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Calmer Day on Wall Street ahead of Bernanke

Stocks are striking a much-improved tone after Wednesday's high energy selloff, as investors await testimony this morning from Fed Chairman Ben Bernanke. Monthly chain store sales and some big earnings could also influence direction.

Ford reported a smaller-than-expected third-quarter loss which helped push stock futures into positive territory from an early decline. On a net basis, Ford lost $380 million or $0.19 per share. Of retailers reporting so far, warehouse giant Costco says its sales rose 9% in October.

Bernanke appears this morning before the congressional Joint Economic Committee.

"There may be some calming commentary out of the Fed," said Bill Nichols at Bear Stearns. "There'll be a lot of technicians talking about the S&P 500 index... it broke below the 200-day moving average." But Nichols said the index, which went through 1,483 level, also looks like it has some support.

Asian markets sold off sharply overnight after Wall Street's big decline. European markets are mostly lower but the UK market has moved a bit higher. The Dow's 2.6% or 360 point decline yesterday was its third worst percentage drop this year. The S&P closed at 1475, or 2.9%, also its third biggest percent drop of the year.

The dollar, one of yesterday's fear factors, is off its lows as the European Central Bank and the Bank of England kept rates unchanged.

Boiling Oil

Oil is rising and is trading near $97 per barrel. It appears OPEC has noticed the big move up. In the "it's not our fault" category, OPEC Secretary-General Abdullah al-Bardri was out talking to reporters today and called for tighter regulation of oil markets to keep speculative investors from driving prices close to $100 per barrel. He also said when OPEC meets on Dec. 5 it will discuss the market situation. OPEC is ready to "interfere and help if it has to do with fundamentals. There is currently no interruption," he said to reporters.

Credit Crunching

In the background remains the haunting credit worries that have shaken stocks for months. In a rumor come true, Morgan Stanley said late Wednesday it is taking a $3.7 billion hit from subprime exposure in the current quarter and left the door open for more. Insurer AIG , under pressure all day, reported after the bell that its profits fell 27% and that it too was taking a write down of $2.68 billion.

The S&P financial group yesterday was down a painful 5%, in a move that was partially rumor driven. The decline was also fueled by news from the New York Attorney General's investigation into appraisers and lending practices which Wall Street fears could draw in a number of financial companies beyond Washington Mutual . In another subprime drama, Merrill Lynch says the SEC opened an inquiry into its subprime portfolio.

By the way, reporting by CNBC's Mary Thompson earlier this week gave traders an open window into what was going on at Morgan Stanley. She ran into CEO John Mack while covering Citigroup's tumultuous CEO departure and he told her that everybody was looking at "repricing." Traders saw that video and, well, that got people talking and thinking and rumors started flying. CNBC's Charlie Gasparino has been reporting all along that Morgan's hit could be in the $3-billion-plus zone.

Thompson today is at the securities industry's annual meeting in Boca Raton and should have some good insight into what else Wall Street is talking about. NYSE Chairman John Thain speaks at the three day meeting.

Earnings Central

Other earnings reports today include Disney , Marsh & McLennan , Cephalon and Vonage . Traders are still picking over Cisco's profit report late yesterday showed a 37% increase in earnings. But that wasn't enough to cheer investors who had run up the stock ahead of the news, and Cisco is trading lower this morning.

Deal Zone

BHP Billiton revealed that it offered to buy rival Rio Tinto in a proposal that was rejected. Such a deal could have created a $300-billion-plus mining giant, says Reuters.

A source close to TomTom tells me the Dutch satellite navigation equipment company is confident its $4.1 billion offer to buy mapmaking company TeleAtlas will succeed. What else could they say? But they sure look like they may have made a knockout bid, aided by the purchase of a 28% stake in TeleAtlas.

TomTom yesterday bumped its previous bid to 30 euros, a 41% increase, in an effort to thwart a rival offer from U.S. market leader Garmin . TeleAtlas said this morning it supports the TomTom bid. Garmin has said it is studying the situation. It offered 24.50 euros for TeleAtlas, not long after Nokia said it would buy U.S. map maker Navteq for $8.1 billion. Navteq supplies maps to Garmin and is Tele Atlas only competitor. Garmin stock got slammed yesterday.

Questions? Comments? marketinsider@cnbc.com

  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

  • CNBC's Senior Personal Finance Correspondent

  • JeeYeon Park is a writer for CNBC.com. Follow her on Twitter: @JeeYeonParkCNBC

  • Rick Santelli joined CNBC Business News as an on-air editor in 1999, reporting live from the floor of the Chicago Board of Trade.

  • Senior Producer at CNBC's Breaking News Desk.