>> susie: investors are on earnings watch, but strong results from corporate america may not be enough to help the stock market. >> i think investors are going to focus however on what the

companies have to say about the european debt situation and its effect on the european economies. >> tom: those worries couldn't stop the santa claus rally this year, an optimistic sign for investors. it's "nightly business report" for wednesday, january 4. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by: captioning sponsored by wpbt >> susie: good evening everyone. investors turned cautious today on worries about the three e's: the economy, europe and upcoming earnings. tom, stocks did little on this second trading day of the year. >> tom: susie, it was a big contrast from yesterday's strong rally.

investors were encouraged by today's good numbers on factory orders and auto sales, but stocks pulled back on concerns about the financial health of european banks.

the leader, in case you are wondering, is energy with an expected profit gain of 24%. on the flip side, three industries are expected to post negative growth-- materials, telecom, and utilities. so, with all these cross- currents, what's an investor to do? some analysts say the biggest mistake is to focus exclusively on earnings when picking stocks >> dividends is really the biggest theme of 2012. investors are looking for companies that prove out those earnings by paying out a portion of those in dividends. >> reporter: but there is some good news on the earnings front. although corporate profits are expected to rise about 4% in the first two quarters of the year, the second half is likely to be much stronger. >> we're expecting growth of about 7.5% for the third quarter

and close to 16% in the fourth quarter, so that brings our overall calendar year estimate for 2012 to about 8%, which is still a very respectable number. >> reporter: if she's right, and earnings do rise about 8% this year, that would be about half the gain of last year. so although 2012 may be the year of a mythical creature, it's probably not a year of mythical returns. erika miller, "nightly business report," new york. come as new sources of u.s. energy are feeling an increase in production. energy officials say development of renewable resources and the boom of u.s. share are all driving the potential for u.s. made energy. sylvia hall tonight reports on the outlook for this year's domestic energy. >> reporter: the u.s. imports nine million barrels of crude oil per day. industry experts say we don't have to. in fact, right now the untapped energy supplies in the united states far exceed demand. >> all the oil that has been consumed over the past 100 years

doesn't come anywhere close to what oil is produceable in this country. >> reporter: but still, citizens for affordable energy c.e.o. john hofmeister expects conditions abroad to import volatile energy prices this year as america continues its dependence on foreign oil. just before the new year, iran bumped up prices when it threatened to close the strait of hormuz-- a major mid-east artery for oil tankers. >> i'm expecting a higher price outlook for 2012, unless and until we get an energy policy in this country that really seriously focuses on domestic fuel-- domestic electricity for our use. >> reporter: he says a clear, long-term plan for using american resources would help stabilize prices even as the demand for energy grows. jack gerard of the american petroleum institute blamed politics for the holdup. >> there's a vision of restrained oil and natural gas development that keeps american resources beyond reach, that

puts them on the shelf, missing from the energy equation. >> reporter: a similar vision puts the focus on renewable resources, which can be found in all corners of the united states. advocates say demand for renewables is on the rise and the u.s. should look at energy as a diversified portfolio, with a mix of petroleum and alternative energy. >> americans want more energy choices and they want more of those choices to be clean, renewable energy, whether it's for fueling their cars and light trucks, or whether it's for compressed natural gas in fleet vehicles, or whether it's electricity. >> reporter: but even as demand for renewables rises, experts say oil will drive the american markets this year and years down the road. >> let's be clear. 250 million cars on the road can only use gasoline or diesel. they're going to be on the road for the next 10-20 years, so we're going to need more oil. >> reporter: the discovery of shale is creating a boom for

u.s. oil and gas exploration. just yesterday, french and chinese companies plunged more than $2 billion each into shale extraction in separate moves showing u.s. energy is getting attention worldwide. sylvia hall, "nightly business report," washington. >> susie: gasoline prices didn't hurt auto sales. pent-up demand and improving consumer confidence helped fuel a strong end in december to a super-charged year for the auto industry. auto makers sold about 12.8 million cars and trucks last year-- more than a million more than the year before. as diane eastabrook reports, analysts think u.s. drivers will keep buying this year, but at a more modest pace. the spirit of giving and getting helped auto makers close 2011 with robust vehicle sales. chrysler led the pack in december. its sales soared 37% over the previous year with help from the jeep wrangler. ford followed with a sales increase of 10%, followed by g.m. with a 5% increase. on the import side, volkswagen had a blockbuster month with

