Oil cut could choke stocksReport of February OPEC cut sends oil higher, stock futures down; strong Wall Street earnings could help limit stock sell-off.NEW YORK (CNNMoney.com) -- A report of an agreement by OPEC oil ministers to cut production in February sent oil prices sharply higher and might give stocks trouble, although that could be balanced by strong results from two major Wall Street firms. Stocks futures turned lower after the reports of the OPEC decision, pointing to a tough opening for the stock market. Rising oil prices are a worry for investors since they boost costs for many companies and can slow economic growth as well as adding to inflationary pressures. Oil prices spiked higher, then retreated slightly after the reports from Reuters and other outlets of the OPEC decision to cut production by another 500,000 barrels a day, but not until Feb. 1. U.S. crude jumped 95 cents to $62.32 a barrel in electronic trading. Brent crude futures gained 90 cents to $62.23 in London. Stocks ended a tumultuous session little changed Wednesday, as investors welcomed bullish November retail sales, but showed caution amid rising oil prices and Treasury yields. Early Thursday Lehman Brothers (Charts) and Bear Stearns (Charts) both topped earnings forecasts with improved results. Lehman earnings narrowly topped the consensus estimate with a 22 percent rise in profits, while Bear Stearns blew past the $3.36 a share forecast, reporting a $4.00 a share profit. Both results trailed the nearly doubling in earnings at competitor Goldman Sachs (Charts), which reported earlier in the week. Elsewhere, the dollar crept higher against the euro and the yen while Treasury prices also rose, taking the yield on the benchmark 10-year note to 4.56 percent from 4.58 percent. In other corporate news, Hewlett-Packard (Charts) and Microsoft (Charts) announced they have agreed to invest jointly at least $300 million over three years and work together to win over large business customers. General Motors (Charts) CEO Rick Wagoner told reporters at the automakers' holiday party Wednesday evening that he doesn't expect the company to reach a deal with bankrupt auto parts maker Delphi and the United Auto Workers before the end of the year. Talks about a new labor pact at the former GM unit have been going on for more than a year, and uncertainty over what a deal will cost GM has been hanging over the automaker and preventing its executives from setting a target for when it can return to profitability. Conglomerate and Dow component United Technologies (Charts) announced after the bell Wednesday that it expects 2007 profit of $4.05 to $4.20 per share. Analysts had been forecasting EPS of $4.14. Shares of the company slipped 0.3 percent in after-hours trading. The company also authorized a buyback of up to 60 million shares, worth about $4 billion at current prices. Stocks rallied in Asia Thursday. Sony shares rose as the company said there is no need to change its targets for worldwide shipments of its PlayStation 3 game console. And Australian airline Qantas accepted an $8.7 billion buyout offer from banks and private equity firms the day after the airline's board had rejected an earlier offer. Shares in Europe were higher in early trading. |
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