115 issues below $3 billion in the S&P 500. The old dividing line for inclusion in the S&P 500 was $5 billion. That was reduced to $4 billion in September, then knocked down to $3 billion about a week ago, which was the only way these firms got in.

    • Jobless Claims Surge By 30,000 to 26-Week High

- The Dow 30 at a Glance

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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