Crude sees its first close above $100

Crude oil shot up to its first close above $100 a barrel this afternoon, gutting a stock market rally and leaving investors wary about what may come next.

Crude's big jump to $100.01 came on a slew of bad news: cold weather in the Midwest, worries that the Organization of Petroleum Exporting Countries may cut output, a refinery outage in Texas and more unrest in Nigeria.

The stock market turned lower as crude prices soared. At the close, the Dow Jones industrials were down 11 points to 12,337. The Standard & Poor's 500 Index was down 1.2 points to 1,349, and the Nasdaq Composite Index was off 16 points to 2,306.

While the pullback was modest, it was deeply disappointing to many investors because the Dow had been up as many as 157 points in the morning, thanks to decent earnings from Wal-Mart Stores (WMT, news, msgs).

And the market got a boost this afternoon with strong earnings from tech giant Hewlett-Packard (HPQ, news, msgs).

Crude oil has been flirting with $100 a barrel for months. It crossed $100 on Jan. 2 and Jan. 3 but fell back as investors in crude oil took profits. It wasn't clear if today's close above $100 would hold. In electronic trading this afternoon, crude was at $99.55 a barrel, down 46 cents.

• $100 oil may be just the start

The ostensible reason for the oil-price uptick was an explosion and fire that shut down an Alon USA (ALJ, news, msgs) refinery in Texas. Prices shot up and pulled energy shares higher as a result. (Alon shares, however, fell 5.4% to $17.26.) In addition, traders said there was speculation that OPEC would trim production when it meets in March.

Plus, the March crude oil contract expires tomorrow. Short-covering in advance of the expiration has helped push crude higher.

ExxonMobil (XOM, news, msgs) and Chevron (CVX, news, msgs) were up 1.9% to $87.01 and 1.5% to $84.83, respectively -- good for 22 points for the Dow.

The energy rally extended across of the energy sector. The Amex Oil Index ($XOI.X) was up 2.7% to 1,414. The Amex Natural Gas Index ($XNG.X) was up 2.4% to 588. The Philadelphia Oil Service Sector Index ($OSX.X) added 2.4% to 277.

Chevron joined the Dow today, along with Bank of America (BAC, news, msgs).

• Get free, real-time stock quotes on MSN Money

They replaced Altria Group (MO, news, msgs) and Honeywell International (HON, news, msgs).

While Exxon and Chevron generated the most points for the Dow, American International Group (AIG, news, msgs) was today's biggest percentage gainer among the 30 blue-chip stocks, up 2% to $47.03, after a story in Barron's over the weekend suggested the stock was undervalued.

U.S. financial markets had been closed Monday for Presidents Day.

Energy prices -- New York close

	Tues.	Fri.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$100.01	$95.50	$4.51	9.00%	4.20%
Heating oil (per gallon)	$2.7614	$2.6469	$0.1145	8.95%	4.23%
Natural gas (per million BTU)	$8.9770	$8.6600	$0.3170	11.18%	19.97%
Unleaded gasoline (per gallon)	$2.6031	$2.4938	$0.1093	12.73%	4.51%

Hewlett-Packard's global business powers results

The world's biggest maker of personal computers saw its shares jump 6% to $45.93 in after-hours trading from a regular close of $43.95. The company delighted investors with fiscal-first-quarter earnings, and it raised guidance for the year.

Hewlett-Packard said it earned 86 cents a share, up from 65 cents a year ago and 5 cents ahead of Wall Street estimates. Revenue was up 13% to $28.5 billion and $1 billion ahead of estimates. The company was a significant beneficiary of the falling dollar. Five percentage points of the 13% revenue gain was due to the foreign-currency translations.

Analysts noted some weakness in the printer division but said the report showed H-P was able to manage through a tough economy. The report showed that the company is "able to execute even in a slowing economy," analyst Shannon Cross of Cross Research told Reuters.

H-P was helped by cost cuts and strong sales outside the United States as U.S. technology spending slowed on recession concerns.

But H-P faces a tougher environment this year as consumers and companies reduce spending on technology hardware, the bulk of H-P's business, and competition with a resurgent Dell Inc. (DELL, news, msgs), the No. 2 PC maker, heats up.

H-P forecast fiscal second-quarter earnings per share before items of 83 to 84 cents, above the average Wall Street forecast of 82 cents. H-P projected second-quarter revenue ranging from $27.7 billion to $27.9 billion, compared with the average analyst forecast of $27.5 billion.

