Tuesday Morning’s Top Stories

Germany’s (NYSEARCA:EWG) December ZEW economic sentiment indicator gained 1.4 points, halting a nine-month downward trend. December’s number was a -53.8 level as compared to November’s -55.2 number, as reported by the Center for European Economic Research or ZEW.

According to ZEW President Wolfgang Franz, “The economic sentiment for Germany seems to have bottomed out. Apparently, the financial-market experts expect the economic activity to slow down, but not to plunge during the next six months.” Franz added that decisions made at the recent European Union summit “may have improved the experts’ expectations.”

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New legal concerns have risen over the recent EU deal. European Council President Herman Van Rompuy said to the European Parliament that with U.K. vetoing the agreement, it now complicates the implementation of the new fiscal rules and forces a separate agreement. Van Rompuy said in his remarks, ”An intergovernmental treaty was not my first preference, nor that of the most of the member states … It will not be easy, also legally speaking. I count on everybody to be constructive bearing in mind what is at stake.”

Best Buy Co. (NYSE:BBY) missed Wall Street earnings estimates for the third quarter. Net income for the electronics store fell to $154 million (42 cents per share) vs. $217 million (54 cents per share) a year earlier. This is a decline of 29% from the year earlier quarter. Revenue rose 1.8% to $12.1 billion from the year earlier quarter.

Investing Insights: Best Buy Co. Earnings Cheat Sheet: Margins Shrink on Rising Costs, Net Income Falls.

Apple Inc (NASDAQ:AAPL) is in discussions to purchase the Israel-based Anobit , a flash storage technology maker, for $400 to $500 million, according to Reuters. Anobit’s allure to Apple is its chip that improves flash drive performance through signal processing.  Apple already uses it in the iPhone, iPad and the MacBook Air.

Anobit is also reviewing a financing round with a top Asian flash memory manufacturer.

AOL Inc. (NYSE:AOL) plans to reorganize the company, combining its dial-up business with its Web services. AOL’s Chief Executive Officer Tim Armstrong announced the news on Monday and said that a new AOL services group is one of four business divisions in the new corporate plan. The other three includes advertising, local services and the Huffington Post media group. Employees will learn details on Dec. 14 and the plan will take effect in January.

Check Out: Which Retailers Will Perform Well in 2012?

Tuesday Morning Hot Stocks

Best Buy Co. (NYSE:BBY) shares fell more than 8% after reporting third-quarter profit. Net income fell 29% to $154 million (42 cents per share), compared to $217 million (54 cents per share) last year.

Investing Insights: Best Buy Co. Earnings Cheat Sheet: Margins Shrink on Rising Costs, Net Income Falls.

Shares of Morgan Stanley (NYSE:MS) are up nearly 6% early Tuesday. The bank announced it has reached a settlement with bond insurer MBIA Inc. (NYSE:MBI) over lawsuits dealing with credit default swaps. “The settlement has the effect of significantly reducing risk-weighted assets and releasing the equivalent of approximately $5 billion of capital under the Basel Committee’s proposed Basel III framework, thereby increasing the pro forma Tier 1 Common ratio,” Morgan Stanley explained.  Other banks such as Goldman Sachs (NYSE:GS) and Bank of America (NYSE:BAC) are also climbing higher.

Apple Inc. (NASDAQ:AAPL) is edging .29% higher this morning. The tech giant is in talks to acquire Anobit Technologies, which produces specialized computer chips. Apple uses the technology in the iPad, iPhone and MacBook Air.

Don’t Miss: Which Retailers Will Perform Well in 2012?

Shares of Urban Outfitters Inc. (NASDAQ:URBN) surged more than 11% before the opening bell. The retailer reported late Monday that same-store sales had increased in the fourth quarter.

DuPont Co. (NYSE:DD) is heading more than 2% higher after forecasting earnings above expectations for next year.  In 2012, the company expects earnings of $4.20 to $4.40 per share.

Investing Insights: IPO Anticipation: Facebook Shareholders Counting Their Eggs.

