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CNBC's Domm: Market Outlook

U.S. stocks are heading lower this morning as oil prices climb on OPEC developments. Today's headlines from OPEC, brokerage profits, and takeover activity will all get attention but stocks are looking for direction as a year of strong gains begins to wind down.

Asian stocks closed higher, with Japan at a seven month high on the weakening yen. European stocks are also higher.

OPEC DRAMA: Oil is moving higher. Reuters reports OPEC is discussing an output cut of up to 500,000 barrels per day, possibly delayed until February when winter is ending. The market awaits final comments form the cartel following its meeting in Nigeria today. Our Sharon Epperson will cover all the comments and price moves today from the NYMEX.

MADE IN CHINA: Treasury Secretary Hank Paulson, speaking in Beijing, encouraged China to speed up the pace of economic reforms. Paulson called the first day of strategic economic talks between Chinese officials and a group of US officials "productive and informative." The Chinese currency, a focus of the discussions, firmed against the dollar.

BALANCE OF POWER: Sen. Tim Johnson's possible stroke is raising questions about whether the South Dakota Democrat will be able to serve. If he cannot, the balance of power in the senate could shift to the GOP when South Dakota's Republican governor appoints a replacement.

WALL STREET PROFITS: Traders will be watching Bear Stearns and Lehman Brothers earnings today after Goldman Sachsreported giant profits earlier in the week. Bear Stearns beat estimates with its $4.00 per share profit for the fourth quarter.

IMPORTANT READ: the prominence of The Wall Street Journal's top story on the Fed and Wall Street betting a recession next year is unlikely is no doubt required reading in many trading rooms today. The story builds a case for optimism, and will no doubt irritate some of the crankiest traders in the bond market. It certainly will carry some weight.

DEALS KEEP ON COMING: Nestle is buying the medical nutrition business of Novartis for $2.5 billion. Australian airline Qantas late yesterday agreed to a buyout from a consortium after some conditions in the deal were dropped.

In corporate news, General Electric (parent of CNBC) won a $1 billion Saudi gas turbine contract, its biggest gas turbine order in five years. BPmeanwhile faces charges from the CFTC over the company's trading in unleaded gasoline futures and federal officials say lettuce may be behind Taco Bell's problems.