>> susie: with the stroke of a pen-- an extension of tax cuts for all becomes law. >> in fact, not only will middle-class americans avoid a tax increase, but tens of millions of americans will start the new year off right by opening their first paycheck to see that it's actually larger than the one they get right now. >> tom: the changes start january 1. what you can expect to see on that first check in 2011. you're watching "nightly business report" for friday, december 17. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:

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>> susie: good evening, everyone. american workers today got an early christmas present from uncle sam: lower taxes! tom, president obama signed today the sweeping tax bill into law. >> tom: susie, the signing came just a day after the house of representatives voted in favor of the $858 billion bill. the president said this is relief that's going to help families pay their bills. >> over the course of 2011, 155 million workers will receive tax relief from the new payroll tax cut included in this bill, about $1,000 for the average family. this is real money that's going to make a real difference in people's lives. >> susie: meanwhile, the incoming house speaker john boehner says he's glad congress extended the bush tax cuts. but he still doesn't think the bill will be enough to jump-start the economy. he says americans will continue to be uncertain about growing their businesses, until the government makes the tax cuts

permanent. so while he voted for the legislation, boehner says congress still has lots to do. >> it's a good first step, but if we actually want to help get our economy back on track and to begin creating jobs, we need to end the job killing spending binge, we need to cut spending significantly, and we need to provide more certainty to small businesses around america. >> susie: now that the tax cut is a done deal, what can you expect? for starters, workers will see a boost in their paychecks, thanks to a tax break on what they pay into social security. usually, workers pay 6.2% of their wages for social security. under the new tax agreement, they will pay just 4.2%. that's a 2% break. so if you make $50,000, you'll get an extra $1,000 a year. that works out to $20 more in your weekly paycheck.

and there are additional savings now that congress extended the bush era tax cuts-- keeping income tax rates the same as today. for that person making $50,000 a year, there's another $1,000 in savings. all these changes kick in on january first. but you might not see the changes in your first paycheck of the new year. it might take a few weeks for your employer to re-program its payroll systems. >> tom: here are the stories in tonight's n.b.r. newswheel: stocks end the day mixed. the dow fell seven points, but the nasdaq rose five points and the s&p 500 added a point. volume was very heavy with options and futures expiring today, driving up trading activity. two billion shares traded on the big board, just under three billion on the nasdaq. ireland's bond rating was downgraded today by moody's blaming ireland's ailing banks. while ireland's rating remains investment grade, it's now just three notches above junk. meanwhile, the international

monetary fund today said the irish government needs to do more to cut its budget. the securities and exchange commission is expanding its investigation into the nation's foreclosure crisis. the agency has subpoenaed all of these big banks for information on the companies they hired to oversee the process of packaging home loans into mortgage backed securities. earlier this year, the regulator focused on foreclosure document practices at many of these banks. >> susie: still ahead, there's a new spirit of compromise on capitol hill and tonight's market monitor says that bodes well for stock gains in the new year. he's duncan richardson of eaton vance. >> tom: it's not quite time for ho-ho-ho or kisses under the mistletoe. still, investors are already celebrating, as it looks like the u.s. stock market will end the year with a healthy gain. but, does it make sense to be buying anything other than gifts for under the tree in the next few weeks? suzanne pratt reports. >> reporter: in just a week,

santa claus will make his midnight run around the world. but, on wall and broad streets he's already showed up. the santa claus rally, which usually happens in the last week of the year, came early to u.s. stocks. since the december began, the dow is up 4%, the s&p 500 has gained 5% and the nasdaq has tacked on 6%. investors may be tempted to catch a last minute ride on santa's coattails. even "usa today" today urged investors to get into the stock market. but is it really a good idea to be buying stocks now with just a few trading days left in the year? nyse floor trader jonathan corpina says yup. in fact, he's bet lunch with a colleague that the dow will cross 11,600 by year end. >> i actually think in the next two weeks that we're going to continue to see the market rally. next week is a short week, holiday week, not a lot of traders in. that means low volume, high volatility. if the market continues and it wants to continue to move

higher. we're going to see that magnified a little bit. >> reporter: but, other market pros worry about more financial troubles in europe and about higher interest rates. as a result, they say investors may be better off postponing stock purchases until after the new year. market strategist stephen wood says besides there are few catalysts that could push stocks higher before year-end. >> we've got a lot of what the market expected priced in already. so you've got the tax cut which has already happened, that's now at the president's desk. you've got the corporate earnings story which is winding down. also, you've got the stimulus qe2 from the federal reserve. >> reporter: for investors who steer clear of stocks in the next few weeks, it's important to note that most experts are still optimistic about the market in 2011. suzanne pratt, "nightly business report," new york. >> susie: speaking of santa claus, just seven shopping days left until christmas. and today, could be the best day to point, click and buy. it's the third annual free shipping day.

