Start of "Santa Claus rally" dampened by "cliff' worries

NEW YORK (Reuters) - U.S. stocks edged lower on Monday as caution over the potential for volatility driven by worries about the U.S. "fiscal cliff" dampened enthusiasm at the start of a seasonally strong period for equities.

Investors are betting Congress will reach a deal to avert most of the austerity measures due to come into force at the start of next year. That has led to the best year for stocks since the post-financial crisis rebound. But those gains may be quickly reversed if a deal is not reached soon.

The S&P 500 index posted its biggest drop in more than a month on Friday as a Republican plan to avoid the cliff - $600 billion in tax hikes and spending cuts that could tip the U.S. economy into recession - failed to gain traction on Thursday night.

Sharp moves like that highlight how headlines from Washington can whipsaw markets, especially during the thinly traded period over the Christmas holiday.

Still, with the S&P 500 up 0.7 percent in December and on course for its strongest month since September, some analysts are predicting that stocks will find their footing during a market seasonality known as the "Santa Claus rally."

"Right now we've seen some very constructive action in the market so I think that bodes well for this being a positive seasonal 'Santa' period over the coming seven days," said Ari Wald, a technical analyst at The PrinceRidge Group.

He noted an all-time high in the NYSE advance-decline line, which compares advancing and declining stocks, as indication of strong participation in the rally off November lows.

"Pull-backs are buying opportunities," said Wald. "There has been really great participation on this move, a lot of small- and mid-cap stocks behaving well, pushing out to the upside; we're seeing some good leadership from offensive sectors of the market as well."

A high ratio of advancing stocks to declining issues shows there is broad participation across the equity market.

The Santa seasonality covers the last five trading days of the year and the first two of the new year. Since 1928, the S&P 500 has averaged a gain of 1.8 percent during this period and risen 79 percent of the time, according to data from PrinceRidge.

The Dow Jones industrial average <.dji> dropped 51.76 points, or 0.39 percent, to 13,139.08. The Standard & Poor's 500 Index <.spx> fell 3.49 points, or 0.24 percent, to 1,426.66. The Nasdaq Composite Index <.ixic> lost 8.41 points, or 0.28 percent, to 3,012.60.

The S&P 500 is up more than 13 percent for the year, having recovered nearly all the losses suffered in the wake of the U.S. election. The yearly gain would be the best since 2009.

Some U.S. lawmakers expressed concern on Sunday the country would go over the cliff, as some Republicans charged that was President Barack Obama's goal. Talks are stalled with Obama and House of Representatives Speaker John Boehner out of Washington for the holidays.

"It does seem like we are continuing through the same drift of the same thing we've had the past couple of weeks - 'cliff' talk," said Nick Scheumann, wealth partner at Hefty Wealth Partners in Auburn, Indiana.

"You can't trade on what you don't know and we truly don't know what they are going to do," he said.

Congress is expected to return to Washington next Thursday as President Barack Obama returns from a trip to Hawaii. As the deadline draws closer, a 'stop-gap' deal appears to be the most likely outcome of any talks.

Trading volume was muted, with U.S. equity markets closing at 1 p.m. (1800 GMT) ahead of the Christmas Day holiday on Tuesday.

In addition, a number of European markets operated on a shortened session, with other markets closed.

U.S. retailers may not see a sales surge from this weekend as ho-hum discounts and fears about imminent tax hikes and cuts in government spending give Americans fewer reasons to open their wallets in the last few days before Christmas.

Aegerion Pharmaceuticals Inc said the U.S. Food and Drug Administration approved Juxtapid capsules in patients with homozygous familial hypercholesterolemia, but will conduct a post-approval study to test long-term safety and efficacy. Shares fell 1.8 percent to $25.25.

Herbalife Ltd dipped 4.4 percent to $26.06 after the company said it expects to exceed its previously announced repurchase authorization guidance and has retained Moelis & Company as its strategic adviser. The declines put the stock on track for a ninth straight decline.

Yum Brands Inc advanced 1.8 percent to $65.01 after Shanghai's food safety authority said the level of antibiotics and steroids in the company's KFC chicken was within official limits.

