Tech rally offsets retail, housing weakness

Wall Street came back from Christmas and liked what it saw from technology and energy but didn't care for the news on retailing and housing.

The result was small gains overall. The Nasdaq Composite Index closed up 11 points to 2,724. The index has risen for six straight sessions. The Nasdaq-100 Index moved up 8 points to 2,137.

The Dow Jones industrials rose 2 points to 13,552, and the Standard & Poor's 500 Index added 1 point to 1,498.

Apple (AAPL, news, msgs) got almost too much attention. The stock topped $200 a share for the first time in the early afternoon, but there was so much excitement over the move that profit-taking set in, and the shares fell back on the day to a small gain to $198.95.

Still, the stock is up about a third since hitting a low in early November and is up 135% on the year.

What pushed the stock today was continued momentum from strong sales for the iPod and iPhone and a report from Amazon.com (AMZN, news, msgs) that Macintosh computers were among the Web site's top-selling items this holiday season.

Amazon.com itself was up 2% to $92.85, and Google (GOOG, news, msgs) was up 1.4% to $710.84, adding nearly 2 points to the Nasdaq-100. The Nasdaq-100 percentage leader today was Baidu.com (BIDU, news, msgs), one of China's largest Internet search engines, up 5% to $399.67.

Meanwhile, energy shares pushed higher as crude oil jumped about 2% to $95.97. Crude had hit a high of $96.54 a barrel before falling back. Crude's gain for the day was spurred by Turkish attacks on Kurdish rebels in northern Iraq and supply disruptions in Nigeria.

ExxonMobil (XOM, news, msgs) was a big beneficiary of that move, rising 1.2% to $94.75. The Amex Oil Index ($XOI.X) was up more than 1% to 1,577. And the Philadelphia Oil Service Sector Index ($OSX.X) jumped 1.5% to 308.

Bad news, part 1: Housing

For all the strength in tech land, there were two big weights on the market.

First, the housing market is worsening, according to a national survey of home-price trends released today.

The Standard & Poor's/Case-Shiller Home Price Index showed single-family homes prices in the 10 biggest markets fell 6.7% between October 2006 and October 2007, breaking the record of 6.3%, set in April 1991. In the top 20 markets, the decline was 6.1%.

The savagery of the pullback is most evident in Miami, down 12.4%, Tampa, Fla., down 11.8%, Phoenix, down 10.6%, and Las Vegas, down 10.7%. All had seen sharp increases in the early part of the decade until overbuilding set in. No market, however, is now immune to the pullback. Seattle, Portland, Ore., and Charlotte, N.C., saw their indexes fall slightly from August to September and from September to October. All three still are showing modest price gains between October 2006 and October 2007.

• Video: Home prices fall

Prices will continue to fall as record foreclosures put even more homes on the market while stricter lending rules make financing tougher to get. Declining values also pose a risk to consumer spending by making it harder for owners to tap home equity for extra cash.

"You are likely to see more people giving up on their loans as they end up with little or no equity in their homes," Ariel Reinhart, an economist at JPMorgan Chase, told Bloomberg News. "It's one more factor that weighs on the path of consumption."

Housing stocks were mixed on the news. Ryland (RYL, news, msgs) rose nearly 2% to $28.78, but KB Home (KBH, news, msgs) was down 1.4% to $23.31.

Bad news, part 2: Weak holiday sales

Investors dumped a who's who of retail stocks today after initial reports suggested the results of the holiday sales season were modestly higher at best.

Macy's (M, news, msgs) was down 3.9% to $25.95. Nordstrom (JWN, news, msgs) fell 3% to $36.54, and Circuit City (CC, news, msgs) was down nearly 6.3% to $4.64, the worst performer among S&P 500 stocks.

The sector turned lower on Target's (TGT, news, msgs) report that its December sales appeared to be close to flat; earlier, the chain had forecast a 3% to 5% increase at stores open at least one year.

Target shares were down 2.5% to $51.16 today.

Total holiday sales in the U.S., excluding automobiles, rose 3.6% from 2006 levels, according to MasterCard's (MA, news, msgs) SpendingPulse -- which tracked sales from "Black Friday," the day after Thanksgiving, to midnight Monday. Earlier forecasts had seen holiday retail sales growing 3.5% to 4.5% over last year.

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Excluding gasoline, sales rose only 2.4%.

Target now expects same-store sales this month to fall in a range from a 1% decline to a gain of only 1%. An increase in visits to Target stores in the week ending Dec. 22 "was not sufficient to compensate for the unfavorable traffic trends that carried over into December from the week following Thanksgiving,'' the company said on a recorded call.

Target blamed rising fuel prices for the weaker outlook. The mixed results from retailers are causing some worry about the overall economy and a slowdown in consumer spending.

Still, some retailers were merry about their holiday results. Costco Wholesale (COST, news, msgs) has had "pretty good" holiday sales so far, the company told The Wall Street Journal.

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"Items that were strong were high-end chocolate gift packs and high-end nut gifts packs," Costco Chief Financial Officer Richard Galanti told the newspaper. "All of our seasonal gift packs sold through pretty well."

But shares of Costco were down 0.2% to $70.59.

Today will be the No. 6 holiday shopping day this season, ShopperTrak predicts, with many retailers opening early to lure shoppers looking for bargains. MasterCard was off 1.2% to $209.48.