at more than 1,700 stores the cost of sending your items is on the house. if your shopping is done, but you haven't shipped your gifts, time is running out. it was a busier than normal day at fed ex. the company says today is the deadline to send packages by ground with guaranteed delivery before christmas. >> tom: there is a big struggle going on in cyberspace and shopping malls as we head into the last weekend before christmas. will shoppers spend or will retailers cut prices? brad wilson runs bradsdeals.com- - an online coupon and price tracking website. he joins us from the nasdaq. brad, welcome to nightly business report. >> tom, thanks for having me on. >> tom: how successful have retailers been avoiding discounting ahead of this coming weekend? >> retailers have been successful in the last week or two avoiding discounts. they were much more aggressive in november and over thanksgiving weekend and black friday. prices came up 21% or so as far as i can tell in the last few

weeks. and i think they're going to have to move back towards that -- you know, the last-minute on the 22nd and the 23rd and the week between craft and new years. >> tom: you mentioned the price increase you have seen since black friday. you looked at the most popular black friday advertisements and the prices, this 32-inch l.c.d. television at wal-mart, was under $200 on black friday and recently under $300. lots of flexibility in these kinds of prices, huh? >> that's the norm, really. we saw the retailers were a little insecure about the holiday season, and they were very aggressive coming out of the gate. november was a very strong month by almost any metric with retail sales. there are a little more comfortable, and, you know, they've raised their prices a bit. they're also assuming that a lot of us are going to shop right now regardless, so the deals are certainly a little less than before. and then i think, you know--. >> tom: we did hear from the best buy and it warned

competitors were cutting into its partly because of televisions like the one we saw. are retailers making any money on tvs? >> the success we're seeing in retail right now is from the top down, and that means wal-mart and amazon mainly target-- even best buy. you think best buy is big, but they're clearly a victim of wal-mart being incredibly competitive, the great example being the 32-inch flat screen tv for under $200. that's an all-time low price by a wide margin, and i think best buy and anyone smaller than best buy is certainly feeling the effects of that. >> tom: fs more than just electronics. you also looked at jewelry on black friday. kohls advertising a sterling silver heart diamond pendant, almost $100. recently it was $200. the price doubled. again, supply-demand. sort this out for us as we look at this last week of shopping. >> so the reality is, especially with online shopping. this is the biggest week for online shopping so the retailers know that people are going to be shopping. they can pull back a little bit

and really not take much of a chance as far as bringing in sales. in november, earlier in the season, they're worried about whether people are going to come out, whether they're going to come out early. they were much more aggressive. you know, there really is a supply and demand thing. they're insecure about the demand early on. they're more comfortable with it right now and prices reflect that. >> tom: do you anticipate prices to reflect as we move closer to christmas and after christmas a drop down to the black friday levels. >> you will see the retailers start to get insecure about inventory and getting things off their books, getting revenue right before the end of the year. and the last few days and the week between christmas and new years traditionally have been incredible times to shop. and i expect that to be no different this year sgloom brad, we appreciate the insight. brad wilson, he runs bradsdeals.com.

>> the blue chips finished the day down here se new york stock exchange, but if you broaden it out and look at the last couple of weeks, the dow has been up every week, adding something like 400 points for the month of december, a gain of more than 3.5%. >> tom: no difference for this week, either, susie. it was a week of small moves but they added up to levels we haven't seen in the last couple of years. let's take a look at tonight's market focus. >> tom: it was a bit of choppy week for the major stock indices, but they were able to hit new post-recession highs this week.