(Reporting By Edward Krudy; Editing by Chizu Nomiyama and Dan Grebler)

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Gaza City Journal: Gaza Cease-Fire Expands Fishing Area, but Risks Remain

Relaxed Rules Restore Old Opportunities:
As a part of last month's cease-fire agreement between Hamas and Israel, Gazans can now fish 6 miles off the coast, doubling the previous limit.

GAZA CITY — Khader Bakr, a 19-year-old fisherman, was thrilled to hear that he could now fish up to six nautical miles from the coast, up from the three-mile limit Israel had had in place since 2009. The change was part of the cease-fire deal that halted last month’s fighting in Gaza between Israel and Hamas.

But testing the waters late last month, Mr. Bakr apparently sailed out too far. An Israeli gunboat patrolling against arms smuggling ordered him to stop and strip to his underwear. As the Israelis sank his boat, he jumped into the sea and was hauled aboard the Israeli vessel for questioning.

“I spent four hours trembling,” he said, before the Israelis ordered another Palestinian fishing boat to ferry Mr. Bakr back to shore.

Run-ins with Israeli patrols are still the bane of Gaza fishermen. But in most respects, the new arrangement has been a boon.

The fishermen have raced to take advantage of broader fishing grounds, farther from the shore where sewage is pumped into the water untreated.

Catches have improved in quantity, quality and freshness, and thus price. The fish are bigger and include desirable species like grouper, red mullet and Mediterranean sea bass that were no longer present closer to land.

But the fishermen risk rapidly overfishing. “In the first few days, I caught fish worth $1,580 to $1,850,” said Yasser Abu al-Sadeq. “Today, I made around $1,050.” But the situation is still better, he said. “Before the cease-fire, I would barely catch $790.”

“It’s like when you come to a house that’s been abandoned for years and start cleaning it,” he said. “When you start cleaning, you get out a lot of trash, but when you clean daily, you get out only a little.”

He and his crew go out for 24 hours at a time, he said, cooking the small crabs and squid they catch in the nets.

He described an early trip out past the six-mile limit, when an Israeli gunboat circled his boat, shaking it in the wake, and ordered him back toward shore.

He remembers a golden time, before the second Palestinian intifada in 2000, when he could go out as far as 12 nautical miles, where he could find sardines and what he called guitarfish, a small ray. “There, it’s a reserve protected by God,” he said.

The fishermen say they estimate their distance, since most of them lack precise navigational systems, but there is usually one indicator.

“When we were allowed within 3 miles, the gunboats would attack us at 2.5 miles,” said Monzer Abu Amira, as he repaired his green nylon nets. “Today, they hit us when we are at 5.5 miles.”

The Israelis generally use loudspeakers and water cannons, but sometimes they shoot live ammunition at fishing gear, the motor or the boat itself. Gazans in principle can apply for compensation if boats are damaged or destroyed, but in practice few do.

A senior Israeli official said that there had never been an official announcement that the fishing limit had been extended to six miles from three, but he confirmed that six was the new reality. Israel is continuing to negotiate indirectly with Hamas, the Islamist movement that rules Gaza, with Egypt as an intermediary, to turn the cease-fire agreement into something more permanent, the official said.

“We have an interest in prolonging the longevity of the quiet,” the official said. “We understand that relaxation of some of the restrictions is conducive to that goal. Quiet is in our interest. So we have an interest in showing flexibility where we can, and to show the Egyptians that we’re serious.”

There were problems immediately after the cease-fire, the Israeli official said, because “some in Gaza were interested in testing the limits and pushing the envelope,” and because the expansion of the fishing zone meant deploying more Israeli resources to cover more sea.

“But if people don’t exceed the six-mile limit, it’s O.K.,” he said.

The Israelis are not interested in the smuggling of “Kalashnikovs and bullets,” he added, but in preventing Iran from resupplying longer-range missiles and preventing Hamas from smuggling in foreign experts to aid them in missile development and technology. “The important thing for us is to prevent Hamas from rearming,” he said.

Ed Ou contributed reporting.

