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Stocks will likely remain in a cheery mood today despite the relatively weak tone of this morning’s economic reports. On a positive note, the resolution of the payroll tax cut issue should help remove one lingering source of uncertainty for many consumers. Trading volumes are expected to remain thin ahead of the long Christmas weekend. The stock market remains open for the full day today, while the bond market closes early.

Of this morning’s economic docket, we got a weaker-than-expected reading from the November Personal Income & Outlays report, while the Durable Goods report came in a tad weaker as well. The New Home Sales numbers come out a little later. Growth in Personal Income came in weaker than expected, while the savings rate ticked further down a bit. Consumer spending, which accounts for more than two thirds of the economy, increased at a 0.1% pace in November, while the expectation was for a 0.3% increase. Consumer spending had increased 0.1% and 0.7% in October and September, respectively.

While Thursday’s GDP report saw a negative revision to third quarter consumer spending, the overall tone of recent incoming data has been pointing towards continued momentum on the spending front. Initial jobless claims have consistently dropped in the last three weeks, reaching their lowest level since April 2008. This appears to be showing up in consumer confidence readings, which has perked up lately after staying down in the summer. All of this has pushed up GDP growth expectations for the current quarter, which remains above 3% at present.

In corporate news, Compuware Corp. ([url=http://www.zacks.com/stock/quote/cpwr]CPWR[/url]) will be exiting the S&P 500 index after the market close on December 30th, to be replaced by WPX Energy, a spin-off from Williams Companies ([url=http://www.zacks.com/stock/quote/wmb]WMB[/url]). The spin-off is expected to be completed on December 31st; while Williams itself will remain part of the index. In other news, Shutterfly ([url=http://www.zacks.com/stock/quote/sfly]SFLY[/url]) provided weak guidance for the current quarter.

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