Spain Inspires Confidence (GIS, RHT, CCL, T, BTX, XSELY)

Stocks posted a huge rally on positive news out of Europe and strong housing starts in the U.S. Spain had a successful bond auction that saw interest rates on its three-month bonds plunge to 1.74% from 5.1% in its last auction in November. Germany, meanwhile, saw consumer confidence remain steady, coming in above expectations. Back in the U.S., housing starts were very strong, led by a greater than 25% jump in multi-home (i.e., apartments) construction. Overall, we continue to remain cautious, but we are a little more confident given that the market is becoming more comfortable with the steps Spain has taken to improve its fiscal problems.

We also want to wish all our Jewish subscribers a Happy Hanukkah!

The Stem Cell Stocks Index was the top performing tickerspy Index on the day, led by BioTime (BTX) with a 27% gain. The Chinese Advertising Stocks Index was the day’s worst performing tickerspy Index, with Xinhua Sports Entertainment (XSELY) down -45%.

Stocks soared on the day, with the Dow climbing 337 points to 12,104. The S&P jumped 36 points to 1,241, while the Nasdaq surged 81 points to 2,604. Oil rose $3.34 to $97.22 a barrel, while gold advanced $20.90 to $1,617.60 an ounce.

In economic news, the Commerce Department said housing starts jumped 9.3% to a seasonally adjusted annual rate of 685,000 units in November. That’s good for the best reading since April 2010 and easily topped the reading of 635,000 economists expected.

In earnings news, shares of General Mills (GIS), the second-largest U.S. food company, fell -0.8% after the company said its fiscal second-quarter profit dropped -28% to $444.8 million, or 67 cents per share, from $613.9 million, or 92 cents per share, a year earlier. On an adjusted basis, the company earned 76 cents per share. Revenue increased 14% to $4.62 billion. Analysts had expected a profit of 79 cents on sales of $4.6 billion. The company still expects a full-year profit of $2.59-$2.61. Analysts were expecting $2.61 a share. Fifty-one pros counted General Mills among their top holdings at the end of Q3 and more than 500 tickerspy members own the stock in their portfolios.

Shares of software maker Red Hat (RHT) plunged -8.9% after the company’s billing growth of 22.8% was shy of the 23.5% analyst consensus. For its fiscal third-quarter, the company reported a profit of $38.2 million, or 19 cents a share, compared with $26.0 million, or 13 cents a share, a year earlier. On an adjusted basis, the company earned 28 cents a share on revenue of $290.0 million. Analysts had expected a profit of 26 cents on revenue of $289.6 million. Nine pros counted Red Hat among their top holdings at the end of Q3 and more than 200 tickerspy members own the stock in their portfolios.

Cruise line operator Carnival (CCL) reported a fiscal fourth-quarter profit of $217 million, or 28 cents per share, compared with $248 million, or 31 cents a share, a year earlier. Revenue rose 6% to $3.7 billion. The company also forecast a fiscal 2012 profit of $2.55-$2.85 a share compared with the $2.78 analysts were expecting. Carnival expects an adjusted fiscal first-quarter profit of 6-10 cents. Shares of Carnival edged down -0.2%.

Telecom giant AT&T (T) said it’s dropping its $39 billion bid to acquire T-Mobile USA due to regulatory opposition. If the deal had gone through, AT&T would have become the largest provider of wireless service in the U.S. AT&T will have to pay T-Mobile owner Deutsche Telekom a record $4 billion break-up fee this quarter. The stock rose 1.3%.

Tags: BTX, CCL, GIS, RHT, T, XSELY