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Facebook Shrugs Off Instagram’s New Class Action Lawsuit

For Instagram, there’s good news and there’s bad news about the class action lawsuit just filed against them. Bad news first: Somebody just filed a class action lawsuit. Good news: the lawyers from Instagram’s parent company, Facebook, have plenty of practice getting rid of these pesky things. That might explain why they’re so dismissive about the legal inconvenience a group of disgruntled Instagram users left under its tree this year. “We believe this complaint is without merit and we will fight it vigorously,” says Facebook spokesman Andrew Nusca. It’ll obviously take more than the half-hearted apology Instagram CEO and co-founder Kevin Systrom made at the end of last week.

RELATED: It’s Time to Accept the Existence of a Social Media Bubble

The lawsuit’s complaint is somewhat understandable. If you’ve so much as heard the word “Instagram” you’ve heard about how much their new terms of service stink. In it, the company declared that it “may share User Content and your information (including but not limited to, information from cookies, log files, device identifiers, location data, and usage data)” with Facebook, its subsidiaries and its “affiliates.” Instagram users understood this to mean that Instagram could sell their photos to advertisers, though Systrom pushed back at that in his blog post when he more or less said that the company would revert to its old terms of service. “We don’t own your photos – you do,” he said. 

RELATED: And the Actual Retail Price for Instagram Is…

Instagram kept three key new details in place, though. One, the company maintained the ability to serve ads in your feed. Two, it said “that we may not always identify paid services, sponsored content, or commercial communications as such.” Lastly, it left in place the mandatory arbitration clause that it added with the new terms of service, forcing users to waive their right to participate in class action lawsuit. That obviously didn’t discourage this group of plaintiffs who said in the lawsuit that “Instagram declares that ‘possession is nine-tenths of the law and if you don’t like it, you can’t stop us.’”

RELATED: Mark Zuckerberg Disappears from Google+ Due to Privacy Settings

No big deal. Instagram is a part of Facebook now, and Facebook has dealt with class action lawsuits before. Just seven months ago, it got slammed with a $ 15 billion class action suit from users who said that the social network was ”improperly tracking the internet use of its members even after they logged out of their accounts.” They haven’t settled yet, but if it winds up anything like the class action lawsuit over the Beacon advertising program a few years ago, it could take years to resolve and could cost Facebook millions. With some good lawyering, though, this latest lawsuit won’t cost as many millions as it could. But Instagram will never be the same.

Social Media News Headlines – Yahoo! News

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Sandy Hook Shootings: How to Cope

By Howard Breuer

12/23/2012 at 06:00 PM EST

State police personnel lead children to safety away from the Sandy Hook Elementary School

Shannon Hicks/Newtown Bee/Reuters/Landov

The Sandy Hook massacre, in which 20 innocent children and six heroic elementary school faculty members were gunned down last Friday, is particularly difficult for people – even those thousands of miles away from Newtown, Conn. – to process, according to mental health experts.

"This tragedy is so deeply affecting the national psyche, reminding us of 9/11, because of its assault on Norman Rockwell's vision of America," psychiatrist Carole Lieberman tells PEOPLE.

Friday was proclaimed a national day of mourning for those lost a week ago, with a moment of silence called for at 9:30 a.m. Eastern time, as 26 churchbells rang in Newtown and elsewhere. In addition, First Lady Michelle Obama sent an open letter of condolence to the town, saying the entire nation "is holding you in our hearts."

But how do those directly involved with the tragedy find the strength to cope?

To do that, family members who lost loved ones need immediate counseling and to maintain their normal routines. They also need to draw support from other affected families who can relate to what they're going through, says Dr. Stephanie N. Marcy, a psychologist at Children's Hospital Los Angeles.

"I think the people on the ground are feeling a sense of hopelessness because there is no way to justify what happened," Marcy says. "They need to be around other people who have experienced and understand it. If you were all involved together, you can empathize and grieve together."

In many of these families, the remaining children might have survivor's guilt, she adds.

"They rethink what they did that day and wonder if they in some way contributed to the death of a sibling, or they wonder, why did I survive?" Marcy says.