Energy prices -- New York close

	Wed.	Mon.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$95.97	$94.13	$1.84	8.18%	57.20%
Heating oil (per gallon)	$2.6412	$2.5947	$0.0465	4.41%	65.29%
Natural gas (per million BTU)	$7.0460	$7.0250	$0.0210	-3.51%	11.86%
Unleaded gasoline (per gallon)	$2.4526	$2.3840	$0.0686	8.57%	53.09%

Merrill investor buys stake in MBIA

Arizona mutual funds manager Davis Selected Advisers raised its stake in MBIA (MBI, news, msgs) to 5.1%, a vote of confidence in the largest U.S. bond insurer, which is trying to raise capital to save its vital AAA credit rating.

The news sent MBIA's shares soaring 11% to $22.41 and gave a lift to other companies in the sector.

• Talk back: How should I invest a $25,000 year-end bonus?

Shares of rival Ambac Financial (ABK, news, msgs) rose 13% to $20.14.

On Monday, Davis agreed to buy $1.2 billion in newly issued common stock in Merrill Lynch (MER, news, msgs), which like other banks and financial institutions has sought new capital after taking billions of dollars in write-downs linked to the subprime mortgage crisis and credit crunch.

Buffett adds to Berkshire Hathaway

Warren Buffett did his Christmas shopping in heavy industry. On Tuesday, Buffett announced that his Berkshire Hathaway (BRK.A, news, msgs) had bought 60% of Marmon Holdings for $4.5 million.

• Video: More on Buffett's Christmas purchase

Marmon Holdings is an industrial conglomerate owned by members of the Pritzker family in Chicago. Its businesses include water-treatment equipment and wire and cable, among others.

Buffett plans to buy the rest of the company over the next several years. Berkshire Hathaway shares were up slightly today to $138,500.

Amazon's top sellers

Amazon.com said that Hewlett-Packard's (HPQ, news, msgs) Pavilion Entertainment Notebook PC and Garmin's (GRMN, news, msgs) line of global positioning systems were all hot items from the period from Nov. 15 through Dec. 19.

DVDs that made Amazon's top-selling list included "Harry Potter and the Order of the Phoenix" and "Pirates of the Caribbean: At World's End."

Top sellers in books included "Eat, Pray, Love" by Elizabeth Gilbert, "The Dangerous Book for Boys" by Conn Iggulden and Hal Iggulden, and "I Am America (And So Can You)" by Stephen Colbert.

Amazon.com sold enough Hannah Montana wigs to outfit the entire audience at her Dec. 20 show in Providence, R.I.

FedEx boosts prices

FedEx (FDX, news, msgs) said today that it is increasing freight rates by 5.5% starting Jan. 14.

The rate increases are for freight and long-haul, less-than-truckload units.

The shipping company had previously announced that it will boost regular ground-package-delivery prices by 4.9%; that rate increase will take effect on Jan. 7.

Shares of FedEx were up 0.9% to $92.91.

Toyota sales goal rises

Japanese automaker Toyota Motor (TM, news, msgs) is aiming to sell 9.85 million vehicles next year, a 5% jump from 2007, the company announced Tuesday.

Toyota had previously forecast 2008 sales of 9.8 million vehicles.

• Video: The year 2007 in stocks

Toyota has been edging out U.S. automaker General Motors (GM, news, msgs) in the race for worldwide car sales.

GM has held the top spot for 76 years, but Toyota took the title in the first half of 2007. For the full year, GM has said it expects to sell about 9.26 million vehicles, while Toyota expects to sell 9.36 million vehicles.

Shares of Toyota were up 1.3% to $108.69 in New York today. GM shares dropped 2 cents to $26.52.

Flat-screen-TV deal

Three Japanese electronics makers are teaming up to collaborate in the liquid crystal display (LCD) industry.

Matsushita (MC, news, msgs), Hitachi (HIT, news, msgs) and Canon (CAJ, news, msgs) announced a deal Tuesday in which the three companies would "merge their strengths to accelerate the development of cutting-edge display technologies and expand their scope of application," they said in a press release.

The three companies likely will use their alliance to get further into the organic light-emitting display (OLED) televisions -- which are currently too expensive for the consumer market. The technology is used to make ultrathin televisions. Shares of all three companies were up today in New York.

Short hits from the markets -- 4 p.m. ET

	Wed.	Mon.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	3.225%	3.200%	0.025	5.05%	-33.98%
5-year Treasury note yield	3.707%	3.633%	0.074	8.46%	-21.14%
10-year Treasury note yield	4.281%	4.212%	0.069	7.78%	-9.11%
30-year Treasury bond yield	4.686%	4.618%	0.068	6.43%	-2.74%
Currencies
U.S. Dollar Index	77.175	77.560	-0.385	1.30%	-7.04%
British pound in U.S. dollars	$1.9849	$1.9782	0.0067	-3.51%	1.29%
U.S. dollar in British pounds	£0.5038	£0.5055	-0.0017	3.64%	-1.27%
Euro in U.S. dollars	1.4495	1.4405	0.0090	-1.10%	9.81%
U.S. dollar in euros	€ 0.6899	€ 0.6942	-0.0043	1.11%	-8.94%
U.S. dollar in yen	114.31	114.33	-0.02	3.02%	-3.96%
U.S. dollar in Canadian dollars	$0.982	$0.985	-0.004	-1.78%	-15.75%
Canadian dollar in U.S. dollars	$1.020	$1.015	0.005	1.84%	18.84%
Commodities
Gold	$829.50	$816.50	$13.00	5.12%	30.02%
Copper	$3.1700	$3.1535	$0.016	-0.46%	10.41%
Silver	$14.8350	$14.8350	$0.18	4.73%	13.34%
Crude oil (NYMEX) (per barrel)	$95.97	$94.13	$1.84	8.18%	57.20%

By Elizabeth Strott and Charley Blaine