the dow industrials rallied three of the past five sessions for a total weekly gain seven- tenths of a percent. the nasdaq is two-tenths of a percent higher tonight compared to a week ago. and the s&p 500 added three- tenths of a percent this week. the s&p 500 and the nasdaq are both at more than two year highs tonight. today's gains were driven by steel stocks thanks to optimism about international business. here's the market vectors steel exchange traded fund. it has broken out to its highest price since early september of 2008. allegheny technologies led the sector up more than 7%. it received a titanium order from saudi arabia. that helped titanium metals and a.k. steel. each of these rallies coming on strong volume today. the steel business is just part of the materials sector. here is the broader materials exchange traded fund. in the past 90 sessions, the

materials fund is up almost 20% as confidence in the global economy has improved. another sign the banking industry is improving, regional bank marshall and ilsely has buyout offer from bank of montreal. many analysts have been expecting buyouts given the troubles some banks have had. this is a stock for stock deal valued at just over $4 billion. based on last night's closing price, it values m&i at $7.75 per share and expands bank of montreal's presence in america's midwest. m&i is based in milwaukee. m&i shares jumped 18% on the offer, but remain well below the implied buyout price. it has struggled due to its real estate loan portfolio. as part of the deal, bank of montreal will repay the more than one and a half billion dollars m&i received from the tarp bailout. british-based drug maker astra- zeneca still has not been able to get the u.s. okay for its blood thinning drug.

like many big name branded drug makers, astra-zeneca has been racing to blunt the impact of expiring drug patents. this drug's failure to get into the u.s. has investors worried. a.z.n. shares fell 6% on heavy volume. this brings the stock down to its lowest price since late june. but drug maker intermune had better luck with european drug regulators. a panel in europe endorsed intermune's application to for a drug to treat a rare lung disease. it has been a wild ride for intermune shareholders. the stock popped in march when an f.d.a. panel recommended the medicine. but the stock fell when the full f.d.a. said no. today, it exploded with a 144% gain. but that still doesn't take it to its april high. there were several new stocks coming to market, before the full brunt of the holidays hits next week. swift transportation was the biggest of the i.p.o.s, raising more than $800 million.

it is a trucking company. shares started at $11 and remain close to that tonight. fleet-cor technologies began at $23. it operates payment networks using charge cards for employees and their company cars. it has had a nice rally. i-soft-stone likely is the latest china-based company to go public in the u.s. this year. it is an i.t. services firm. isoft came out at $13 and has rallied. and that's tonight's market focus. >> susie: the biggest settlement ever today in the bernard madoff ponzi case.

the trustee recovering money for his victims reached a settlement of more than $7 billion. that's the largest forfeiture in u.s. history. the money comes from the estate of jeffrey picower-- a longtime friend and investor with madoff. the u.s. attorney in charge of the case called the settlement a game-changer for people who lost money in the scheme. >> this settlement provides a significant measure of hope for the many victims of bernard madoff's horrific crimes. crimes which judge denny chin described as extraordinarily evil. this settlement is the most substantial effort to date to make the madoff victims whole. >> susie: today's settlement brings the total amount collected to nearly $10 billion. investors lost twice that amount. >> tom: here's what we're watching for next week: our market monitor guest is closed-end fund expert thomas j. herzfeld.

he's president of thomas j. herzfeld advisors. we'll also see the november reports on new and existing home sales. monday, with corporate coffers fat with cash these days, does it pay to buy dividend stocks? we get the outlook for dividends in 2011. >> susie: arizona and nevada sued bank of america today-- accusing the nation's largest bank of misleading consumers about home loan modifications. arizona also accused the bank of reneging on a settlement a year ago that ended a fraud investigation into mortgage operations at countrywide. nevada says the bank promised borrowers help with loan modifications but never delivered. bank of america says it's disappointed with the lawsuits. both states are among those with the highest levels of foreclosures. >> tom: general motors today recalled some of its newest crossover vehicles for seatbelt trouble. the automaker says the anchor part of the buckle could break in a crash, increasing the risk of injury. the recall affects 2011 models of the cadillac s.r.x., chevrolet equinox and the g.m.c.