Therapists will need to explain to kids who lost a sibling that their "false belief that they should have been able to prevent it is not correct," adds Marcy.

Children at Sandy Hook may also have Post-Traumatic Stress Disorder and will need therapy, Lieberman says.

What to Tell Children

And what do parents whose children were not involved in the tragedy tell their own youngsters about what happened? That, Marcy says, depends on how old they are and how much they know already.

"Kindergarteners and first graders don't need to be told about it unless you think they will hear it somewhere else. For older kids, you have to get to know what they know, answer any questions they might have, and be truthful – but don't say too much," Marcy says. "Say that a person who was having problems, that was sick, went into a school and injured some people for no particular reason. Tell them it would never happen at their school."

"Yes," she adds, "it could happen anywhere. But there's no point in letting your child think that, [because] they may be flooded with fear."

For the adults and children across the country who have been vicariously traumatized, Marcy says, "We need to regain our sense of control, because this type of event makes us feel completely helpless."

Lieberman adds that Americans "are also feeling a generalized anxiety, a fear that no place is safe anymore. They need to talk to friends and family, get involved in championing causes that make society better, to volunteer for charities, and to get psychotherapy if the sadness and anxiety persist."

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Asian shares steady, U.S. budget concerns weigh

TOKYO (Reuters) - Asian shares steadied in quiet pre-holiday trade after a slump late last week, with markets cautious over whether the United States can avoid a fiscal crisis.

MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> was up 0.6 percent after falling to a near two-week low on Friday when House of Representatives Speak John Boehner failed to gain support for a tax plan, raising fears the U.S. may not be able to avert the "fiscal cliff" of automatic spending cuts and tax increases set to start January 1.

The White House on Friday tried to rescue stalled talks but there was little headway as lawmakers and President Barack Obama abandoned Washington for Christmas.

Many market players still expect both sides to reach a compromise before the end-year deadline but heightening tensions were likely to stifle trade already slowed by the holidays.

U.S. Treasuries gained a safety bid on Friday from fiscal cliff worries, which put many investors on edge and drove down global equities markets, the euro and oil futures.

Australian shares <.axjo> rose 0.4 percent early on Monday, but trade was extremely thin, with Monday's session shortened ahead of the two-day Christmas holiday and many players already out on vacation.

South Korean shares opened up 0.2 percent.

"Investors will cut positions in response to the U.S. budget uncertainty, as the year-end deadline for a fiscal deal is just around the corner," said Lee Jae-hoon, an analyst at Mirae Asset Securities.

"A last-minute agreement, if it is reached, will be cheered by investors. But the deal looks ... difficult," Lee said.

Japanese financial markets are closed for a public holiday and will resume trading on Tuesday. Japan's Nikkei average <.n225> dropped 1 percent on Friday to close below the key 10,000-mark it reclaimed for the first time since early April on December 19. <.t/>

The dollar inched up 0.2 percent to 84.43 yen, having fallen below 84 yen on Friday. The dollar hit a 20-month high of 84.62 yen on December 19.

The yen has been pressured by expectations the Bank of Japan will be pressured to adopt more drastic monetary stimulus measures next year as incoming prime minister Shinzo Abe has demanded bolder action by the central bank to bring Japan out of decades-long deflation.

Currency speculators increased their bets against the U.S. dollar in the latest week, according to data from the Commodity Futures Trading Commission released on Friday. Bets against the yen fell after reaching a more than five-year peak.

The euro stood steady around $1.3184.

In Italy, Mario Monti announced on Sunday he would consider seeking a second term as Italian prime minister if approached by allies committed to backing his austere brand of reforms. Monti resigned on Friday but has faced growing calls to seek a second term at a parliamentary election on February 24-25.

At stake is the leadership of the world's eighth largest economy, where recession and public debt of more than 2 trillion ($2.6 billion) have aggravated investor concerns about growth and stability in the euro zone.

Italy faces a huge bond redemption in the first quarter of 2013 and its failure to secure funding could refuel concerns about sovereign financing not only in Italy but also similarly indebted Spain, hurting sentiment towards the euro.

