U.S. MARKET AVERAGES

U.S. stock averages advanced Tuesday, boosted by strong productivity data which helped inflation worries ease and robust retail and technology stocks like Apple and Sears Holding. Currently all 3 major U.S. equity indices are showing gains of nearly 0.6%.

A sharp jump in industrial productivity, the biggest surge in two years, lifted market sentiment today. Investors welcomed data, released by the Labor Department that the third-quarter productivity rose 4.7 %o versus the summer. This news helped labor costs go lower, easing fears of inflation on Wall Street.

The semiconductor sector recovered from yesterday’s profit-taking, approaching a high set last week. The computer hardware sector was also strong, advancing by 1.6%.

Apple (AAPL: chart) advanced on a positive analyst comment, extending its 52-week high. Adobe Systems (ADBE: chart) extended last-week gains, setting a fresh peak. AMR (AMR: chart) reached a new high as well, ticking above recent resistance.

ConAgra (CAG: chart) fell on earnings guidance, dropping to a new 52-week low. Comstock Homebuilding Companies (CHCI: chart) dropped after releasing new fourth-quarter guidance. The stock extended its low.

In corporate news, Time Warner Inc.''s talks with Microsoft Corp. and Google Inc about a number of possible deals largely don''t involve either company buying a stake in the AOL Internet-service unit. The deal ideas center on Web search, ad sales and possibly other fields. Time Warner plans to drop Google as its primary provider of Internet search and use Microsoft''s MSN instead. Microsoft and Time Warner are considering creating a joint advertising sales force to sell ads across AOL and MSN.

Cephalon Inc. said it''ll pay around $360 million in cash to buy Zeneus Holdings to speed into entry in the European oncology market.


MOVERS AND SHAKERS

Apple Inc. (AAPL: chart) rose 3.6% to $74.39 after UBS raised its price target on the stock to $86 from $74 because of its iPod product.

FedEx Corp. (FDX: chart) rose 3.2% to $98.82 after Merrill Lynch upgraded the stock to ‘buy’ from ‘neutral’.

Dillard's Department Stores (DDS: chart), retailer, reported narrower Q3 loss of $2.7 million, or 3 cents a share vs. $18.7 million, or 23 cents a year ago, exceeding analyst estimates of 21 cents quarterly loss. Company’s sales rose to $1.73 billion with same-store sales 2% higher compared with last-year figures. The stock gained 7.1%.

G-III Apparel Group Ltd. (GIII: chart), sportswear maker, reported Q3 net income rise of $14.8 million, or $1.73 a share compared with $9.9 million, or $1.33 a share a year ago. Sales climbed 62% to $186.6 million largely due to the acquisition of Marin Richards stock and assets from Winlit. The company projected 2006 net income in the range of 85 cents to 90 cents a share, including an 11-cent non-cash charge. The stock gained 8.4%.

ConAgra Foods Inc. (CAG: chart) projected Q2 pro forma earnings of 38 cents a share compared with analyst expectations of 45 cents a share on revenue of $4.03 billion. ConAgra cited lower-than-expected shipment volume and revenue and increased input and operating costs, among other factors, for its expected quarterly shortfall. The stock fell 3%.

ECONOMIC NEWS

Tuesday morning, the Department of Commerce released its report on factory orders in the month of October, showing that orders rebounded after a notable decline in September. The strength of the rebound came as a surprise to economists.

The report showed that new orders for manufactured durable goods rose 3.4 in October following a 2.0 percent decrease in September. Economists had been expecting a much more modest increase of about 2.2 percent compared to the 1.7 percent drop originally reported for September.

The growth in October was largely due to a rebound by orders for transportation equipment, which rose by 11.4 percent in October after falling 6.4 percent in September. Excluding orders for transportation equipment, new orders increased 0.3 percent.

The U.S. Department of Labor released its revised reading for third-quarter productivity on Tuesday, with the measure now showing a 4.7% seasonally adjusted annual growth rate. When the statistics were first reported in early November, the government said productivity increased by a rate of 4.1%. Unit labor costs were revised to a decline of 1%, compared to the previous-reported estimate of a 0.5% slide.

Meanwhile, factory orders data are due out after the start of trading. Economists expect the measure to increase by about 2% for October, reversing September's 1.7% decline.

INTERNATIONAL MARKETS NEWS