Confidence Boost

The markets surely needed a lift and they got one today from the Conference Board, which reported their Consumer Confidence Index for December at 110.3 , the highest level since May of 2002.

The mostly upbeat report was tempered by the coincident Expectations Index, which declined to 94.5 from 96.3. Included in the report was the statement:

"This month's slight increase in confidence was solely the result of an improvement in the Present Situation Index, fueled primarily by a more favorable job market," says Lynn Franco, Director of The Conference Board Consumer Research Center. "Looking ahead, however, consumers are not as optimistic as they were in December. All in all, the Index suggests a moderate improvement in the pace of growth in early 2007."

Wall Street responded on cue, with the three major indices jumping well into positive territory around 11:00. Highs for the day were reached at that early point, with trading for the rest of the session vacillating in a narrow range.

The Dow gained 32.53 points; the NASDAQ was up 7.55; the S&P 500 added 8.20.

High among the anxiety points were corporate earnings, which for the most part had been lackluster. The prevailing mood wasn't helped much by Dow component 3M (MMM), which reported 4th quarter profits of $1.57 per share, including 47 cents from the sale of its drug business and 4 cents a share of stock option expenses.

With the quarter essentially in line, what spooked investors was the outlook from the conglomerate, calling for 2007 earnings between 4.60 and 4.75 per share, well below Wall Street's outlook of 4.99. Shares of 3M took a 5% hit on the day.

Drug maker Merck (MRK) also disappointed, posting 4th quarter earnings of just 22 cents, as opposed to 51 cents in the year-ago period. The company included charges of 7 cents for restructuring and 21 cents for the purchase of a small biotech company, Sirna Therapeutics. Shares lost 60 cents, or 1.6% on the day.

What had to have been the biggest move of the day was in the energy sector. Continued cold weather and an announcement of production cuts from an OPEC minister sent oil higher by $2.96 to close at $56.97. Natural gas rose 80 cents, or 12% to $7.74 per 1000 btu.

Not surprisingly, stocks in the energy sector led all others on the day. Breadth was solidly on the plus side, with gainers swamping losers nearly 2-1.

The Federal Open Market Committee (FOMC) releases guidance tomorrow after 2:30 and is widely expected to announce no change in interest rates, a stance they have held since August of 2006.