(Additional reporting by Hyunjoo Jin in Seoul)

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Bashir Ahmad Bilour, Taliban Opponent, Is Buried in Pakistan

ISLAMABAD, Pakistan — A senior politician killed in a suicide attack claimed by the Pakistani Taliban was buried Sunday in the northwestern city of Peshawar amid renewed calls for unity in the fight against terrorism and militancy. 

The politician, Bashir Ahmad Bilour, 69, a minister in Khyber-Pakhtunkhwa Province, was remembered as a “courageous” and “brave” man,  who had gained a reputation as one of the most outspoken critics of the Taliban. 

The funeral service was held at a sports  stadium in Peshawar, where leaders of Mr. Bilour’s political party, Awami National Party, gathered with hundreds of party workers.

Interior Minister Rehman Malik and several leading politicians from other parties also attended the service, guarded by a large contingent of police officers. Surveillance helicopters hovered overhead, and mourners were allowed into the stadium only after passing through metal detectors. 

Mr. Bilour and eight others were killed Saturday by a suicide bomber who detonated his explosives after a political rally. The assassination, claimed by the Taliban, convulsed the country’s political circles, serving as a grim reminder of the Taliban’s lethal ability to strike their opponents. Mr. Bilour had survived two previous assassination attempts.

Mr. Malik lauded the bravery of members of the Awami National Party, a secular group that has been at the forefront of resistance to the Taliban in the northwestern Khyber-Pakhtunkhwa Province. Dozens of the party’s workers have been killed in suicide bombings since 2008, when the party gained power in the insurgency-plagued area.

Also on Sunday, at least 100,000 followers of Muhammad Tahir-ul Qadri, a religious leader, rallied in the eastern city of Lahore to demand that the government carry out electoral and political changes. Mr. Qadri threatened to march toward the capital, Islamabad, with “millions” of his followers and stage a sit-in if his demands were not met by Jan. 10.

The sudden re-emergence of Mr. Qadri, a moderate religious scholar with political ambitions, surprised analysts and political commentators and set off speculation about his intentions.

For the past several years, Mr. Qadri has lived in Canada. He runs Minhaj-ul Quran International, an Islamic group that promotes peace, harmony and religious moderation and has branches in more than 90 countries. He belongs to the Barelvi sect, which believes in mysticism, reveres saints and shrines, and is considered to be tolerant and accommodating of other faiths. He has issued a religious decree against terrorism and is opposed to the Taliban. 

Known for his fiery oratory, Mr. Qadri won a seat in Parliament in 2002, but soon quit over differences with Pervez Musharraf, then Pakistan’s president, and moved abroad. 

The rally in Lahore, believed to be one of the biggest in recent years, was preceded by an extensive media campaign, raising questions about sources of financing. A spokesman for Mr. Qadri said the media campaign, television advertisements and the event in Lahore were paid for with donations from supporters.

But skeptics wondered whether Mr. Qadri’s efforts might also have the backing of the powerful military and intelligence establishment, which is eager to support political figures amenable to its agenda.

Criticizing Pakistan’s political system and its politicians, whom he described as corrupt and inept, Mr. Qadri on Sunday demanded accountability and change before the next general elections, which are expected to be held in the spring. 

“I do not want to derail democracy,” he said. “I want real democracy.”  

While supporters of Mr. Qadri said the event reflected a popular hunger for change, some analysts had a different view. 

“It was an important political mobilization,” said Raza Rumi, a political analyst who directs the Jinnah Institute, a public policy research group based in Islamabad. “But we need a peaceful transition after the next general elections.”

Mr. Rumi said the demand to root out corruption was not new. 

“It is not unusual,” he said. “Almost before every general election, politically marginalized groups have demanded the postponing of elections by raising similar demands to end corruption.”

Waqar Gillani contributed reporting from Lahore, Pakistan.

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How to Get Free Last-Minute Shipping

First, the bad news: the cut off for free shipping on most online sites was Tuesday, Dec 18^th. But the good news – we’ve got some sneaky ways to finagle free rush shipping and a list of sites still offering free shipping guaranteed to arrive before December 25^th.

