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U.S. equity markets opened higher this morning on hopeful sentiment that negotiations related to the approaching fiscal cliff might show some progress. In Asia, that sentiment helped push shares higher at most of the major exchanges. In Europe, a survey of German economic sentiment came in much stronger than expected and yielded the first positive reading in six months (more coverage here). In the U.S., hopes for progress toward avoiding the fiscal cliff buoyed markets for most of the day. Then Senator Harry Reid said that he doubted that a deal could get done before Christmas. Shares began to give back some of their gains almost immediately.

The U.S. dollar index fell today, now down 0.33% at 80.059. The GSCI commodity index is down 0.2% at 631.40, with commodities prices mixed again today. WTI crude oil closed up 0.3% today, at $85.79 a barrel. Brent crude trades up 0.7% at $108.03 a barrel. Natural gas is down 1.2% today at about $3.42 per thousand cubic feet. Gold settled down 0.3% today at $1,709.60 an ounce.

The unofficial closing bells put the DJIA up about 79 points to 13,248.90 (0.60%), the NASDAQ rose more than 44 points (1.49%) to 3,022.30, and the S&P 500 rose 0.66% or more than 9 points to 1,427.85.

There were several analyst upgrades and downgrades today, including Michael Kors Holdings Ltd. (NYSE: KORS) started as ‘Conviction Buy’ with a $75 target price at Goldman Sachs; Foster Wheeler AG (NASDAQ: FWLT) cut to ‘neutral’ at Lazard; Aruba Networks Inc. (NASDAQ: ARUN) started as ‘neutral’ at JPMorgan and as ‘outperform’ at Oppenheimer; Time Warner Cable Inc. (NYSE: TWC) reitereated as ‘buy’ and target price raised to $115 at Argus; and Gap Inc. (NYSE: GPS) started as ‘buy’ with a target price of $41 at Goldman Sachs.

Earnings reports since markets closed last night have resulted in the following price changes for reporting companies as of the last half hour of trading today: Dollar General Corp. (NYSE: DG) is down 7.9% at $42.90 (more coverage here); Teavana Holdings Inc. (NYSE: TEA)is down 0.1% at $15.43; and Ferrellgas Partners LP (NYSE: FGP) is up 2.2% at $18.07.

Before markets open tomorrow morning we are scheduled to hear from Costco Wholesale Corp. (NASDAQ: COST) and Joy Global Inc. (NYSE: JOY).

Some standouts from today include the following stocks:

Clearwire Corp. (NASDAQ: CLWR) is up 12.9% at $2.71. The wireless network carrier is rumored (again) to be an acquisition target of Sprint Nextel Corp. (NYSE: S). More coverage here.

Family Dollar Stores Inc. (NYSE: FDO) is down about 8.3% at $64.75. The discount retailer is down following Dollar General’s weak outlook.

SPX Corp. (NYSE: SPW) is down 9.3% at $61.96. The flow technology company on a report that the company is considering a merger with competitor Gardner-Denver.

BG Medicine Inc. (NASDAQ: BGMD) is up 136% at $3.14. The medical diagnostics maker has received permission to sell its CardioScore test in the European Union and other countries that recognize the CE Mark.

Stay tuned for Wednesday. The Fed Open Market Committee concludes its two-day meeting tomorrow. We have also noted the following events on the schedule (all times Eastern):

• 7:00 a.m. – Mortgage Bankers Association purchase applications
• 8:30 a.m. – Import and export prices
• 10:30 a.m. – EIA weekly petroleum status report
• 11:30 a.m. – 10-year note auction
• 12:30 p.m. – FOMC meeting announcement
• 2:00 p.m. – FOMC forecasts
• 2:00 p.m. – Treasury budget
• 2:15 p.m. – Ben Bernanke press conference

Paul Ausick