Stocks finished lower as the dollar rose and concerns over European sovereign debt worries resurfaced. Positive U.S. data helped offset some of those concerns as industrial production rose in November at its fastest pace in four months, implying that self-sustaining recovery is now entrenched. The Empire State Manufacturing Survey rebounded strongly, adding to the brighter domestic picture.

The Dow Jones Industrial Average ended down 19.07 points, or 0.17%, to close at 11,457. The S&P 500 fell 6.36 points, or 0.51%, to close at 1235, and the NASDAQ was down 10.50 points, or 0.40%, to finish at 2617. Most of the key S&P 500 sectors were trading lower, led by utilities, financials and materials, while consumer staples gained.

CBOE Volatility IndexI:VIX calls were active as traders adjust positions into expiration, with the index closing up 1.87%, at $17.94. January 35 and January 27.5 calls were active on total put option volume of 67,000 contracts and 311,000 call contracts.

December options contracts expire this week, while VIX contracts expire on Wednesday, December 22 (last day to trade is Tuesday.) As a reminder, VIX contracts are on a different expiration schedule than "standard" options, expiring on the Wednesday that is thirty days prior to the third Friday of the calendar month immediately following the expiring month.

SPDR S&P 500 ETF (SPY) - Get Report December expiration led to greater volume as players adjust or exercised their derivative positions, closing down by $0.57, at $124.10. December 124 calls and December 124 puts were active on total put option volume of 956,000 contracts and 679,000 call contracts. January put option implied volatility is at 16 and February is at 19, below its 26-week average of 22, suggesting price movements will be low into 2011.

PowerShares QQQ Trust (QQQQ) wings (upside calls and downside puts) were active on low call volatility and flat put volatility as the Qs finished down $0.24, at $54.16. QQQQ put volume of 268,000 contracts compares to 205,000 calls, with December 54 puts as the most active series on 61,500 contracts. January put option implied volatility is at 19 and February is at 21, versus its six-month average of 22. QQQQ January 56 call volatility is at 15 and January 52 puts are at 21, indicating larger downside price movement.

Thursday will be active on the earnings calendar with the following notable companies reporting: ACN, DFS, FDX, GIS, ORCL and RIMM. Traders will be watching FedEx (FDX) - Get Report for an update on holiday shipping trends and Accenture (ACN) - Get Report and Oracle (ORCL) - Get Report for an outlook on how tech is pacing. Investors will keep an eye on Discover Financial Services (DFS) - Get Report earnings for a look into the credit space, as well as details on the Durbin component of the Dodd-Frank financial regulatory reform bill for more color on the restriction of anti-competitive practices in payment processing and debit card interchange fees.

The following economic data are expected to be released Thursday: Housing Starts, Jobless Claims and Current account due out at 8:30 a.m. EST, Philadelphia Fed Survey at 10:00 a.m. EST and the EIA Natural Gas Report at 10:30 a.m. EST; Friday: Leading Indicators due out at 10:00 a.m. EST.

Overseas, the EU Leaders Summit will take place on Thursday and Friday and while nothing too substantative is anticipated, there will be a lot of headlines about the sovereign debt situation in Europe and the officials ability to agree on a way to handle pockets of debt problems and bolster confidence in the single currency. Kit Juckes, a currency strategist at Societe Generale, told the Wall Street Journal that, "If the summit fails to provide investors with a solution to these issues, we will see a further loss of confidence in the euro and wer could easily move back to a fully fledged crisis."

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