Tuesday’s Trending Stocks

The Dow Jones Industrial Average is up at 12,075, the S&P 500 Index at 1,239 and the Nasdaq at 2,610. Here are the hottest stocks drumming up trading chatter on Wall Street today:

1. Synovis Life Technologies, Inc. (NASDAQ:SYNO): Shares of Synovis Life Technologies, Inc. are trading higher 50% today. Synovis Life Technologies, Inc. develops, designs, manufactures, and brings to market medical devices for surgical and interventional treatment of disease. The Company provides products such as implantable biomaterial, surgical productivity tools, micro-wire components, and a coupler system.
2. Best Buy Co., Inc. (NYSE:BBY): Shares of Best Buy Co., Inc. are trading lower 11.5% today. Best Buy Co., Inc. retails consumer electronics, home office products, entertainment software, appliances and related services through its retail stores, as well as its web site. The Company also retails pre-recorded home entertainment products through retail stores.
3. Endocyte, Inc. (NASDAQ:ECYT): Shares of Endocyte, Inc. are trading lower 63% today. Endocyte Inc. is a biopharmaceutical company developing targeted therapies for the treatment of cancer and inflammatory diseases. The Company uses a proprietary technology to create small molecule drug conjugates, or SMDCs, and companion imaging diagnostics that actively target receptors that are over-expressed on diseased cells, relative to healthy cells.
4. FactSet Research Systems Inc. (NYSE:FDS): Shares of FactSet Research Systems Inc. are trading lower 7.5% today. FactSet Research Systems Inc. supplies global economic and financial data to analysts, investment bankers, and other financial professionals. The Company combines databases from multiple suppliers into a single online source of information and analytics, including fundamental data.
5. The Pantry, Inc. (NASDAQ:PTRY): Shares of The Pantry, Inc. are trading lower 10.7% today. The Pantry, Inc. operates convenience stores in the southeastern United States. The Company’s stores offer a variety of merchandise and gasoline, as well as ancillary services designed to appeal to the convenience needs of the customers. The Pantry’s stores are located in Florida, North Carolina, South Carolina, Kentucky, Indiana, Tennessee, Virginia, and Georgia.
6. Hexcel Corporation (NYSE:HXL): Shares of Hexcel Corporation are trading higher 1% today. Hexcel Corporation develops, manufactures, and markets reinforcement products, composite materials, and engineered products. The Company’s products are used in the commercial aerospace, space and defense, electronics, general industrial, and recreation markets for a variety of end products. Hexcel operates around the world.
7. Cabot Microelectronics Corporation (NASDAQ:CCMP): Shares of Cabot Microelectronics Corporation are trading higher 16.6% today. Cabot Microelectronics Corporation supplies slurries used in chemical mechanical planarization, a polishing process used in the manufacture of integrated circuit devices. The slurries are liquids containing abrasives and chemicals that enhance the polishing process. The polishing process itself facilitates the manufacture of smaller, faster, and more complex integrated circuit devices.
8. Alexza Pharmaceuticals, Inc. (NASDAQ:ALXA): Shares of Alexza Pharmaceuticals, Inc. are trading higher 34.6% today. Alexza Pharmaceuticals, Inc. is a pharmaceutical company focused on the development and commercialization of proprietary products for the treatment of acute and intermittent conditions.
9. YM BioSciences Inc. (NYSEAMEX:YMI): Shares of YM BioSciences Inc. are trading higher 12.3% today. YM Biosciences Inc. is developing cancer drugs based on technologies licensed primarily from international academic centers. The Company is currently developing a small molecule chemopotentiator for metastatic breast cancer, an EGFr humanized monoclonal antibody, and a GnRH cancer vaccine. YM is also supporting the preclinical development of additional cancer products.
10. A.M. Castle & Co. (NYSE:CAS): Shares of A.M. Castle & Co. are trading higher .47% today. A. M. Castle & Co. provides highly-engineered materials and value-added processing services to a variety of industrial companies. The Company distributes specialty metals, nickel alloys, aluminum, titanium, and copper and brass. A. M. Castle also provides materials management programs.

