The unofficial closing bells put the DJIA down nearly 21 points to 12,632.91 (-0.16%), the NASDAQ rose nearly 2 points (0.07%) to 2,813.84, and the S&P 500 fell -0.05% or less than 1 point to 1,312.40.

There were several analyst upgrades and downgrades today, including Nike Inc. (NYSE: NKE) raised to ‘buy’ at Argus; Potash Corp. of Saskatchewan (NYSE: POT) cut to ‘neutral’ at Goldman Sachs; Tesla Motors Inc. (NASDAQ: TSLA) started as ‘buy’ at Jefferies; Amgen Inc. (NASDAQ: AMGN) reiterated as ‘buy’ and target price raised to $80 at Argus; and Range Resources Corp. (NYSE: RRC) raised to ‘hold’ from ‘sell’ with a target price of $59 at Canaccord Genuity.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Anixter Inc. (NYSE: AXE) is down -3.7% at $65.25; ARM Holdings PLC (NASDAQ: ARMH) is up 1.7% at $28.84; Celanese Corp. (NYSE: CE) is down -0.95% at $48.84; Eli Lilly & Co. (NYSE: LLY) is up 1.35% at $39.78; Exxon Mobil is down -1.98% at $83.80; Helmerich & Payne Inc. (NYSE: HP) is up 2.2% at $61.64; L-3 Communications Holdings Inc. (NYSE: LLL) is up 1.3% at $70.49; McGraw-Hill Cos. Inc. (NYSE: MHP) is down -0.5% at $46.09; Mattel Inc. (NYSE: MAT) is up 5.1% at $31.04 after posting a new 52-week high today of $31.49; Pfizer Inc. (NYSE: PFE) is down -0.8% at $21.42; and Valero Energy Corp. (NYSE: VLO) is down -0.73% at $24.10.

Other standouts from today include the following stocks:

Vringo Inc. (NASDAQ: VRNG) is up nearly 21% at $1.40. The social media software maker is apparently basking in the glow of the coming IPO of Facebook. See our coverage here.

RadioShack Corp. (NYSE: RSH) is down nearly -30% at $7.19 after setting a new 52-week low of $7.15 earlier today. The social media software maker is apparently basking in the glow of the coming IPO of Facebook. See our coverage here.

Verifone Systems Inc. (NYSE: PAY) is up more than 8% at $42.61. The payment systems maker is getting a boost from a plan by Mastercard Inc. (NYSE: MA) to subsidize the installation of new card readers that use a microchip rather than a magnetic stripe to store customer information.

Rare Element Resources Ltd. (AMEX: REE) is up more than 17% at $7.22. The rare earth minerals miner is likely gaining after a ruling from the WTO that China’s restriction on rare earth minerals’ exports violates global trade rules.

FriendFinder Networks Inc. (NASDAQ: FFN) is up about 19% at $1.26. The adult social media company is likely also being bought up on the prospective Facebook IPO.

Stay tuned for Wednesday. Automakers will be releasing sales figures for January throughout the day. We have noted the following events on the schedule (all times Eastern):

• 7:00 a.m. – Mortgage Bankers Association purchase applications
• 7:30 a.m. – Challenger Job-cut data
• 8:15 a.m. – ADP employment report
• 10:00 a.m. – ISM manufacturing index
• 10:00 a.m. – Construction spending
• 10:30 a.m. – EIA weekly petroleum status report

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Paul Ausick

Inflation in China drops in October. (Reuters)

Olympus investment losses may have gone above $1 billion. (Reuters)

Silvio Berlusconi leaves as prime minister of Italy. (Reuters)

Investors will focus on General Motors’ (NYSE: GM) $20 billion unfunded pension liability as it releases earnings. (Reuters)

Microsoft (NASDAQ: MSFT), Aol (NYSE: AOL) and Yahoo! (NASDAQ: YHOO) set a new advertising sales partnership. (Reuters)

Samsung will invest nearly $34 billion in R&D next year. (Reuters)

An Informa study for the Wireless Broadband Alliance says Wi-Fi hot spots will grow by four times by 2015. (Reuters)