H-P's results helped Dell shares move up 0.8% to $19.44 in after-hours trading; they had been down 1.5% in regular Nasdaq trading to $19.28. Apple (AAPL, news, msgs) shares moved up 1% to $123.36 in after-hours trading. The shares had fallen 2% to $122.18 in regular trading.

Wal-Mart gets the market started

The market got a strong start today thanks to Wal-Mart, whose shares were up 0.4% to $49.66.

The retailer reported fourth-quarter earnings of $4.1 billion, or $1.02 per share, a 4% increase from the $3.94 billion, or 95 cents per share, a year ago. Excluding one-time items, Wal-Mart earned $1.04 per share, ahead of analysts' estimates of $1.02 per share.

Revenue rose nearly 10% to $107.4 billion, the first time a retailer has reported quarterly revenue more than $100 billion. Revenue was in line with analysts' expectations.

• Video: Inside Wal-Mart's earnings

But Wal-Mart was a bit cautious about the outlook. "We know that the economy remains a critical factor in this new fiscal year," CEO Lee Scott said in a statement. "Customers were more cautious in their spending in January."

Wal-Mart cut thousands of prices in January by 10% to 30% to try to lure customers hit by the economic slowdown.

The company said it expects earnings of between 70 cents and 74 cents per share for the first quarter and between $3.30 to $3.43 per share for the full year. Wall Street's first-quarter estimate is 74 cents per share. The full-year consensus estimate is $3.44.

Credit Suisse to write down $2.85 billion

Credit Suisse (CS, news, msgs) this morning said it will write down $2.85 billion in asset-backed securities, which will cut the Swiss company's first-quarter earnings by $1 billion.

The bank said it found errors in control processes because several traders made mismarking and pricing errors on some structured credit trades which "didn't meet our standards," Chief Executive Officer Brady Dougan said on an analyst call.

The news comes just a week after Credit Suisse reported a 72% drop in fourth-quarter earnings with another $1.8 billion in write-downs.

While the decline was not pretty, the write-downs were far smaller than those of rival UBS (UBS, news, msgs). UBS last week reported a fourth-quarter loss of $11.3 billion and said it had written down $13.7 billion on bad mortgage bets in the quarter.

Shares of Credit Suisse fell 5.3% to $48.22 today. UBS shares dipped 1.3% to $32.71.

Barclays' profit slips, but stock jumps

Meanwhile, another European bank is in the news today -- with good news.

• Video: Sizing up Barclays' earnings

Barclays (BCS, news, msgs) reported 2007 net profit of $8.69 billion, a 3% decline from 2006 profit. Net write-downs for the year rose 26% to $3.22 billion.

The results were better than most analysts had expected. "The fact that there are no surprises is good news and shows that Barclays is coming out of this with minimum injuries and bodes well for the future," MF Global Securities analyst Mamoun Tazi told Bloomberg News.

Shares of the British financial-services company rose 9.6% to $37.41 in New York, after President Bob Diamond said he expects market conditions to improve during the second half of the year.

Microsoft says bid for Yahoo is 'fair'

Yahoo (YHOO, news, msgs) has been saying to Microsoft (MSFT, news, msgs): "Show me the money."

But what Yahoo may get is a proxy fight. The New York Times reported this morning that Microsoft may launch a proxy fight to replace the Yahoo board.

Microsoft so far has been unwilling to sweeten its bid for the Internet company.

"We sent them a letter and said we think that's a fair offer," Chairman Bill Gates said Monday. "There's nothing that's gone on other than us stating that we think it's a fair offer. They should take a hard look at it." (Microsoft is the publisher of MSN Money.)

• Talk back: Are the 'best' stocks now emerging?

Yahoo shares were down 2.3% to $28.98 this afternoon. Microsoft was down 0.6% to $28.15.

Late today, The Wall Street Journal reported that Yahoo plans to offer all of its employees enhanced severance benefits in the event they are laid off following any change in control of the Internet company.

Jeff Sonnenfeld of the Yale School of Management told CNBC this morning that he believes the Yahoo board is split, with half favoring the Microsoft deal and half opposed. He suggested that Microsoft is "waiting this out so that employees . . . and shareholders are increasingly asking for this deal."

