abcnews.go.com — By Haitham Haddadin

NEW YORK (Reuters) - U.S. stocks mostly hugged the flatline at midday on Monday after a rating downgrade on Dell Computer Corp. <DELL.O> and an earnings warning from Duke Energy Corp. <DUK.N> helped reverse an opening advance before key corporate earnings reports this week.

The blue-chip Dow Jones industrial average and the tech-laden Nasdaq rose slightly, while the broader Standard & Poor's 500 inched down a fraction of a point.

Last week, the three major market gauges gained between 2 percent and 4 percent amid a handful of strong earnings outlooks. But Wall Street is looking for confirmation of that guidance in earnings reports this week from several marquee companies plus a host of economic reports such as monthly retail sales, the Producer Price Index and consumer sentiment data.

"This is simply profit taking ahead of all the economic numbers as well the earnings reports due out this week," said Harry Michas, index futures trader at manmarketmonitor.com. "This market ran up pretty well over the past two weeks and I think it's time to take some profits off the table."

An upbeat brokerage call on Intel Corp. <INTC.O>, the chipmaking giant, had helped fuel the early gains in high-tech issues. However, Dell Computer fell after it was downgraded, denting other stocks in the sector. Also weighing on the market was Duke Energy, which sank nearly 12 percent after warning that earnings for 2002 would fall short of forecasts.

The Nasdaq Composite <.IXIC> edged up 0.79 of a point, or 0.05 percent, to 1,448.51, after rising more than 1 percent. The Dow Jones average <.DJI> was up 4 points, or 0.04 percent, at 8,788.66. The S&P 500 Index <.SPX> shed 1 point, or 0.12 percent, to 926.50.

U.S. Treasuries slipped as stocks rallied earlier. But after stocks fizzled, bonds clawed back some losses.

The most-active issue on the New York Stock Exchange was Canada's Nortel Networks Corp. <NT.TO> <NT.N>, up 13 cents to $2.48, or 5.5 percent. Nortel's stock touched a seven-month high on Friday as investors bet on a better 2003 for telecom equipment suppliers, spurred by some optimistic analyst calls.

The reversal in the indexes coincided with fresh economic data showing a sharp drop in the Kansas City Federal Reserve's regional manufacturing index, which covers manufacturing activity in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico and western Missouri.

"Timing wise, the drop in the Kansas City Fed Manufacturing index has caused a nosedive in stock index futures," said one stock index futures trader on the Chicago Mercantile Exchange. "The move downward was a surprise because the first half hour (of pit trade) seemed to be pointing the markets toward higher levels. This would be an excuse to take profits off the table."

The decline in the Kansas City Fed index suggests care should be taken in gauging whether national factory activity has picked up. The Kansas City manufacturing index registered -20 for December; of the 96 firms surveyed, more saw production drop from November's level than those who saw it rise.

SHORTING THE SPIDERS

"There's heavy selling on the Nasdaq futures and the shorts are also piling up at 930 on the S&P. They are shorting the spiders (exchange-traded S&P index fund) at 930. That's resistance," said Anthony Iuliano, head equity trader at Glenmede Trust Co.

Nasdaq 100 futures were down 12.50 points at 1,079, and S&P futures fell 4.30 points to 922.20. Earlier, both were higher.

"The traders are taking some profits. There's still a lot of problems out there with the geopolitical situation and earnings are not that fascinating so there's some concern over earnings," Iuliano said.

Intel was up 10 cents at $17.52 after earlier in the session rising as high as $17.98. Salomon Smith Barney raised its 2003 earnings estimates for Intel, which reports fourth-quarter earnings after the close on Tuesday.

Dell fell after J.P. Morgan Chase cut its rating for the computer maker to "Neutral" from "Overweight" because of "an increasingly aggressive industry pricing environment."

Dell declined $1.02, or 4 percent, to $26.13. Rival Hewlett-Packard <HPQ.N>, a Dow stock, lost 23 cents to $20.62.

Duke Energy fell $2.63, or 12.5 percent, to $18.37, and was the second-most active issue on the New York Stock Exchange. Duke also said the sluggish U.S. economy would prevent any near-term recovery of the merchant energy business.

Besides Intel, several other tech heavyweights, including International Business Machines Corp. <IBM.N>, report this week. Other big companies set to hand in their scorecards include General Motors Corp. <GM.N> and General Electric Co. <GE.N>, two of the 30 Dow industrials.