sales jumping 36%. but troubles continued at toyota, where sales rose just under 2%. the company's been having trouble getting parts from thailand because of flooding. auto makers made more money in december versus the same time last year. the auto website truecar.com says the average transaction price last month was $30,686. that's a nearly 6% increase over the previous year. the company says consumers were willing to shell out more money for vehicles with better technology and features. analysts think sales will continue to improve this year, but they think it will still be a few more years before they reach the pre-recession levels of 2007. diane eastabrook, "nightly business report," chicago. >> tom: still ahead, from presidential election cycles to santa claus on wall street, market watcher jeff hirsch of the "stock traders almanac" is tonight's "street critique" guest. >> susie: the consumer agency

created by the 2010 dodd-frank financial overhaul finally has a new leader, and it took a so- called "recess appointment" to make it happen. president obama today sidestepped republicans and installed former ohio attorney general richard cordray as the head of the new consumer financial protection agency. senate republicans blocked cordray's confirmation last month. he will serve for at least two years, running the agency that supervises everything from payday loans to credit cards and home mortgages. the president says it means cordray can immediately get down to the business of protecting the american people. >> without a director in place, the consumer watchdog agency we've set up is left without the tools it needs to prevent dishonest mortgage brokers, payday lenders and debt collectors who are taking advantage of consumers.

and that's inexcusable. it's wrong. >> susie: also getting a new job today? scott thompson. the former president of paypal has been tapped to lead yahoo. his challenge? turning around yahoo's core online advertising business. yahoo shares have fallen 13% from their may high, and the shares were down 3% on today's c.e.o. announcement. motley fool senior analyst joe mayger thinks wall street's reaction to scott thompson is short-sighted. >> yahoo's not going to find someone who's an ace on media, turnarounds and technology. i think in the guy they got, they got someone who is a proven guy who's a proven commodity an innovator and right now yahoo does need that different spark. you know, it sounds like they've already made some decisions around the asian assets it sounds like they're going to divest those, and when you take that out of the equation, then it starts to make a lot more sense. >> susie: mayger says investors still holding yahoo stock are counting on the sale of those asian internet businesses.

tom, they could bring in $17 billon. >> tom: that's a big number, certainly considering the current market vasio valuation 9 billion dollars. we had responses as we mentioned earlier. that's roll with tonight's market focus. it was a day of small moves for the major stock indices, holding on to yesterday's sharp rally. you can see just how muted today's trading was by looking at the leading stock sectors. consumer discretionary stocks led the way with only a 0.7% increase. material and industrial stocks also saw gains. despite the strength among consumer discretionary stocks and the decent december auto sales, car dealer auto nation was the biggest loser in the sector. shares fell almost 7%, pushing shares down to their lowest price since their november sell- off. today's drop came on strong volume more than three times its average pace.

but auto parts retailers found buyers. both advance auto parts and auto-zone were up at least 2%. netflix is coming off a very difficult year. it saw subscriber leave after a price hike in the summer and it canceled plans to split the company in two. still, it continues seeing demand for its streaming media business. shares jumped more than 11%. volume more than doubled. netflix subscribers watched more than two billion hours of video through its streaming service in the fourth quarter. meantime, more disney shows like those on a.b.c. and e.s.p.n. will be online for comcast cable subscribers. disney and comcast signed a new 10-year distribution deal, keeping disney channels on comcast cable and expanding disney shows watched online by comcast customers. speaking of watching content, tivo stock shot up 10% after settling its patent infringement fight with at&t. tivo will get $215 million from at&t as well as higher monthly