• Video: More on Microsoft's bid for Yahoo

Microsoft offered $44.6 billion for Yahoo on Feb. 1, an offer Yahoo later rejected as too low.

Since then, Yahoo has been scrambling to develop alternatives. One possibility mentioned in the press is an advertising alliance with Google (GOOG, news, msgs); there have also been reports of talks between Yahoo and News Corp. (NWS, news, msgs). But Google has backed away from talks with Yahoo, and most analysts believe any deal between Yahoo and News Corp. wouldn't amount to much.

"All this talk about Yahoo combining with AOL or News Corp. is just noise," Canaccord Adams analyst Colin Gillis told Bloomberg News. "You're not curing any weaknesses. Shareholders would have a hard time loving a combination like that."

Microsoft shares have fallen nearly 13% since the bid was announced, as of Friday's closing price; that drop in Microsoft's share price has slashed the value of the overall offer to about $41 billion. Yahoo shares jumped 50% to $28.38 the day of the offer and have been trading around $28 to $29 since the offer was made.

What's next for Northern Rock?

The past weekend was a big one for troubled mortgage lender and bank Northern Rock (NHRKF, news, msgs).

On Sunday, the British government announced that it would "temporarily" nationalize Northern Rock, after rejecting bids from the bank's managers and Virgin Group.

The decision is viewed as another blow to British Prime Minister Gordon Brown and his Labor Party, which have drawn criticism for their efforts to aid the bank, now struggling to deal with the mortgage-market meltdown.

• Video: No muni-bond buyers

The government announced in September that it was enacting an emergency bailout plan, but instead of calming the markets, the move triggered the first run on a British bank in more than 100 years.

"We did the right thing, at the right time, for the right reasons," Brown said at a news conference on Monday, "to protect savers and the taxpayer."

Not everyone agreed.

"Let's be in no doubt about what a disaster this day is," said David Cameron, leader of the opposition Conservative Party, to Bloomberg News. "The nationalization of Northern Rock is a disaster for the British taxpayer, a disaster for this government and a disaster for our country."

Ron Sandler, formerly of Lloyd's of London, will run the bank.

Massive beef recall by FDA

The U.S. Food and Drug Administration recalled 143 million pounds of raw, fresh and frozen beef on Sunday -- the biggest meat recall in history.

The beef came from a California slaughterhouse, Westland/Hallmark Meat, which supplies meat to government school lunch programs and some fast-food chains.

The FDA recalled the meat after a video showed that injured and sick cows were processed by the company, despite regulations banning such cattle from the food supply as a precaution against diseases like salmonella and mad cow disease.

The government has stopped buying meat from Westland/Hallmark Meat, Secretary of Agriculture Ed Schafer said over the weekend. Most of the meat has already been consumed, the Agriculture Department said.

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

	Tues.	Fri.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	2.170%	2.130%	0.040	16.04%	-30.89%
5-year Treasury note yield	2.900%	2.764%	0.136	2.62%	-16.06%
10-year Treasury note yield	3.875%	3.780%	0.095	6.49%	-3.97%
30-year Treasury bond yield	4.655%	4.595%	0.060	6.91%	4.40%
Currencies
U.S. Dollar Index	76.075	76.380	-0.305	1.05%	-0.81%
British pound in dollars	$1.9493	$1.9527	-0.0034	-2.12%	-2.01%
Dollar in British pounds	£0.5130	£0.5121	0.0009	2.17%	2.05%
Euro in dollars	1.4734	1.4661	0.0073	-0.91%	0.81%
Dollar in euros	€ 0.6787	€ 0.6821	-0.0034	0.92%	-0.80%
Dollar in yen	107.82	108.11	-0.29	1.33%	-3.60%
U.S. dollar in Canadian dollars	$0.984	$1.007	-$0.0095	-1.60%	-0.94%
Canadian dollar in U.S. dollars	$1.017	$0.993	$0.0104	1.64%	0.96%
Commodities
Gold	$929.80	$906.10	$23.70	2.62%	10.95%
Copper	$3.7330	$3.5390	$0.19	5.48%	22.76%
Silver	$17.5080	$17.1180	$0.39	2.28%	17.35%
Crude oil (NYMEX) (per barrel)	$100.01	$95.50	$4.51	4.72%	4.20%

By Charley Blaine and Elizabeth Strott, MSN Money