Market Recap

Markets closed down on Wall Street today: Dow -0.55%, S&P -0.87%, Nasdaq -1.56%, Oil +2.26%, Gold -2.03%.

On the commodities front, Oil (NYSE:USO) climbed to $99.98 a barrel. Precious metals were down, with Gold (NYSE:GLD) falling to $1,634.30 an ounce while Silver (NYSE:SLV) fell 0.85% to settle at $30.74.

Hot Feature: OPEC Boosts Supply as Libyan Output Rebounds

Today’s markets were down because:

1) Fed. Markets reversed an early rally after the Federal Reserve kept rates unchanged, warning that “strains in global financial markets continue to pose significant downside risks to the economic outlook” in minutes from a meeting of the Federal Open Market Committee. Though it said the economy is expanding moderately, with some improvement in labor conditions, the Fed’s confirmation that Europe remains a real threat to U.S. economic growth, and prediction that the “unemployment rate will decline only gradually,” had investors disheartened.

2) Germany. Stocks first pulled back today after a Dow Jones report said that German Chancellor Angela Merkel had rejected suggestions to raise the funding limit for the European Stability Mechanism, which goes into effect next year and may run alongside the European Financial Stability Facility, which it is ultimately intended to replace. Though the FOMC minutes might have had a more dramatic impact on the major U.S. indices, Germany’s news didn’t help, and was the first to rock markets that had been trading up thanks to an initial void of bad news out of Europe.

3) Retail. Retail sales for the month of November rose 0.2 percent, well below what was expected, according to the U.S. Commerce Department. However, the disappointing report had little impact. Sales were expected to have increased by 0.6 percent, following a 0.5 percent advance in October that was revised to 0.6 percent in today’s report. Instead, the November gain was the smallest since June, despite Thanksgiving weekend sales figures that topped estimates and toppled previous records. Shares of electronics retailer Best Buy (NYSE:BBY) plummeted 15.46 percent after the company reported earnings that fell far short of forecasts.

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After Hours Radar Stocks

Shares of Yahoo Inc. (NASDAQ:YHOO) are attracting attention after one of its largest shareholders, Third Point LLC, requested the internet company release letters that invited proposals from potential buyers.  Internet giant Google (NASDAQ:GOOG) is also edging higher after the closing bell.

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After the closing bell, Advanced Micro Devices Inc.’s (NYSE:AMD) CEO said he did not expect much pressure on the quarter due to disk drive shortages.  Thailand flooding has damaged supply chains in the tech sector recently.  AMD Chief Executive Rory Read said while there’s pressure in the market, he doesn’t “see major pressure in terms of the quarter.” He said hard-disk supply in the channel at the beginning of the period has kept the market “going pretty well.”

Shares of Jive Software Inc. (NASDAQ:JIVE) continue to climb .27% in late trading, after closing up 25%.  The stock just began trading on the Nasdaq.  The California-based company, which helps businesses set up their own social networks, offered 13.4 million shares at $12 a share, above its initial range of $8 to $10.

Investing Insights: Jive Beats Own Target With IPO.

Best Buy (NYSE:BBY) is trying to climb higher in extended trading. Shares fell 15.46% during regular market hours. On Tuesday, Best Buy reported third quarter results.  Net income for the electronics store fell to $154 million (42 cents per share), compared to $217 million (54 cents per share) last year. This represents a whopping 29% drop, as Best Buy missed estimates for the second consecutive quarter. The company continues to receive competition from other electronic retailers like Amazon (NASDAQ:AMZN) and Wal-Mart (NYSE:WMT).

Shares of Intel Corp. (NASDAQ:INTC) continue to struggle after cutting fourth-quarter sales due to the hard-disk drive shortage.  Shares closed nearly 2% lower on Tuesday, and continue to head .04% lower in late trading.

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