Nvidia (NASDAQ: NVDA) releases new products for tablet PCs. (Reuters)

Yelp hires banks to take it public. (Reuters)

Carlyle Group sharply cuts fees as it tries to raise money for a $$2.3 billion real estate fund. (WSJ)

Investors aggressively sell Italian bonds. (WSJ)

Foreign markets help AB Inbev’s (NYSE: BUD) earnings. (WSJ)

Vivendi makes a bid for EMI. (WSJ)

Fannie Mae wants another $7.8 billion from the government. (WSJ)

The number of U.S. job openings rose to 3.4 million in September from 3.1 million in August. (WSJ)

President Obama approves very limited off-shore drilling. (WSJ)

The State Department may agree to move the Canada-to-U.S. pipeline around a section of Nebraska. (WSJ)

Amylin (NASDAQ: AMLN) and Eli Lilly (NYSE: LLY) kill their diabetes drug partnership. (WSJ)

Adobe (NASDAQ: ADBE) cuts 750 jobs. (WSJ)

Credit Suisse (NYSE: CS) will give the U.S. names of clients who may have evaded taxes. (WSJ)

The FCC wants to expand low-income family access to high-speed internet. (NYT)

The head of HSBC (NYSE: HBC) says Asia faces a shortage of available credit. (FT)

Douglas A. McIntyre

Lilly’s Zyprexa lost patent protection in Europe just last month, and European sales in the quarter fell by -3%. Two other Lilly drugs, anti-depressant Cymbalta and osteoporosis drug Evista lose patent protection by 2014. Regarding the loss of protection on Zyprexa in the US, the company said that it “expects the introduction of generics to result in a rapid and severe decline in Zyprexa sales.”

For the first three quarters of 2011, Zyprexa has accounted for $3.9 billion in Lilly’s sales. Cymbalta brought in another $3 billion, up 19% over 2010 Cymbalta sales.

The company also noted the impact of the Affordable Care Act, which it says reduced EPS in the third quarter by -$0.13. Lilly said the ACA has lowered revenue by $330 million as a result of higher rebates and subsidies, and added $135 million in expenses related to mandatory manufacturing fees.

Lilly now expects full-year 2011 adjusted EPS to be $4.30-$4.35, up to -9% lower than 2010 EPS of $4.74. The revised guidance is in-line with the existing consensus EPS estimate from analysts of $4.33. The company’s gross margin guidance was unchanged, with an expected decline of 2%-3%.

Lilly’s position at the edge of the patent cliff is perhaps more frightening than that of its major competitors. The company does not have a product to replace any of those that are losing patent protection, and so far its only answer has been to announce a $1 billion cost-cutting plan that will eventually cost 5,500 jobs.

Shares in Lilly are down about -0.7% in the first hour of trading this morning, at $38.43, in a 52-week range of $33.46-$39.78. For the past 12 months, Lilly’s shares have risen 6.8%, about the same as Pfizer’s gain, but far behind Bristol-Meyers’ gain of 21%.

Paul Ausick

The FDA has already given Merck & Co. (NYSE: MRK) a very tough time over the company’s application to sell its popular Lipitor-competitor Mevacor. Lipitor and Mevacor, both in the family of drugs known as statins, probably should not be as easy to push through the OTC approval process as a stomach-acid drug like Prilosec from AstraZeneca PLC (NYSE: AZN). A third statin drug, Plavix, which is sold by Sanofi-Aventis SA (NYSE: SNY) and Bristol-Meyers Squibb Co. (NYSE: BMY), loses its patent protection next year and could be yet another entry into the race for an over the counter heart medicine.

The list of patent expirations through 2012 includes Zyprexa, an anti-psychotic made by Eli Lilly & Co. (NYSE: LLY); Levaquin, an antibiotic, and Concerta, an ADHD/ADD drug, both from Johnson & Johnson (NYSE: JNJ); Protonix, an antacid from Pfizer; Seroquel, an antipsychotic from AstraZeneca; Singulair, an asthma drug from Merck; Actos, a drug to treat Type 2 diabetes from Takeda Pharmaceuticals; and Enbrel, an arthritis drug from Amgen Inc. (NASDAQ: AMGN). Plavix and Lipitor were the two leading drugs by sales in 2010, with more than $6.1 billion and $5.3 billion in sales, respectively.

