Midday Action, Oct. 29 By Jody Osborne

Gains continue Monday for stocks on interest rate cut hopes. However, gains have been light so far to start the week. Another record high for oil prices has pushed oil producer stocks higher, but also negatively impacts sentiment. The normal bout of merger news to start a week is missing, although Oracle (ORCL) did withdraw its bid for BEA Systems (BEAS). Overall, with expectations for a Fed rate cut Wednesday, stocks could see gains leading into the announcement.

Oil prices hit a new all-time high Monday with the December contract reaching a price of $93.20 this morning. Currently, crude is up about 50-cents to trade near $92.40 a barrel. News that Pemex, the state-owned Mexican oil producer, halted operations for a few days has pushed prices higher. Pemex averages about 600,000 barrels a day. Of course, the fact that the Fed is expected to cut rates is also pushing prices higher.

BEAS decided that it needs $21 a share, which is much higher than the $17 Oracle was offering. ORCL decided on Sunday withdrew its offer and there are no guarantees the company will even reenter a bid at $17 in the future. Shares of BEAS are trading flat Monday at a price near $16.50. Oracle shares are also flat near a price of $21.40.

Merrill Lynch (MER) is a company in the news Monday. The financial giant is expected to announce the resignation of its CEO Stan O’Neal. After reporting a larger than expected third quarter loss, shareholders are calling for changes and the Wall Street Journal believes that his resignation is very near. MER shares are actually down slightly on the news.

In earnings news, Verizon (VZ) reported a profit of $1.27 billion with earnings per share coming in at 63-cents, a penny ahead of estimates. Revenues also were slightly above expectations at $23.77 billion. VZ also raised its stock buyback plan by $500 million to $2.5 billion. Despite this positive news, VZ shares are higher by just half a percent to $45.85.

The Fed meeting will get underway tomorrow with their decision on interest rates expected Wednesday afternoon. Fed fund futures are pricing in a 90 percent chance of at least a 25 basis point cut. A 25-basis point cut is seeing just about 70 percent chance with 20 percent odds for a 50-basis point cut. Stocks are likely to price in a 25-basis point cut heading into the meeting.