licensing fees for its digital video recording technology. telecom stocks were among those holding back today's gains. verizon was the biggest drag on the dow industrial index despite reporting it sold a record number of iphones in the fourth quarter. that news did not help shares. they fell more than 1% as some investors expressed concern that profit margins will fall at verizon wireless due to the higher subsidy verizon pays to encourage subscribers to buy smartphones. it's the lack of spending by verizon and at&t on their networks that slashed the share price of telecom equipment maker acme packet. the stock lost a fifth of its value, dropping to a 52-week low. analysts voiced worry about telecom gear spending with at&t's dropped buyout of t- mobile and verizon's labor issues. finally, thanks to the cold snap gripping much of the united states, we saw rallies today in natural gas and orange juice

futures. nat gas reversed some of its recent losses, brought on by record high supplies and a mild winter, at least before this week. today, nat gas jumped more than 4%. the cold weather has dipped into florida, raising worries about the citrus crop. that sent o.j. futures up almost 3%, even though the damage has been described as isolated. and that's tonight's "market focus."

>> tom: it's been more than three years since the federal government took control of fannie mae and freddie mac. the u.s. federal reserve thinks using the mortgage giants may help repair and stabilize the broken housing market, even if those actions cause fannie and freddie to lose more money in the short term. since falling into government conservatorship, the companies have cost taxpayers $151 billion. the federal reserve report to congress released today stopped short of making specific recommendations to fix fannie and freddie. modifications and money are two big forces shaping housing market. tonight, we look at money-- specifically cash. even though mortgage rates are near record-low levels, some buyers with the means, including those from overseas, prefer to pay in cash. after several years of decline, 2011 was a big year for home sales in miami. existing-home sales surged 52% in the first 11 months of the year, according to the national association of realtors. nationwide, home sales were up only 2% during the same time

period. the nice weather helps, but so does cash-- especially foreign cash. >> the number one buyers right now are venezuelans. they're topping the market right now. and brazilians are coming close behind them. and then we have argentina, columbia, and we're seeing more purchases from france and italy, too. >> it was a no-brainer. >> tom: fernand talpe and his wife are french. eight months ago, they paid nearly $2 million in cash for their waterfront home. talpe, a commodities trader, chose miami over brazil when looking to relocate his business. >> at that time, the euro was very strong. i think i bought the house when the euro was at 145 against the dollar, so of course at comparative-- it was still expensive in dollars, but if you compare that with euros, it was a real bargain. >> for foreigners with a strong

currency, which is obviously going to change very soon with the euro which is crashing down, but, no, we bought it already so miami has so much opportunities... >> reporter: buyers across the nation are putting up cold, hard cash. in december, 28% of existing home sales across the country were cash deals, and most of those buyers are investors. they don't plan on living in the homes they're buying. mark pordes manages condominium sales at canyon ranch miami beach, a luxury building on the atlantic ocean. prices range from $300,000 to over $3 million. when it opened in 2008 after the housing collapse, only 20 units were sold. last year, 145 units were bought. >> you are pulling from an international crowd, so you're not just dealing with a local purchaser, so either want to change or upgrade where they live, but you're dealing with people from europe, from south america.

>> tom: and we could see a lot more buyers like fernand talpe if a bipartisan bill in the senate is approved. it would grant foreigners a special type of residence visa if they spend at least $500,000 cash on a home in the u.s.a. >> susie: here's what we're watching for tomorrow: we'll see whether the nation's retailers had a "ho-ho" or "ho- hum" holiday with december retail sales. also tomorrow? the latest on jobless benefit claims. and, from the economy to stocks and bonds, bob doll, chief equity strategist at blackrock, joins us with his ten predictions for 2012. more defense budget cuts are on the horizon. tomorrow, president obama and the pentagon will launch a strategic review of u.s. military spending and they're expected to unveil what's being called a "more realistic" vision for the u.s. military. that vision is expected to include cuts to ground force numbers and a new emphasize on

military investment in asia at a time when china continues its military buildup. >> tom: with defense budget cuts on t way boeing is closing one of its biggest defense plants. the facility in wichita, kansas upgrades and supports military jets and maintains air force one. just over 2,000 workers will lose their jobs when the plant closes. lawmakers from kansas are crying fowl, they say the aerospace giant promised to expand the facility last year after winning a coveted pentagon contract.