According to the National Institutes of Health, Lipitor users need to be aware of any number of side issues and side effects when taking a the drug. Because the medicine essentially thins a person’s blood to prevent the buildup of cholesterol along the walls of blood vessels, the danger of improper dosage is non-trivial.

What Pfizer needs to do is convince the FDA that it is safe for a patient to self-prescribe Lipitor. Merck hasn’t been convincing and unless Pfizer can pull some magic rabbit out of its hat, there doesn’t appear to be much chance of getting FDA approval.

Merck has failed to get its statin drug approved, Pfizer is likely to fail, and the team of Sanofi-Bristol Meyers is equally likely to fail with Plavix. A generic equivalent of Plavix is already sold in Europe and if approved in the US, could undercut plans for Sanofi to introduce a generic equivalent.

Of the drugs losing patent protection in the next year or so, the antibiotic Levaquin and the antacid Protonix are the likeliest candidates for OTC sales. Antipsychotics over-the-counter? Not in this lifetime.

Paul Ausick

Pfizer’s strategic decisions center around its divestiture of all four of its non-pharma units, including nutritionals, consumer health, animal health and a capsule manufacturing operation.  Eli Lilly & Co. (NYSE: LLY) has already shown interest in Pfizer’s veterinary products unit.

Merck’s strategic approach calls a glide path involving planned job cuts and a flat-to-down paring of its massive research and development budget.  After its 2009 acquisition of Schering-Plough, a 15% cut to the combined 100,000-person work force had been expected.  This number was revised upward and additional cuts have reduced the current Merck workforce to 91,000.  The company expects to further reduce its payroll by another 12,000 positions by 2015.  The company also plans to cut its $8.3 billion R&D budget by $100 million.

Pfizer Inc. (NYSE: PFE) reported its revenue totaled $16.98 billion largely in line with analysts estimates.  Excluding one-time items, Pfizer posted earnings of $0.60 per share.  Analysts estimates had called for $0.59 EPS for the second quarter and $0.56 for the third. The company’s FY2011 guidance looks for per share earnings of $2.16 to $2.26 on revenue of $65.2 billion to $67.2 billion.  The shares recently closed at $19.01.  Its 52-week price range is $15.10 to $21.45.

Merck & Co. Inc. (NYSE: MRK) reported results in line with analysts estimates of $0.95 EPS for the second quarter and $0.91 for the third on revenues of $11.8 billion and $11.4 billion. The shares recently closed at $33.44.  Its 52-week price range is $31.06 to $37.68.

At the end of the day, you have Pfizer trying to gear down to win from its prior R&D efforts while Merck is digging in with cost cutting efforts.  Pfizer pays 4.2% but offers perhaps more of a changing landscape, while Merck is looking less aggressive in change but has a higher dividend rate of 4.5%.

Jim Berdou

Yahoo!’s (NASDAQ: YHOO) revenue fell (Reuters)

A settlement of the debate over the U.S. debt pushed crude higher (Reuters)

Samsung released a new Galaxy tablet to further compete with the Apple iPad (Reuters)

T-Mobile will offer an unlimited data plan (Reuters)

Apple directors may have had discussions about a replacement for Steve Jobs (Reuters)

Goldman Sachs (NYSE: GS) made fewer bond investments, which drove its profits lower. It will fire 1,000 people (WSJ)

The failure of Eli Lilly’s (NYSE: LLY) Alzheimer’s drug raised concerns about related treatments (WSJ)

Bank of America (NYSE: BAC) said it hoped for an increase in business lending (WSJ)

The LSE expects few IPOs this summer (WSJ)

Nokia (NYSE: NOK) is expected to say its business has fallen further (WSJ)

The FBI began an investigation into whether any properties of News Corp (NYSE: NWS) in the U.S. hacked phones of 9/11 victims (WSJ)

