Stocks edge up on Lehman news
Wall Street struggles to post early gains after brokerage announces a nearly $4 billion quarterly loss.
NEW YORK (CNNMoney.com) -- Stocks gained early Wednesday as investors digested Lehman Brothers' steeper-than-expected quarterly loss and plans to clean up its balance sheet.
Stocks had gotten pummeled Tuesday on worries about the solvency of Lehman Brothers, as well as AIG's ability to raise capital.
Lehman Brothers addressed some of those concerns Wednesday.
Lehman Brothers (LEH, Fortune 500) said it suffered a net loss of $3.9 billion in the third quarter, or $5.92 per share. A consensus of analysts interviewed by Thomson First Call had expected a decline of $3.35 per share.
Lehman said it was taking steps to reduce its residential mortgage exposure by 47% to $13.2 billion, reduce its commercial real estate exposure by 18% to $32.6 billion, and reduce its high yield acquisition finance exposure by 38% to $7.1 billion.
Shares of Lehman rose 2% in the first few minutes of trade after having risen as much as 28% in premarket marketing.
A Wednesday rally would be welcome news to investors, considering the Dow's 280-point plunge in the last session. Much of the hemorrhaging stemmed from anxiety over the finance sector. After reports that deal-making negotiations collapsed between Korean investors and Lehman Brothers Holdings (LEH, Fortune 500), the battered firm's stock dropped 45%.
Oil: Oil prices rose 77 cents a barrel to $104.02 after the Organization of Petroleum Exporting Nations agreed to trim daily overproduction by 520,000 barrels.
Also contributing to oil's rise were concerns that Hurricane Ike might disrupt oil production in the Gulf of Mexico. The hurricane could hit Texas by Friday or Saturday as a Category 3 storm.
Oil settled at a five-month low Tuesday.
Gasoline prices rose on Wednesday for the first time in 10 days to a nationwide average of $3.668 a gallon, up 1.6 cents from the day before, according to motorist group AAA.
The economic numbers for crude inventories for the week ended Sept. 6 will be released at 10:35 a.m. ET. Forecasts call for a drop in crude supplies of 3.9 million barrels, a decline in gasoline stocks of 4.7 million barrels and a drop in distillates of 2.3 million barrels.