Apple's snappy iPhone wows investors

Count on Apple's (AAPL, news, msgs) Steve Jobs to generate buzz.

Shares of the electronics giant -- notice Market Dispatches doesn’t say computer maker, but we'll get to that -- were jumping today after Jobs unveiled a long-expected telephone. The stock was up 8.5% to a record $92.57 and led both the Standard & Poor's 500 Index and the Nasdaq-100 Index ($NDX.X).

Investor enthusiasm for Apple was, well, extreme: Nearly 120 million shares changed hands today, more than four times its daily average, and one can argue Apple's gain helped turn the stock market around. The market struggled for most of the morning as traders coped with a volatile energy market.

Alcoa's (AA, news, msgs) decent fourth-quarter report could give the market some oomph tomorrow.

The S&P finished down slightly at 1,412. The Nasdaq-100 was up 0.5% to 1,796, and the Nasdaq Composite was up 5.6 points, 0.2%, to 2,445.

The Dow Jones industrials were down a slight 6.9 points at 12,416.60.

Apple's announcement at its Macworld Conference in San Francisco also pushed up makers of semiconductors used in telecommunications and video.

Thirteen of the 19 stocks in the Philadelphia Semiconductor Index ($SOX.X) were higher today, and the index was up 0.7% at 475.

The Apple iPhone was one of those shock-and-awe product announcements, featuring a touch screen that combines features from the company's popular iPod music player. And it is betting that the ability to combine phone, music and Internet access will transform the wireless phone universe.

The company also unveiled new features for its Apple TV product, including the ability to download movies from film producer Paramount. The company also said it will be changing its name immediately to Apple Inc.

"Apple is going to reinvent" the telecommunications industry, Jobs told the conference audience. The phone will be available in June and will be available exclusively only to customers of AT&T's (T, news, msgs) Cingular wireless service. The Wall Street Journal reported the arrangement this morning.

The machines won't be cheap. A model with four gigabytes of storage space will cost $499, while a version with eight gigabytes of storage will cost $599. Apple has sold its four-gigabyte iPod nano for $200 and eight-gigabyte iPod nano for $250.<

The name of the phone is not yet Apple's. It turns out that Cisco Systems (CSCO, news, msgs) owns the name "IPhone" and was negotiating the rights with Apple. An agreement was expected today, the Journal said. Cisco used the name in a line of Internet-based phones unveiled last month. Cisco was down 0.5% this afternoon.

Stocks of two competitors were hammered on the news: Research in Motion (RIMM, news, msgs), maker of the BlackBerry device, and Palm (PALM, news, msgs).

Research in Motion was down 7.9% this afternoon; Palm fell 5.7%.

• Columnist Robert Walberg says Apple's iPhone announcement shows the company isn't done creating revolutionary technology.

Alcoa shares jump on earnings gain

Wall Street genuinely liked Alcoa's earnings, and it could lead to a positive open in the morning.

After the close today, aluminum giant said it earned 41 cents after items in the fourth quarter, up 58% from a year ago, on a 20% revenue gain to $7.8 billion.

The Dow component said it sees a strong market ahead in 2007 despite weakness in the automobile industry. Results were boosted by high prices globally and strong demand from aerospace, commercial transportation and building markets.

The results include after-tax charges of $386 million, or 44 cents per share, for costs related to a restructuring program that includes the elimination of 6,700 jobs. Excluding all the charges, the profit was 74 cents a share; analysts had expected 65 cents.

The stock was up 4 cents to $28.52 in regular trading and moved up another 4.9% to $29.91 in after-hours trading.

Alcoa is the first Dow component to report fourth-quarter earnings. Thomson Financial is projecting profit growth of 9.7% for S&P 500 companies from a year ago. If that profit growth rate is above 10%, it would be the 14th straight quarter of double-digit profit gains.

The sector expecting the largest growth is financial stocks, up 34%, Thomson says, with energy projected to show a 9% profit decline.

Energy prices -- New York close

	Tues.	Mon.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$55.64	$56.09	-$0.45	-8.86%	-8.86%
Heating oil (per gallon)	$1.5565	$1.5571	-$0.0006	-2.59%	-2.59%
Natural gas (per million BTU)	$6.6310	$6.3780	$0.2530	5.27%	5.27%
Unleaded gasoline (per gallon)	$1.4696	$1.4685	$0.0011	-8.27%	-8.27%

United wins nonstop flights to China

United Airlines won tentative approval today to operate the first nonstop daily flight between Washington and Beijing, a 14-hour trip that links the countries' capitals as their economies become more intertwined.

The Department of Transportation's final OK would give UAL's (UAUA, news, msgs) United a route coveted by executives and government officials and potentially worth $200 million a year.

United beat out AMR's (AMR, news, msgs) American Airlines, which sought to fly between Dallas/Fort Worth and Beijing; Continental Airlines (CAL, news, msgs), which applied for service between Newark, N.J., and Shanghai; and Northwest Airlines (NWACQ, news, msgs), which applied for Detroit-Shanghai service.

All four airlines' shares were higher on the day -- thanks to continued falling oil prices.

Short-covering hits the oil markets

Early today, that was a serious question because crude oil seemed to be in a free fall, crashing through an intraday low of $54.86 a barrel set on Nov. 17. A bottom was reached at $53.88, a level not seen since June 2005.

But crude rebounded from that low to as high as $56.13, a gain of 4 cents from yesterday, before falling back to $55.64 at the close. The $55-a-barrel mark was considered to be a key technical level for oil, analysts said.