China will begin to explore deep seas for new minerals (WSJ)

EU leaders appeared closer to a deal to aid Greece (WSJ)

The IMF warned that euro-zone problems could affect financial stability outside the region (WSJ)

HSBC has begun to cut relationships with Americans who may park money outside the country to save on taxes (WSJ)

The SEC and CFTC do not have the resources to handle their jobs as new responsibilities are added due to recent legislation (WSJ)

Intel’s (NASDAQ: INTC) earnings will suffer short term as the period of PC dominance ends (WSJ)

Global hedge fund assets were over $2 trillion at the end of last quarter (WSJ)

The U.S. Postal Service will try to cut the amount of real estate it holds (WSJ)

Coca-Cola (NYSE: KO) will raise prices in the U.S. by 3% in the second half (WSJ)

The U.S. government will shutter 800 computer centers and lay off thousands (NYT)

EU leaders remain concerned about the finances of Spain and Italy (NYT)

American Air (NYSE: AMR) will probably split a 600 jet order between Boeing (NYSE: BA) and Airbus (FT)

Zillow and Skullcandy IPOs priced above expected ranges (FT)

Douglas A. McIntyre

Write us what you think about this article.  douglasamcintyre@247wallst.com

Two food companies showed modest gains: General Mills Inc. (NYSE: GIS) and YUM! Brands Inc. (NYSE: YUM). And, two retailer moved higher, but with little conviction: Kohl’s Corp (NYSE: KSS) and Safeway Inc (NYSE: SWI)

Our screen yielded six companies.  We list them here by the size of their dividends in descending order: Eli Lilly & Co. (NYSE: LLY) , Bristol-Myers Squibb Company (NYSE: BMY), Merck & Co. Inc. (NYSE: MRK), Pfizer Inc. (NYSE: PFE), Abbott Laboratories (NYSE: ABT) and Johnson & Johnson (NYSE: JNJ).   The six companies pay dividends ranging from 3.45% to 5.27%.  Beyond attractive dividends,  all of these companies boast additional positive characteristics including: forward PE’s lower than 13.5; price to free cash flow (P/FCF) per share lower than 28; and, average volume greater than 2 million shares per trading day.  Five of the six companies sport Return on Equity (ROE) greater than 9%.

The industry faces notable challenges in aiming for positive year-over-year earnings comparisons over the next several years.  Investors today are not able to look at drug companies as a mega-growth sector like they could in the 1990s.  A significant bolstering factor:  cash equivalents on the balance sheets of these six Big Pharma are sufficient to meet dividend payouts for multiple years. Except where otherwise noted, the source for all performance and financial data is Finviz.com.

In recent weeks, all six of these companies have demonstrated relative strength in the face of market declines.  Both the Dow Industrials and S&P 500 have fallen more than 7% since reaching their intermediate highs on the last trading day of April, 2011. During the same period, shares of these six Big Pharma companies have been under pressure as well, but have realized markedly lesser losses.  The shares of two of them, Eli Lilly & Co. (NYSE: LLY)  and Johnson & Johnson (NYSE: JNJ) actually posted tiny price gains, resulting in credible total returns. The other four companies showed share price losses ranging between 1.4% and 3.7%.

Eli Lilly & Co.  (NYSE: LLY) pays a 5.3% dividend with an earnings payout ratio of 46.4%.  Should Lilly encounter a period of declining earnings, its balance sheet boasts $5.80 “cash per share,” sufficient to cover its dividend payout for 12 quarters. Its forward PE is 10 and its price to free cash flow (P/FCF) is 11.6.  Its shares closed at $37.20 Wednesday, down1.1%. Its 52-week price range is $31.12 to $39.40.

Bristol-Myers Squibb Company (NYSE: BMY)  pays a 4.8% dividend with an earnings payout ratio of 67%.  Bristol-Myers holds $3.98 cash per share, sufficient to cover its dividend for 12 quarterly payouts.  Its forward PE is 13.3 and its price to free cash flow (P/FCF) is 24.3.  shares closed at $27.42 Wednesday, down 0.98%.  Its 52-week range is $23.35 to $28.99.