Free Rush Shipping
Some of the biggest online retailers are still offering free last minute shipping:

• Barnes & Noble – free shipping on Nook HD through Dec. 22


• MacMall – free 2-day shipping on orders over $ 299 and under 25lbs – through 6 p.m. PST Dec. 22.


• Macy’s – free shipping on orders over $ 99. Place order 11:59 p.m. EST Dec. 20.


• The Northface – free 2-day shipping on everything through 11:59 p.m. Dec. 19.


• Walmart.com has extended free shipping through December 19^th on some items (check product page for eligibility)


• Overstock.com – free shipping on select gifts. Place order by Dec. 22 to receive by Christmas.


• Newegg   Free 2-Day shipping on over 200 items


• Target – free shipping on Daily Deals


• Victoria’s Secret – free shipping on orders over $ 100 using code “SHIP12.” Order by 5 p.m. EST on Dec. 20.


• Zappos – free shipping for all items with guaranteed Christmas delivery if ordered by 11:59 p.m. PST Dec. 22.

And the biggest of the big online retailers, Amazon, has a limited set of items available for free expedited shipping. These include jewelry, watches, clothing, video games, laptops, headphones, and kitchen items.

[Related: Great Gifts for Under $ 25]

But since many of the above deals are limited to select items, take a look at…

How to Get Free 2-Day Shipping on Just About Everything
Amazon Prime is a yearly subscription service. In exchange for a $ 79 fee, you get free 2 day shipping all year long. And yes, that also applies at Christmas (must order by 3 p.m. EST Dec. 22 to receive on time). Best deal is that you can get a free 6-month trial.

And here’s the real sneaky surprise: Do you have a family member who already belongs to Prime? They can nominate up to four people for the same free shipping benefits. Prime members nominate someone by going to their account, clicking “Settings” and “Manage Prime Membership.”

Also, Amazon Student is a free 6-month membership to Prime with all the benefits, providing you have an email address that ends in .edu.

But you don’t have to limit yourself to Amazon. Shoprunner.com also offers free 2-day shipping, though the membership service costs $ 8.95 a month – so not entirely free, but if you have numerous items still to buy, you could save a bundle.  And Shoprunner has tons of participating online retailers like Toys R Us, Sports Authority, Claire’s, PetSmart and EMS. Say you want to buy something from PetSmart.com, if you sign in with Shoprunner, many of the items on the site will be eligible for free 2-day shipping. One more thing to try: I was able to sign up for a free 1-year membership to Shoprunner using the promo code RUNNER. The site implied I had to be an American Express member, but it never asked for my details about the credit card, and now I have a membership. Good luck.

Ship to Store
Finally, the best last-minute option for many is to ship to store. You peruse all the options from home, pay online, and then pick up your selection at your local store. Tons of big retailers offer this service, and it guarantees your item will be in stock and waiting for you at customer service. Major retailers offering free Ship to Store include:

• Best Buy


• Target


• Toys R Us


• Walmart


• Sears

[Related: Best E-Reader for Under $ 100]

Brad Marshland contributed to this story.

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Drew Barrymore: My Dogs Are So Protective of Baby Olive

People Pets
Only on People.com

By Julie Jordan and Amy Jamieson

12/22/2012 at 05:30 PM EST

Drew Barrymore, Will Kopelman and dog Douglas

NPG

She may have been a nervous wreck after baby Olive arrived this fall, but the Drew Barrymore could have rested easy because her dogs had everything under control.

"They're so protective of her. They're so sweet," she tells PEOPE of her pups, Douglas and shepherd mix Oliver. "And Douglas, the little blonde one, just comes and licks [Olive's] head, and it's just so goofy and silly and I always say, 'Douglas, is this your baby?' "

The first-time mom, 37, and her husband Will Kopelman were careful when it came to introducing their furbabies to the real baby.

"We brought her stuff home to them to sniff and play with," she tells PEOPLE. "I put her with them right away. I was holding her and protective but there are all these wonderful studies that kids that grow up with dogs have better immunities because of the dander and the pollen. And it's a proven fact that dogs just improve the quality of your life."

