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Saturday Morning News

OPEC to Cut Oil Production by 1 Million Barrels Per Day

Aired March 17, 2001 - 7:00 a.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

MILES O'BRIEN, CNN ANCHOR: We begin this hour with a decision by OPEC to cut oil production by 1 million barrels a day. It's intended to protect OPEC's profits, but it is going to cost Americans more at the gas pump as the summer vacation season approaches. And it may add to the cost of air travel and other petroleum-sensitive businesses.

OPEC's cutback comes when the world's two biggest economies, the U.S. and Japan, are seeing more signs of economic weakness.

The OPEC cutbacks could fuel a new selloff on Wall Street, which is reeling from one of its worst weeks ever that's left investors licking their financial wounds and looking to the Fed to cut interest rates to try and jump-start the economy.

We get more on this from Greg Clarkin.

(BEGIN VIDEOTAPE)

GREG CLARKIN, CNN CORRESPONDENT (voice-over): The week went out on Wall Street just as it came in, with selling, fear, and jangled nerves. Investors bailed out of stocks ahead of the weekend and before next week's Federal Reserve meeting.

If investors needed any additional convincing, there were plenty of profit warnings from the high-tech world. Compaq and Computer Sciences both warned of slower growth, and a constant stream of negative news left investors and Wall Street pros alike off balance.

TOM GALLAGHER, CIBC OPPENHEIMER: Everybody keeps expecting some sort of rally, some sort of bottom-making, and people -- they don't get it. If the market starts out up a little bit or tries to have a rally during the day, and all of a sudden something comes out, a piece of news comes out, and the market goes down again.

CLARKIN: Computer Sciences stock plunged after the company said profits would be far below estimates due to a sharp drop in demand for its computer services. Competitor IBM fell on that and fears of a drop in mainframe sales. Other losers included Lucent and 3M. The Dow lost more than 2 percent on the day, the Nasdaq dropped more than 2.5 percent and is now below the 1900 level.

The Dow, meanwhile, sits below 9900, and some analysts say the blue chips are now close to a crucial support level. CLARK YINGST, PRUDENTIAL SECURITIES: In our view, that index could find support at or around 9700, and in fact we would call that support long term and structural and therefore theoretically and potentially formidable. We would also have to, however, call it critical. It's very important that the Dow hold that level.

CLARKIN: After catching their breath, investors and traders will be focusing on next week. The Fed is widely expected to slash interest rates by at least a half a point. The question now is, will that be enough for investors stunned by this recent selling?

Greg Clarkin, CNN financial news, New York.

(END VIDEOTAPE)

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