Dow jumps 118 after crude oil hits $97

Crude oil hit another record today on growing concern about domestic supplies, and speculation built that the price could top $100 a barrel as early as Wednesday.

Crude finished the day at a record $96.70 a barrel, up 2.9% from Monday. It had been as high as $97.07 in the morning.

The price jump sent energy stocks soaring and was the biggest reason that the stock market finished the day with decent gains.

And it leaves consumers facing the unhappy prospect of higher pump prices. AAA's daily gas price survey showed the national average price of gasoline at $3.024 a gallon, up 2 cents from Monday and 25 cents a gallon, or 9%, in a month.

At the close, the Dow Jones industrials were up nearly 118 points, 0.9%, to 13,661. The Nasdaq Composite Index was up 30 points, or 1.1%, to 2,825, and the Standard & Poor's 500 Index was up 18 points, or 1.2%, to 1,520.

Shares of ExxonMobil (XOM, news, msgs) led the blue-chip index with a 3.1% gain to $90.38. That was worth nearly 23 points of the Dow's gain.

In addition, Apple (AAPL, news, msgs) and Cisco Systems (CSCO, news, msgs) each moved more than 2.5% higher and led technology stocks higher. Cisco reports first-quarter earnings after Wednesday's close.

Crude's big jump came on concern about domestic and global supplies. A big storm in the North Sea was forcing a number of oil companies to shut down production. And domestic supplies were squeezed by storms a week ago that shut in production in Mexico.

• Talk back: How are higher oil and gasoline prices affecting you?

The Energy Information Administration forecast today that global demand for oil would be unchanged in 2008 at 1.5 million barrels a day -- even as the price of oil has risen more than 50% since the fall of 2006.

Wednesday brings the weekly report on crude oil supplies, and Alaron Trading analyst Phil Flynn told MarketWatch that he expects domestic inventories to shrink, adding more pressure on prices.

An attack on a Yemeni oil pipeline triggered worries about supplies, and blasts in Afghanistan killed 64 people, adding to concerns about unrest in the Middle East.

But the bigger issue was the continued fall in the dollar, which pushed most the prices of commodities that are denominated in dollars higher. These included crude oil, gold, silver, copper and grains.

Gold closed at $823.40 an ounce in New York, a 1.6% gain and is up nearly 10% since the end of September. Gold stocks jumped on the price gain. Newmont Mining (NEM, news, msgs) was up 4% to $54.41.

• Investors take a shine to gold

Silver, meanwhile, closed at $15.38 an ounce in New York. And wheat jumped 13 cents a bushel to $7.98. Archer-Daniels-Midland (ADM, news, msgs) jumped 6.9% to $36.89 after the company said its oilseeds processing revenue soared in its fiscal first quarter.

Rallying with ExxonMobil were Valero Energy (VLO, news, msgs), up 4.8% to $72.73; Apache (APA, news, msgs), up 3.6% to $105.96; and Halliburton (HAL, news, msgs), up 2.2% to $40.64.

GM, Time Warner, Cisco Systems will report

In addition to the Energy Department report on oil inventories, Wednesday will also include earnings reports from General Motors (GM, news, msgs), Time Warner (TWX, news, msgs) and Cisco Systems (CSCO, news, msgs).

GM jumped ahead of the market today by announcing its report will include a $39 billion charge from a write-down of tax credits it won't be able to use.

• More on GM's big charge

The charge does not affect GM's cash position, but it is an acknowledgment of how tough times are for the auto maker. The credits are only useful if they can offset profits. GM clearly doesn't see that happening any time soon.

GM shares were up slightly to $36.16 in regular trading but fell 2.8% to $35.14 in after-hours trading.

Wall Street is expecting big profits from Cisco, the biggest player in computer networking. The stock, which closed up 3% to $34.08 today, is up 24.7% this year. The average earnings estimate is for 34 cents a share, up 26% from a year ago.