In just a few months, Douglas has assumed the role of bodyguard over 10-week-old Olive, whom Barrymore calls "Super Baby" because she sleeps and eats so well.

"He's literally sitting [and] looking out the window," she says, "in, like, a guard dog position."

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Wall Street Week Ahead: A lump of coal for "Fiscal Cliff-mas"

NEW YORK (Reuters) - Wall Street traders are going to have to pack their tablets and work computers in their holiday luggage after all.

A traditionally quiet week could become hellish for traders as politicians in Washington are likely to fall short of an agreement to deal with $600 billion in tax hikes and spending cuts due to kick in early next year. Many economists forecast that this "fiscal cliff" will push the economy into recession.

Thursday's debacle in the U.S. House of Representatives, where Speaker John Boehner failed to secure passage of his own bill that was meant to pressure President Obama and Senate Democrats, only added to worry that the protracted budget talks will stretch into 2013.

Still, the market remains resilient. Friday's decline on Wall Street, triggered by Boehner's fiasco, was not enough to prevent the S&P 500 from posting its best week in four.

"The markets have been sort of taking this in stride," said Sandy Lincoln, chief market strategist at BMO Asset Management U.S. in Chicago, which has about $38 billion in assets under management.

"The markets still basically believe that something will be done," he said.

If something happens next week, it will come in a short time frame. Markets will be open for a half-day on Christmas Eve, when Congress will not be in session, and will close on Tuesday for Christmas. Wall Street will resume regular stock trading on Wednesday, but volume is expected to be light throughout the rest of the week with scores of market participants away on a holiday break.

For the week, the three major U.S. stock indexes posted gains, with the Dow Jones industrial average <.dji> up 0.4 percent, the S&P 500 <.spx> up 1.2 percent and the Nasdaq Composite Index <.ixic> up 1.7 percent.

Stocks also have booked solid gains for the year so far, with just five trading sessions left in 2012: The Dow has advanced 8 percent, while the S&P 500 has climbed 13.7 percent and the Nasdaq has jumped 16 percent.

IT COULD GET A LITTLE CRAZY

Equity volumes are expected to fall sharply next week. Last year, daily volume on each of the last five trading days dropped on average by about 49 percent, compared with the rest of 2011 - to just over 4 billion shares a day exchanging hands on the New York Stock Exchange, the Nasdaq and NYSE MKT in the final five sessions of the year from a 2011 daily average of 7.9 billion.

If the trend repeats, low volumes could generate a spike in volatility as traders keep track of any advance in the cliff talks in Washington.

"I'm guessing it's going to be a low volume week. There's not a whole lot other than the fiscal cliff that is going to continue to take the headlines," said Joe Bell, senior equity analyst at Schaeffer's Investment Research, in Cincinnati.

"A lot of people already have a foot out the door, and with the possibility of some market-moving news, you get the possibility of increased volatility."

Economic data would have to be way off the mark to move markets next week. But if the recent trend of better-than-expected economic data holds, stocks will have strong fundamental support that could prevent selling from getting overextended even as the fiscal cliff negotiations grind along.

Small and mid-cap stocks have outperformed their larger peers in the last couple of months, indicating a shift in investor sentiment toward the U.S. economy. The S&P MidCap 400 Index <.mid> overcame a technical level by confirming its close above 1,000 for a second week.

"We view the outperformance of the mid-caps and the break of that level as a strong sign for the overall market," Schaeffer's Bell said.

"Whenever you have flight to risk, it shows investors are beginning to have more of a risk appetite."

Evidence of that shift could be a spike in shares in the defense sector, expected to take a hit as defense spending is a key component of the budget talks.

The PHLX defense sector index <.dfx> hit a historic high on Thursday, and far outperformed the market on Friday with a dip of just 0.26 percent, while the three major U.S. stock indexes finished the day down about 1 percent.

Following a half-day on Wall Street on Monday ahead of the Christmas holiday, Wednesday will bring the S&P/Case-Shiller Home Price Index. It is expected to show a ninth-straight month of gains.