Merck & Co. Inc. (NYSE: MRK)  pays a 4.3% dividend.  Over the next several quarters, bottom line numbers are expected to lower Merck’s horrendous earnings payout ratio to more acceptable levels.  Currently this payout ratio is 292.5%.   Clearly, current quarterly earnings are covering only one third of the company’s current quarterly dividend.  Merck’s $4.22 cash per share is sufficient to cover its dividend payout for 11 quarters. Its forward PE is 9.1 and its price to free cash flow (P/FCF) is 22.6.  Merck’s shares closed at $35.17 Wednesday, down 1.3%.  Its 52-week trading range is $30.73 to $37.25.

Pfizer Inc. (NYSE: PFE) pays a 3.96% dividend with an earnings payout ratio of 69.9%.  The company holds $3.09 cash per share, sufficient to cover its dividend for 15 quarterly payouts. Its forward PE is 8.9 and its price to free cash flow (P/FCF) is 10.8.  Pfizer’s shares closed at $20.19 Wednesday, down 1.9%.  Its 52-week range is $13.43 to $21.45.

Abbott Laboratories (NYSE: ABT) pays a 3.74% dividend with an earnings payout ratio of 62.1%.  Abbott’s balance sheet cash per share is $4.18, sufficient to cover its dividend payout for 9 quarters.  Its forward PE is 10.4 and its price to free cash flow (P/FCF) is just less than 15.  Abbott Lab’s shares closed at $51.31 Wednesday, up 0.04%.  Its 52-week range is $43.41 to $54.24.

Johnson & Johnson (NYSE: JNJ)  pays a 3.45% dividend with an earnings payout ratio of 48.3%.  The company’s $9.80 cash per share is sufficient to cover its dividend payout for 17 quarters.  Its forward PE is 12.5 and its price to free cash flow (P/FCF) is 27.3.  The company’s shares closed at $66.16 Wednesday, down 1.4%.  Its 52-week range is $54.88 to $67.36.

Jim Berdou

The big screen today is defensive stocks with the highest dividends.  Our screen came to a near-tie from Altria Group Inc. (NYSE: MO), Reynolds American Inc. (NYSE: RAI) and Lorillard, Inc. (NYSE: LO).  We also found Kimberly-Clark Corporation (NYSE: KMB), Eli Lilly & Co. (NYSE: LLY), HJ Heinz Co. (NYSE: HNZ), ConAgra Foods, Inc. (NYSE: CAG), Molson Coors Brewing Company (NYSE: TAP), Dr Pepper Snapple (NYSE: DPS), and American Water Works Company, Inc. (NYSE: AWK).

CIGARETTES:  The cigarette space yields three industry leading players, each with a payout exceeding 5%.  Reynolds American Inc. (NYSE: RAI) leads with a dividend of 5.61%, followed by Altria Group Inc. (NYSE: MO) paying 5.57% and Lorillard, Inc. (NYSE: LO) paying 5.23%. Among the three companies, dividend payout ratios range from LO’s low of 65.0% to RAI’s high of 80.88%. Forward P/E’s range from LO’s low of 11.76 to RAI’s high of 13.31. RAI’s shares currently trade around 38, with a 52-week range of $25.53 to $39.87.  With shares trading near $27.50, MO’s 52-week range is $19.53 to $28.13.  LO’s shares currently trade around $102, LO’s 52-week range is $70.87 to $116.90.  Fitch recently gave a report that it expects that tobacco players can easily mitigate legal pressures and regulatory pressures ahead.  Maybe some investors feel guilty for owning stocks that make a living by killing their customers, but those dividend checks are big enough to clean up a conscience.

CONSUMER PRODUCTS: Kimberly-Clark Corporation (NYSE: KMB) is the winner here in dividends for the consumer products sector with a dividend of almost 4.2%. It leads consumer product peers by far and it was one of our own stocks to own for the next decade.  That has not changed.  At $65.65, its has a 52-week range of $59.62 to $68.49, and Thomson Reuters sees a consensus price target of $68.58.  Some have been concerned that rising input costs and in-store promotion costs are too large of a challenge.  We think that Kimberly-Clark (and most peers) can actually survive and thrive either way.