"The focus this week will be on corporate earnings announcements," Ken Tower, chief strategist at CyberTrader, Inc. told clients in a note. "The economy has been mixed over the past three months, so expect the same from earnings. For the markets, that means volatility, particularly since trouble in Venezuela and Iraq remain unresolved."

AOL'S CASE STEPS DOWN

After the resignation of Steve Case as chairman of AOL Time Warner Inc. <AOL.N>, AOL's stock rose 28 cents, or 1.9 percent, to $15.16. Effective in May, Case's resignation completes the exodus of the key architects of the $106.2 billion merger, which irked investors by not delivering on its promise to supercharge growth by marrying old and new media.

Early in the session, stocks got a lift as oil prices fell from recent two-year highs after OPEC's decision on Sunday to lift output. The Organization of Petroleum Exporting Countries, at an emergency meeting, increased production limits by 1.5 million barrels per day, or 7 percent, to compensate for six weeks of supply disrupted by a strike in Venezuela.

money.cnn.com Oil prices, economists, analysts unimpressed with cartel's call for increased production. January 13, 2003: 4:26 PM EST

NEW YORK (CNN/Money) - Oil prices fell briefly Monday after OPEC's decision this weekend to boost production, but analysts doubted the cartel would do enough to make a significant change in prices or in the U.S. economy -- and news of a new supply disruption sent prices rising again.

The Organization of Petroleum Exporting Countries (OPEC), a group of 11 nations that supplies about 40 percent of the world's oil and sits on about 75 percent of all the world's known oil reserves, agreed Sunday to boost production by 6.5 percent, or 1.5 million barrels per day, to 24.5 million barrels per day.

But the increased output quota, which takes effect Feb. 1, does not even make up for the estimated 2 million barrels per day lost because of an oilworkers' strike in Venezuela, OPEC's third-largest oil producer.

The strike has pushed oil prices to more than $30 a barrel, well above OPEC's target price of $22-to-$28 a barrel. Higher prices could be bad news for OPEC if they keep a lid on oil demand.

Higher prices are certainly bad news for the U.S. economy, acting as a tax on anybody who needs to buy petroleum products on a regular basis -- in other words, pretty much everybody.

"Rising oil prices are quite unhelpful, and falling prices are quite helpful in terms of giving stimulus to the economy," said Rory Robertson, interest-rate strategist at Macquarie Equities (USA). "Lower prices feed through pretty well to everyone immediately."

But the initial drop in prices following OPEC's announcement was pretty puny, and it disappeared by the end of the day Monday, after news of the shutdown of two oil fields in the North Sea.

The price of a barrel of light crude oil for February delivery rose 58 cents to close at $32.26 in New York trade. In London, Brent crude jumped 67 cents to settle at $29.40.

"The fact that the North Sea output problem is supporting the market really shows how tight the physical crude supply is," GNI analyst Lawrence Eagles told Reuters.

Unfortunately, oil prices don't seem likely to go much lower at least until the Venezuelan strike ends, according to many oil analysts. Even then, lingering uncertainty about the potential for a U.S.-led war in Iraq -- OPEC's fourth-largest producer -- will keep prices high.

"We're not likely to see oil prices going lower until there's resolution on the Iraqi front," said Fadel Gheit, oil analyst at Fahnestock & Co.

Gheit and other analysts also pointed out that OPEC's production target is probably not even realistic. For example, OPEC's plan calls for Venezuela to boost its production to about 2.6 million barrels per day. That's going to be tough to do when oil workers aren't working; Venezuela's exports have been cut to about 500,000 barrels per day and aren't likely to increase until its strike is over.

Aside from Saudi Arabia, other OPEC nations have little spare production capacity, and OPEC is probably reluctant to boost production too much, anyway, considering the possibility that several factors might come together to drive oil prices much lower in coming months.