U.S. jobless claims on Thursday are seen roughly in line with the previous week's level, with the forecast at 360,000 new filings for unemployment insurance, compared with the previous week's 361,000.

(Wall St Week Ahead runs every Friday. Questions or comments on this column can be emailed to: rodrigo.campos(at)thomsonreuters.com)

(Reporting by Rodrigo Campos; Additional reporting by Chuck Mikolajczak; Editing by Jan Paschal)

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Syrian Resort Town Is Stronghold for Alawites

TARTUS, Syria — Loyalists who support the government of President Bashar al-Assad are flocking to the Mediterranean port of Tartus, creating an overflowing boomtown far removed from the tangled, scorched rubble that now mars most Syrian cities.

The New York Times

The port city of Tartus is sheltered by a mountain range.

There are no shellings or air raids to interrupt the daily calm. Families pack the cafes lining the town’s seaside corniche, usually abandoned in December to the salty winter winds. The real estate market is brisk. A small Russian naval base provides at least the impression that salvation, if needed, is near.

Many of the new residents are members of the Alawite minority, the same Shiite Muslim sect to which Mr. Assad belongs. The latest influx is fleeing from Damascus, people who have decided that summer villas, however chilly, are preferable to the looming battle for the capital.

“Going to Tartus is like going to a different country,” said a Syrian journalist who recently met residents here. “It feels totally unaffected and safe. The attitude is, ‘We are enjoying our lives while our army is fighting overseas.’ ”

Should Damascus fall to the opposition, Tartus could become the heart of an attempt to create a different country. Some expect Mr. Assad and the security elite will try to survive the collapse by establishing a rump Alawite state along the coast, with Tartus as their new capital.

There have been various signs of preparations.

This month, the governor of Tartus Province announced that experts were studying how to develop a tiny local airfield, now used mostly by crop-dusters, into a full-fledged civilian airport “to boost transportation, business, travel and tourism,” as the official Syrian news agency, SANA, reported. The announcement coincided with the first attacks on the airport in Damascus, forcing it to close temporarily to international traffic.

More important, security forces are continuously tightening an extensive ring of checkpoints around the potential borders of an Alawite canton. The mountain heartland of the Alawites rises steeply to the east of Tartus, separating it from much of Syria. Across the mountains, the Orontes River creates a rough line separating Alawite territory from central Syria. Rebel military commanders from adjoining Hama Province said government soldiers vigorously maintain checkpoints on routes leading up into the mountains.

“If we bomb a checkpoint, it is back in place sometimes within hours,” said Basil al-Hamwi, a rebel fighter, speaking on the sidelines of a meeting of opposition military commanders in Turkey. “Once, in Hama Province, we destroyed five in one day and they were all back the next day. This area is even more important for them than Damascus.”

Mr. Hamwi and other rebel leaders said there were about 40 government checkpoints along more than 60 miles in Homs and Hama Provinces alone. Many Alawite commanders of Mr. Assad’s army have sent their families to their home villages, so they are particularly aggressive in protecting the area, said Hassan M. al-Saloom, a rebel battalion commander. They have formed committees to guard the outskirts of their villages, he said, and often negotiate local truces.

“Nobody goes inside, and they don’t come out,” he said.

There are widespread suspicions within the opposition that the military is shipping weapons into the Alawite hinterland, or has already positioned them. “The mountains and the coast make it hard to raid,” Mr. Saloom said.

Castles left by the Crusaders dot the coastal range, a testament to its strategic value.

If Mr. Assad fled to Tartus, he could seek protection from the Russian naval base here, or flee aboard a Russian vessel. Russia announced Tuesday that it was sending a small flotilla toward Tartus, possibly to evacuate its citizens who live in Syria. But Tartus residents said that the Russian families from the naval base had already left, while the officers do not leave the base, which is little more than an enclosure near the civilian port.

An employee of The New York Times reported from Tartus, and Neil MacFarquhar from Antakya, Turkey. Hania Mourtada contributed reporting from Beirut, Lebanon, and Hala Droubi from Dubai, United Arab Emirates.

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