BIG PHARMA: With a dividend of 5.2%, Eli Lilly & Co. (NYSE: LLY) leads major drug manufacturers.  Eli Lilly has a dividend payout ratio of 46.38% and a forward P/E of 10.05.  With shares trading near $38, LLY’s 52-week range is $32.81 to $39.40.  Five other significant drug companies also pay attractive dividends in excess of 4%, including AstraZeneca PLC (NYSE: AZN), GlaxoSmithKline plc (NYSE: GSK), Sanofi-Aventis (NYSE: SNY), Bristol-Myers Squibb Company (NYSE: BMY) and Merck & Co. Inc. (NYSE: MRK).  Dividends in this group range upward from Merck’s 4.25% to AstraZeneca’s 4.94%.

FOOD – MAJOR DIVERSIFIED: HJ Heinz Co. (NYSE: HNZ) leads its industry with a dividend of 3.6%. The company’s forward P/E of 14.56.  With shares trading near $53.50, Heinz’s 52-week range is $42.88 to $55.00.  The consensus price target is $56.81 per Thomson Reuters, so most of the return here may be left in the form of dividends.  Goldman Sachs may have cut its rating to “SELL” recently but it still offers what looks to be the top dividend.

FOOD – PROCESSED & PACKAGED GOODS: ConAgra Foods, Inc. (NYSE: CAG) leads this segment of the food industry with a 3.8% dividend. ConAgra has a dividend payout ratio of 55.20% and a forward P/E of 12.88.  With shares currently trading around 24.50, CAG’s 52-week range is $21.02 to $25.82.  ConAgra is one which does not always feel as defensive as some food stocks, but that dividend is hard to beat.

BEVERAGES – BREWERS: Molson Coors Brewing Company (NYSE: TAP) leads brewers with almost a 2.9% dividend. The company’s payout ratio is 26.26%.  Its forward P/E is 11.26. With shares trading near $44.50, TAP’s 52-week range is $41.88 to $51.11.  The beer sector has not acted quite as defensive as other defensive sectors.  Trends of micro-brews and smaller brews have been troublesome, as has input price trends.  Still, we recently named the now-Canadian Coors owner as a value stock likely to benefit from the summer trends.  In this heat wave, how many people can drink big red wines?

BEVERAGES – SOFT DRINKS: With a dividend of 3.2%, Dr Pepper Snapple (NYSE: DPS) leads this segment of the beverage industry.  Dr Pepper’s dividend payout ratio is 41.30% and its forward P/E is 13.34.  With shares trading around $40, DPS’s 52-week range is $33.60 to $42.44.  Dr. Pepper may still be more growth-oriented than a Coke or Pepsi and it has raised its dividends.  It is now paying a higher payout than both Coke and Pepsi.  Shares are also close to the analyst target of $42.92.

WATER UTILITIES: American Water Works Company, Inc. (NYSE: AWK) leads the municipal water space with a dividend of about 3.1%.  AWK’s payout ratio is 54.64%. Its forward P/E is 15.54. With shares trading near $28.50, the stock’s 52-week range is $19.92 to $30.70.  This one is as defensive as you can get.  You don’t have to an iPhone to live but try living without your water company.  The company’s dividends have risen and are likely to keep rising though time, it has nothing short of monopolies in the local markets which it operates, and its stock has risen and risen until recently.  There is a reason that this was one of our stocks to own for the next decade.

Call this what you want… value investing, dividend investing, or income investing.  Many of these stocks are held by investors for years and years.

JON C. OGG

Hewlett-Packard (NYSE: HPQ) was savaged by the press as information from its CEO about its weak quarterly numbers and future prospects were leaked to the press.

The Flame Index started as a research tool in 2008 at the NY Innovation Design Lab (nyidlab). It was used as a general metric to evaluate companies and their risk in the media. Publicly traded Fortune 500 companies are used as a measure to calculate an overall market of negative news and the companies are ranked within that market.

Data and ranking provided by the Flame Index.