The biggest reason for the oil rally was short-covering ahead of a freeze expected to spread across the country over the next 10 days. Temperatures in Chicago are expected to drop as low as 2 degrees above zero by next Tuesday.

There was also some worry about Russia's cutting oil supplies to Europe through Belarus. The Russians believe its neighbor was siphoning oil off. The pipeline carries oil through Belarus to Poland and Germany and provides about one-fifth of Germany's oil supplies.

There was also a fear rally at work, driven by worries at Venezuelan President Huge Chávez might take crude off the market or simply refuse to sell it to the U.S. Yesterday, Chávez announced plans to nationalize his nation’s telephone system and electric utilities.

Venezuela supplies 10% of U.S. oil imports and is the fourth biggest supplier after Canada, Mexico and Saudi Arabia.

The Energy Department will release inventory data Wednesday. Analysts expect inventories to rise an average of 820,000 barrels.

Not all analysts buy into the idea of a $55 barrier.

Fadel Gheit, a senior energy analyst with Oppenheimer & Co., said the $55 mark for oil prices is like a speed limit -- people go over and under it. He said oil is a commodity that has been volatile and will continue to be.

• Video on MSN Money: Make or break year for OPEC?

Gheit said demand is the key factor in oil prices and is shaped by economic growth and weather.

OPEC has its own tensions, Gheit said. Venezuela, Nigeria and Iraq are already producing less than their quotas, so production cuts would have to be distributed among the remaining member countries, including Algeria, Libya and Saudi Arabia.

Gheit said the higher prices seen in July 2006 have pushed other industries to find ways to reduce consumption, to be more efficient and to find alternatives. Those efforts have now taken hold; he expects the government under the Democrats will give more incentives to industries like food and housing to move to alternatives.

Short hits from the markets -- 4 p.m.

	Tues.	Mon.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	4.945%	4.910%	0.035	0.71%	1.23%
5-year Treasury note yield	4.655%	4.658%	-0.003	0.24%	-0.98%
10-year Treasury note yield	4.656%	4.660%	-0.004	0.22%	-1.15%
30-year Treasury bond yield	4.738%	4.740%	-0.002	-0.11%	-1.66%
Currencies
U.S. Dollar Index	84.61	84.37	0.24	1.41%	1.41%
British pound in dollars	$1.940	$1.940	0.000	-0.99%	-0.99%
Dollar in British pounds	£0.515	£0.516	0.000	1.00%	1.00%
Euro in dollars	1.301	1.303	-0.003	-1.47%	-1.47%
Dollar in euros	€ 0.7689	€ 0.7672	0.002	1.49%	1.49%
Dollar in yen	119.25	118.79	0.46	0.19%	0.19%
Commodities
Gold	$615.00	$606.90	$8.10	-3.61%	-3.61%
Copper	$2.5560	$2.5350	$0.02	-10.97%	-10.97%
Silver	$12.5950	$12.2300	$0.37	-2.63%	-2.63%
Crude oil (NYMEX) (per barrel)	$55.64	$56.09	-$0.45	-8.86%	-8.86%

Sprint Nextel to cut jobs

No. 3 wireless carrier Sprint Nextel's (S, news, msgs) shares took a hit today after the company forecast slow sales growth, saying that revenue for 2006 would be $41 billion, within its own anticipated range but below analysts' expectations of $41.5 billion.

Shares fell 11.2% to $17.62.

Sprint, which now plans to cut 5,000 jobs this year, had 64,600 employees at the end of 2006.

Sprint also said that though it added 742,000 total net subscribers, it lost 306,000 "post-paid" subscribers -- customers with yearly plans who paid their bills at the end of every month -- in the fourth quarter.

Deutsche Bank downgraded the stock to "sell" from "hold," calling the 2007 outlook "abysmal."

Investors flee Venezuelan phone stock

Hugo Chávez announced yesterday that he would nationalize the country's biggest phone company CANTV (VNT, news, msgs). He also said he was planning to nationalize utilities and gain more control over the oil industry. Shares of CANTV plunged nearly 28% to $12.07 in New York Stock Exchange trading, but the stock did not open for trading in Venezuela. It had fallen 14% in New York yesterday before trading was suspended. The company makes up nearly one-fifth of the Caracas Stock Exchange.

Chávez had been planning to make Venezuela more socialist after he was re-elected Dec. 3.

"Chávez seems bent on modeling Venezuela after the old Soviet economy, where the state controls everything," Robert Bottome, an analyst with Caracas research company Veneconomia, told Bloomberg News. "If his intentions weren't clear before, they are now."

Chávez also attacked foreign companies' influence in Venezuela's oil industry, saying control of oil-related assets should belong to the state.

Just one word: Plastics

Just one day after General Electric (GE, news, msgs) announced it was buying oil-services company Vetco Gray for $1.9 billion, GE is looking for buyers for its $10 billion plastics business.

The Wall Street Journal is reporting that the conglomerate has told several private-equity firms about a possible sale.

But the company also reportedly told the firms that they face restrictions on teaming up with other private-equity bidders for a deal. The paper said the possible restrictions stem from competition concerns by the U.S. Department of Justice.

The Justice Department launched an antitrust investigation into private-equity funds in October to determine whether the teaming up of funds limits the size of bids and the number of bidders.

The plastics unit, which has been hit hard by raw-material inflation and competition, has current estimated annual sales of $7 billion. GE was up slightly on the day at $37.58.

By Charley Blaine and Elizabeth Strott