By March, Iraq and Venezuela could be sorted out, world oil consumption will be falling, and a brutal winter in Russia, the world's second-biggest oil producer, will be ending. This combination could lead to oil prices plunging $10 a barrel, Gheit said.  

www.forbes.com Reuters, 01.13.03, 12:32 PM ET

(The following statement was released by the ratings agency) NEW YORK, Jan 13 - Standard & Poor's Ratings Services today lowered its rating on Petrozuata Finance Inc.'s $1 billion bonds to 'B' from 'B+', due to a continuing shutdown of operations that result from continuing strike action in Venezuela's oil and gas sector. The rating remains on CreditWatch with negative implications where it was placed on Dec 10, 2002. The bonds are guaranteed by Petrolera Zuata, Petrozuata C.A.

Petrozuata is a heavy oil upgrading project located in Venezuela that is owned by Conoco Orinoco (50.1%), a subsidiary of ConocoPhillips (A-/Stable/A-2), and PDVSA Petroleo Y Gas (49.9%), a subsidiary of Petroleos de Venezuela S.A. (PDVSA: CCC+/Negative/--).

Petrozuata shut down production and processing operations in December 2002 due to a lack of natural gas and hydrogen supplies at the Jose upgrader complex. PDVSA supplies natural gas to Petrozuata and supplies feedstocks to third parties who produce and supply hydrogen to Petrozuata. These developments result from a continuing national strike that includes some management and employees of PDVSA against the Chavez government. The strike action has led to a near shutdown in domestic production and refining, a large drop in exports of crude oil and refined products, and growing civil unrest between the government and opposition groups.

Standard & Poor's expects to resolve the CreditWatch as developments warrant. The rating could fall further if operations are not restored in the first quarter, an adverse government intervention into the sector or the project occurs, or the creditworthiness of the sovereign further deteriorates.

Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Fixed Income in the left navigation bar, select Credit Ratings Actions.

www.ourmidland.com Beth Medley Bellor , The Midland Daily News 01/13/2003

    Dow employees got more details this morning about the belt-tightening their company is facing.

    In a company-wide communication, Bill Stavropoulos, president and CEO, outlined immediate action plans to restore the company’s profitability.

    "I know many of you are anxiously awaiting detailed announcements on any organizational restructuring, portfolio changes and, importantly, the impact our actions will have on jobs within our company," Stavropoulos said, noting those answers will be provided as soon as possible. "In the meantime, let’s all focus on contributing to Dow’s success by turning our short-term plans into a first quarter that we can be proud of and that will set the pace for a 2003 that will put us well on the road to recovery."

    Energy costs continue to be a challenge for Dow. In addition to the threat of war in the Middle East and the abrupt disruption in the oil supply from Venezuela, Stavropoulos cited price increases in naphtha and natural gas liquids.

    "While we can’t control external costs, we will control internal expenses," he said. "Beginning right now, we will act to raise our prices, protect and grow our volume, and dramatically decrease our costs. Simply put, if it doesn’t improve our bottom line in 2003, we just shouldn’t do it this year."

     He outlined the first steps to protect margins in the first quarter, directing all employees to focus on decreasing costs, increasing cash flow, and improving the bottom line, while remaining safe. Those steps include:     • implementing a six-month moratorium on all new, unauthorized or engineering-only capital projects;     • enacting an immediate freeze on all external hiring and geographic relocations;     • taking swift action, business by business, to raise prices to restore margins, especially in light of the very volatile oil and energy environment; and     • delaying 2003 Service Awards until the second half of the year and suspending the Special Recognition Award / Special Achievement Award Program for the first quarter.

    Dow’s comprehensive action plan includes a complete review of all assets, possibly leading to divestiture or shutdown of those that are non-strategic or underperforming.

    Details are available at www.dow.com/dow_news/corporate/2003/20030113a.htm.

allafrica.com Mike Oduniyi Lagos

OPEC agrees new ceiling of 24.5m bpd _NNPC, JV Partners to meet

Nigeria's official crude oil production quota has been increased by another 124,000 barrels per day (bpd) to 2.018 million bpd, giving a boost to Federal Government's finances for the 2003 fiscal year.

The seven percent increase in the country's quota (the largest production quota Nig-eria was getting in two years), came after the Organization of the Petroleum Exporting Countries (OPEC) agreed at its 123rd (Extraordinary) meeting yesterday in Vienna, Austria, to raise its ceiling from 23 million bpd to 24.5 million bpd, with effect from February 1, 2003.

Nigeria's quota had earlier been raised by 107,000 bpd to 1.89 million bpd effective this month over last year's level of 1.78 million bpd.