Energy prices -- New York close

	Tues.	Mon.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$96.70	$93.98	$2.72	2.30%	58.39%
Heating oil (per gallon)	$2.6078	$2.5439	$0.0639	3.99%	63.20%
Natural gas (per million BTU)	$7.8630	$7.9990	-$0.1360	-5.61%	24.83%
Unleaded gasoline (per gallon)	$2.4350	$2.3811	$0.0539	4.06%	51.99%

Yahoo loses two ways despite Alibaba's big IPO

This was not a day for Yahoo's (YHOO, news, msgs) shareholders, co-founder Jerry Yang or Michael Callahan, its general counsel.

The first problem was the stock's performance: down 4.6% to $29.93 in regular trading, although it did rebound slightly to $29.97 in after-hours trading.

The fall was due in large part to Jeffrey Lindsay, an analyst at Sanford C. Bernstein, who said the shares had become too pricey in the wake of a wildly successful initial public offering for Chinese Internet company Alibaba.com.

Alibaba went public today in Hong Kong, and its shares nearly tripled to HK$39.50 ($5.09 U.S.). That suggested a market cap for the company of roughly $25.7 billion. Yahoo owns 40% of the company.

The second problem was the withering criticism that Yang and Callahan endured in a House Foreign Relations Committee hearing over Yahoo's actions that led to the arrest and jailing of a dissident in China.

Yahoo had turned over account information on journalist Shi Tao that was used to put him in prison with a 10-year sentence. Originally, the company told the House Foreign Relations Committee that its staff in China hadn't known why the Chinese government wanted the information. Later on, the company admitted they did know.

To make matters worse, having created the problem, Yahoo had done nothing for Shi Tao's family, who lost their chief breadwinner.

"While technologically and financially you are giants, morally you are pygmies," Committee Chairman Tom Lantos, D-Calif., said angrily after hearing from Yang and Callahan.

Yang and Callahan apologized to Shi Tao's mother, Gao Qinsheng , who attended the hearing.

But Callahan also said, "I cannot ask our local employees to resist lawful demands and put their own freedom at risk, even if, in my personal view, the local laws are overbroad."

Financial stocks catch a rally

There was good news today from the financial sector, whose stocks generally moved higher as bargain-hunters moved into a number of key stocks.

Goldman Sachs (GS, news, msgs) was up 2.2% to $223.16 after strongly denying it was going to announce an $11-billion write-down of securities from the subprime-mortgage crisis.

The exception was Dow component Citigroup (C, news, msgs), down 2.3% to $35.08 as investors worried about how big its subprime problems will ultimately prove to be. The stock was the worst performer in the index.

Citigroup was also was downgraded to "neutral" from "buy" today by Bank of America.

Meanwhile, CIBC World Markets analyst Meredith Whitney told The Telegraph in London that the only way the bank can move forward under Chairman Robert Rubin and interim CEO Win Bischoff is to carve it up and sell off the pieces. Whitney sparked a sell-off in the stock last week when she said the company may have to cut its dividend. She says she also received a number of death threats on the downgrade.

Worries about the financial sector have been weighing on the markets since last summer, and many think the problems won't go away anytime soon.

"I think that the risk of a recession is greater than people realize," James Dunne, chief executive of Sandler O'Neil & Partners, said at the Reuters Finance Summit in New York.

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Separately, Citigroup named Richard Stuckey head of its subprime portfolio division, which was created after the bank's warning about more write-downs. Citigroup is hoping that Stuckey's experience in helping unwind Long-Term Capital Management's bad bets in 1998 will be useful.

On Monday, Citi said it will write down an additional $8 billion to $11 billion in the fourth quarter. The bank also announced that Chuck Prince was resigning as CEO.

Investment banks to offer loans for Chrysler

Things could be looking up for the corporate-loan market.

Investment banks are going to launch a debt offering of $10 billion this week for Chrysler's automotive business, according to published reports, which could spark a recovery in the credit-crunched corporate-bond market.

The banks, JPMorgan Chase (JPM, news, msgs), Citigroup, Goldman Sachs (GS, news, msgs), Morgan Stanley (MS, news, msgs) and Bear Stearns (BSC, news, msgs), are making their second go at trying to find investors for the Chrysler debt, which has been sitting on the banks' books since summer, when credit markets started to collapse.

As part of private-equity firm Cerberus Capital Management's deal to buy Chrysler in August, the investment banks said they would raise $12 billion in high-yield loans for Chrysler's auto business, The Wall Street Journal reported. An additional $8 billion in loans was raised for Chrysler's financial arm and sold in July at a discount.

