Traders' One Hope for December

The boost to stocks as European Union officials endorsed the $115 billion debt bailout has proved short-lived. The euro has weakened, the dollar strengthened (to a 2-month high), and most major bourses in Europe are down about 1 percent after being up overnight. European banks like Deutsche Bank and Credit Suisse are down 1 to 3 percent.

Retail sales did well over the Black Friday weekend, but discounts were a major incentive: "select brands were more concerned about market share than margin," one analyst at Susquehanna wrote. Electronic sales were strong, especially mobile phone sales, though there were plenty of reports of heavy discounting on LCD TVs.

Still, some are getting more optimistic. FedEx upgraded to Outperform at Credit Suisse, with 12-month price target raised to $111 from $98; the firm says "Global Growth is Re-Accelerating," global industrial production is rebounding, and less-than-truckload pricing is improving.

American Eagle was upgraded to buy from hold at Janney Capital, the firm noting that a strong Black Friday and controlled inventory should result in upward earnings revisions.

Dollar General removed from Best Ideas list at Morgan Stanley after hitting a 52-week high last week.

Many traders feel the best chance for a December boost to stocks is an extension of the Bush tax cuts for everyone; most analysts continue to expect the cuts to be extended for at least one, and possibly two years. Regardless, government spending will be constrained next year, since the spending increases due to the stimulus package will be ending.

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