OPEC had called the emergency meeting in response to sharp drop in oil supply to the world market occasioned by the crippling strike in Venezuela, the group's third largest producer.

The shortage in supply had fueled a sharp increase in oil prices, hovering above $30 per barrel in the last three weeks.

"Having reviewed the oil market situation, especially the demand/supply picture for the first quarter 2003, and in light of tconference decided to raise the OPEC-10 ceiling from 23 mb/d to 24.5 mb/d, with effect from 1 February 2003, in order to ensure adequate supplies of crude to consumers and restore balanced market conditions," OPEC said in a statement posted to its website.

"The conference reiterated its hope that a swift and peaceful resolution of the present situation in Venezuela could be found, in both the interests of the people and government of the country.

"In this regard, the conference extends its support to Venezuela in its efforts to restore its market share.

"The adjusted ceiling will be reviewed at the next ordinary meeting of the conference, which ministers re-confirmed would take place on 11 March 2003.

"Member countries affirmed their commitment to the new production level and their intention to ensure that prices remain within limits deemed acceptable to both producers and consumers."

The decision, according to analysts, was expected to calm the market and prevent further price increases, although some analysts thought the increase was not enough to fill the gap in oil production caused by a continuing general strike in Venezuela.

The latest development represents a booster for the Federal Government, which faced hard times last year following shortfall in oil income. Oil exports account for more than 90 percent of Nigeria's foreign exchange earnings.

President Olusegun Obasan-jo's 2003 budget predicated on a total revenue of N1.819 trillion, envisaged oil earnings at N1.120 trillion based on a production quota of 1.788 million bpd based on official selling price of $22 per barrel.

Meanwhile, the Nigerian National Petroleum Corporation (NNPC) and the chief executives of joint venture oil companies will meet this week to work out modalities for the management of the increase in the country's oil production.

THISDAY checks reveal that the talks will also center on Nigeria's response to call for more crude oil supply to the international market as well as implementation of some Federal Government's directives on local content inputs in the oil industry billed to take off this month.

Preliminary discussions on management of new crude oil production was held in Lagos at the weekend between the NNPC management led by the Group Managing Director, Mr Jackson Gaius-Obaseki and Shell Petroleum Development Compa-ny (SPDC) led by its Managing Director, Mr Ron Van de Berg.

The Federal Government had been joggling figures on how best to accommodate oil production from a series of new deepwater fields expected to come on stream later this year into its OPEC quota, which only got a booster yesterday.

Presently, output capacity has even grown much from existing onshore and offshore fields as well as shallow waters, reaching 2.8 million bpd by the end of last year.

For instance, Shell's shallow water field, EA, came on stream last December with capacity expected to grow to 140,000 bpd and is yet to be accommodated in Nigeria's OPEC quota.

More concern for the Federal Government is when deep offshore fields developed under Production Sharing Contracts (PSCs) are completed, meaning that the government would not share from profits earned from oil exports from the fields until the operators recoup their investment.

Italian oil firm, Agip, is expected to begin production from its deep offshore field, Abo, early next month. So also is TotalFinaElf's Amenam offshore field that will produce around 125,000 bpd in June this year.

Sources, however, said that this week's talks will also dwell on implementation of government's policies on local content inputs in the oil industry, billed to commence this month.

These include achieving 30 percent local content in all oil projects, execution of engineering design of projects in the country, and conducting technical evaluation and project review in Nigeria.

The National Petroleum In-vestment Management Services (NAPIMS), an NNPC subsidiary is charged with the implementation of these policies.

Gaius-Obaseki who dropped the hint of the challenges facing the industry in the days ahead, said in Lagos at the weekend that the corporation aimed at sustaining the growth it achieved last year. He said that the government would surely come up with solution to the issue of production from joint venture fields and PSC fields "to the best interest of the country."

"We have been having series of meetings since December 27 (2002), to address immediate issues of having no interruptions," said the NNPC chief.

"Recently, we have an increase in quota, and an emergency meeting comes up on Sunday (yesterday) to take a decision on further increase. We intend to sustain the growth which we commenced earlier."

Gaius-Obaseki said Nigeria was capable and ready to raise oil supply to the international market if called upon to do so.

"We are ready, and fully prepared to meet any call on us for more oil," said the NNPC chief.

"In fact what should worry us is if we are told to shut down. Our capacity has grown tremendously recently," he added.