The bond announcement is expected Wednesday, the paper reported.

Trouble in housing

Home builder Beazer Homes (BZH, news, msgs) said late Monday that it will take a $230 million charge in the fourth quarter to abandon land contracts. The struggling home builder also said that it is halting its 10-cent quarterly dividend because of the housing slump.

"With recent industry data suggesting that market conditions may deteriorate further before a recovery is under way, we need to adapt and further align our cost structure and investment levels to expected lower volumes," Chief Executive Ian McCarthy said in a statement late Monday.

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Beazer also said it cut 650 jobs, or a quarter of its work force, last month.

Beazer shares were up nearly 10% to $10.47.

Another home builder, Hovnanian (HOV, news, msgs) said today that it delivered 19% fewer homes in its fiscal fourth quarter. Signed contracts fell 10% to 2,781 in the quarter.

Hovnanian shares were down 0.7% to $10.04.

On a related note, former Federal Reserve chief Alan Greenspan said the housing market, particularly the high inventories of unsold homes, would be a nagging problem for the U.S. economy, according to Reuters. "We still need to accelerate the rate of inventory liquidation, and that will mean bringing housing starts down and sales up. We have a long way to go," Greenspan said to a forum in Tokyo today.

UAW leaders approve contract with Ford

United Auto Workers leaders unanimously approved a tentative contract with Ford Motor (F, news, msgs) late Monday.

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Ford was the last of the Big Three U.S. automakers to negotiate with the union, and its deal followed the same general structure as the ones approved at General Motors (GM, news, msgs) and Chrysler several weeks ago. Ford will pay $13.2 billion to create a union-run trust that will cover retirees' health-care costs. Ford will pay $2.2 billion for retiree health care until the trust goes into effect in the beginning of 2010.

Ford also said it will not close any plants beyond the 16 previously announced in its Way Forward restructuring plan.

To take effect, the deal must now be ratified by a majority of the 58,000 UAW workers at Ford.

Ford's stock fell 4 cents to $8.63 this afternoon.

Separately, Ford will report third-quarter earnings on Thursday, and analysts are looking for a loss of 46 cents per share. Ford lost $3.08 per share in the same period last year.

Sun Micro reports profit

Server maker Sun Microsystems (JAVA, news, msgs) late Monday reported fiscal-first quarter income of $89 million, or 3 cents per share, up from a loss of $56 million, or 2 cents per share, in the same quarter last year.

Excluding charges, earnings were 6 cents per share, ahead of Wall Street's estimate of 3 cents per share.

Revenue rose to $3.22 billion, up from $3.19 billion, but lower than the consensus estimate of $3.27 billion.

Shares fell 9.6% to $5.16.

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

	Tues.	Mon.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	3.630%	3.580%	0.050	-4.97%	-25.69%
5-year Treasury note yield	3.973%	3.945%	0.028	-4.66%	-15.49%
10-year Treasury note yield	4.357%	4.318%	0.039	-2.64%	-7.49%
30-year Treasury bond yield	4.652%	4.616%	0.036	-2.08%	-3.45%
Currencies
U.S. Dollar Index	76.03	76.42	-0.39	-0.62%	-8.40%
British pound in dollars	$2.0886	$2.0816	0.0070	0.38%	6.58%
Dollar in British pounds	£0.4788	£0.4804	-0.0016	-0.37%	-6.17%
Euro in dollars	1.4562	1.4480	0.0082	0.60%	10.32%
Dollar in euros	€ 0.6867	€ 0.6906	-0.0039	-0.59%	-9.36%
Dollar in yen	¥114.69	¥114.46	0.23	-0.62%	-3.64%
Commodities
Gold	$823.40	$810.80	$12.60	3.53%	29.06%
Copper	$3.3415	$3.3020	$0.039	-3.79%	16.39%
Silver	$15.3800	$14.7850	$0.60	6.52%	14.30%
Crude oil (NYMEX) (per barrel)	$96.70	$93.98	$2.72	2.30%	58.39%

By Charley Blaine and Elizabeth Strott