terrain. customers are being asked to bring them back to their dealer for repair. >> tom: confidence, compromise and cash will conspire for stock investors next year. that's the forecast from tonight's market monitor. duncan richardson is chief

equity investment officer at eaton vance management. he joins us this evening from boston. duncan, welcome back to nightly business report. >> happy holidays, tom. thank you for having me back. >> tom: let's talk compromise first. i'm guessing you're talking about the compromise on capitol hill. wthe tack bill. why could that pay dividends for shareholders. >> nobody seemed to be happy about the bill in washington, but investors should be really happy about it. there are a lot of gifts in there. for one, it ensures that part of the economy is going to stay on track, but, two, it allows for investors to take advantage of the differential in capital gains rates. particularly important for income investors. and that's one of the most important things for an investor to consider. >> tom: locks in the lower rates for dividends that we've seen over the past several years. what about confidence? does that compromise play into

confidence next year? >> yeah. i actually think that getting some things done in washington is a good thing, probably good for the dollar. the-- there's at least less uncertainty. and that will give confidence to corporate board rooms to maybe spend some of that cash that they have on the balance sheets to start more capital spending, to also start more hiring. >> tom: the cash idea, and you mentioned the corporate spending. what about cash on the sidelines or that are in other investments? do you see that moving boat equity markets, into stocks? >> one of the things that happened with the passage of the bill and also with qed, is interest rates are rising and that has implications on where people should hold their assets. we've been of the mind that too much money is sitting in cash. there's certainly cash on corporate bbs sheets but there's also money that's moved into what whathad been perceived as safe assets-- government treasury bonds, the 10-year bond has been quite low. we think that that money actually may come out in a rising rate environment and may

seek out other assets, in particular the stock market. >> tom: let's take a look at your previous picks. you were here back in the late spring, may 21, you liked the health care sector, and again we're using these exchange-traded funds for demonstration purposes only of your sector ideas, but health care up about 10%. technology up 17%. the market has kept pace with technology, but health care has been a lagger. >> yeah, we still like it. i think it's going to take some time. there's a lot to like there in terms of the dividend and some of the larger cap companies. it's been a bit of a mixed market. some of the biotech companies have done quite well there. so we're still encouraged that the demographic argument and the relative chief valuation of the stocks will be productive going in order. >> tom: let's pull out the technology e.t.f. for demonstration purposes on your affinity towards technology. x.l.k. is what we're using here. it's had a nice rice rooiz. we saw the oracle and research

in motion earnings. alep has been at an all-time high. what's the driver? what's the catalyst? >> i actually think there's lots of good news to come. there are tremendously large product cycles and of the audience, whatever percentage has an apple ipad or similar device is very small in relation to the number of people that want one and i think that growth is going to be tremendous going forward. in technology in particular, it's a growth area of the market that we think is not getting much of a premium at all. we think in a rising rate environment that premium might expand and particularly if we have slower overall economic growth. a company that can actually grow their earnings in excess of the economy will be given a premium multiple and that's a good place for investors. >> tom: you also like financials but not banks, necessarily. you like insurance. here's insurance, the et"f," kie. give us 20 seconds on what separates insurance from the rest of finance? >> all of finance has been a bit of a sleeper. there is still a lot of uncertainty there, maybe some

more clarity from congress will end-- and the rule making will clear up the big part of the financials but one area we particularly like is insurance. some of these trends i talked about, the interest rate environment, the rising equity market is very positive for insurance companies' earnings. they've taken a lot of reservations and we think as those come back out they're going to show better-than-expected earnings gain and they're selling very cheap relative to their historical valuation. we think there's a lot to like. >> tom: how about disclosures, duncan? >> we don't own any of the etfs but certainly have a lot of technology stocks, lots of health care stocks, and lots of insurance stocks in our fund. >> tom: there he is, our market monitor this week, duncan richardson from eaton vance. >> susie: and finally, with a week to go before christmas, toy sales are everywhere! but a one-of-a-kind toy hit the auction block here in new york city. this three-foot replica of the ill-fated lusitania ocean liner sold for just under $195,000 this afternoon at sotheby's

auction house. malcolm forbes paid a mere $29,000 for it in 1983. tom, the auction was a collection of rare and valuable toys that belonged to forbes that also included a handmade monopoly game from 1933. the auction was a collection of rare and value tools that belonged to malcolm forbes. it include a handmade monopoly game from 1933 and that went for $146,000. >> tom: what is that a park place and baltic avenue and maybe a reading railroad? that's about it these days considering inflation the last 26 years. >> suzanne: that's still a good deal sdplom that's nightly business report this friday evening, december 17. thanks for joining us. have a great weekend. i'm tom hudson. have a good one, susie. >> suzanne: tom i have hope you have a great weekend. i'm gar. i'm susie gharib.

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