>> tom: turns out there is a santa claus, and he visited wall street. over the past five trading session of last year and the first two of this year, the s&p 500 is up more than 1%. tonight's "street critique" guest keeps track of these types of market phenomena. jeffrey hirsch is editor-in- chief of the "stock traders almanac." with us tonight. happy new year, welcome to the program. >> happy new year to you too. thanks for having me. >> tom: what kind of predictions can we draw for 2012 due to the visitation of santa claus. >> actually santa showed up at the new year and it's the

beginning, the first positive sign of the year. and it's a bit of sigh of relief but some indicators we will be looking at the first five days is the barometer. generally when santa claus shows up on wall street we get that rally over a seven day period. it's a good sign that forces, seasonal sphoarsz ar forces areg allowed to permeate and negatives aren't necessarily as bad as they might have been. >> tom: jeff, what do we expect usually after a flat year and more so after a flat year for the markets into an election year? >> well you know, are this has only happened about 11 times since the s&p started. the following years are more positive than you'd expect. there are two losses, so it doesn't really imply anything negative even during the election year. so we're not concerned. you don't really have back to back flat years. and most of the time it's followed by about eight of the 11 times by positive years. so we're looking for that not to

be a factor. >> tom: sounds like some pretty good odds then for 2012 are for some stock gammons. you like xle around $70 per share. where do you like energy stocks. >> well you know, it's the global economy as bad as everyone says it is and there's so much trouble out there and ask oil's already really high. what happens when the global economy picks up a little bit and/or something, you know, sinister happens in iran or something in hot oil, i think that would push it up higher. i think the energy needs of the planet are still increasing. it's just a bit of a lull. >> tom: that's the oil trade on energy. you even like nat gas specifically and you're peeling that off with the first trust index fund. an exchange traded fund scg. net gas supplies we know are at record level. demand has been muted because of the mild winter weather at least before this week.

>> it's been down for a long long time and you know, i think there's also some pick up there especially if oil goes up people switch over to natural gas. and it's just so cheap and it's been down so long that i think the longer term prospects especially for this year are good. both of these are in the seasonal bullish period. oil starts in december and goes through july and natural gas picks up in february. we'll be looking to get into that and any sort of difficult and that runs into june. you're looking at the heating and cooling season. >> tom: speaking of which jeff do you have positions yourself in these two etf's. >> i do have both of those in my personal mfl. streetcritique@nbr.com. our guest this evening "street critique, jeff hirsch with the "stock traders almanac." >> susie: in the "money file" tonight, priceless advice for new grads and young adults. here's manisha thakor, co-author of "on my own two feet: a modern girl's guide to personal finance." >> as a financial fellow at my undergraduate alma mater, wellesley college, i recently

hosted a panel discussion for students called "powerful women and their pocketbooks." speakers were graduates from the 1960s, '70s, '80s, and '90s. i was struck by how similar our tips were, despite our very different ages, career choices, and life experiences. the top three pieces of advice every one of us gave to recent college grads were: one: learn to live within your means right out of the gate and understand that means your life likely won't look like mom and dad's right away. two: bow down and respect the incredible power of compounding. start saving right out of school no matter how hard it hurts and how unpleasant the tradeoffs. three: be an advocate for your own financial security, whether in the workplace or on the home front. so if you have a young grad in your life, i'd like to ask you a favor. please share with them some of your best and worst financial moves. the more intergenerational dialogue we have about the basics of personal finance, the better off this country will be. i'm manisha thakor. >> susie: and finally, new york

city has a big new year's resolution. it wants to attract over 50 million visitors this year! 50.2 million people made their way to the big apple last year, and this year the city hopes to top that by at least 2%. the strong euro has been a key driver of new york tourism, but with the eurozone likely headed for recession, a cheap euro could keep more international tourists at home. tom, all those visitors add up. tourism brought in $32 billion last year and supported 320,000 jobs here in the big apple. >> tom: pretty impressive. explains why it's so tough to find a cab on a friday night. this is nightly business report for this wednesday night, january 4th. thank for joining us. i'm tom hudson. have a great evening, susie. >> susie: i'm susie gharib. thanks for watching everyone. we hope to see all of you again right here tomorrow night. "nightly business report" is made possible by:

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