All Indications Look Good for Stocks

The overlapping of triple-witching and the reweightings of two major indices could make this a volatile session.
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It looks like the stock market is set to make another strong showing this morning.

At 9:05 a.m., the

S&P 500

futures were up 6.6 to 1443.2, more than 5 points above

fair value and indicating a positive open.

"It looks like we've got an upward bias," said

Peter Coolidge

managing director of trading at

Brean Murray Foster Securities

. "But things can turn on a dime and usually do."

That's especially the case today, as the overlapping of some unrelated events could make this session subject to a bit more volatility than usual.

To begin with, there's today's

triple-witching, which marks the quarterly expiration of stock-option, index-option and index-futures contracts. That event alone can bring some wild swings into the market. But the matter is being compounded today by the rebalancing of both the

Nasdaq 100 and the S&P 500 indices, which will happen after the market closes, but which in the meantime will prompt a lot of traders to try to capitalize on the price fluctuations caused by index fund (and closet index fund) managers updating their portfolios.

"Some players will want to sit this one out," Coolidge said, "especially here at year-end and with people in wind-up mode. So the options and futures could dominate."

In keeping with its recent tendencies, tech looks ready to explode higher out of the gates again. The Nasdaq 100 futures were lately up 41 points to 3423, and the big tech stocks were getting bids across the board.

The bond market is picking up some ground after yesterday's deep losses, the 30-year Treasury was up 12/32 to 96 27/32, yielding 6.362%. The bonds had been treading water before getting a bit of a boost from this morning's data on

housing starts

, which came in at 1.6 million in November, down 2.3% from a revised 1.637 million in October.

The big European bourses were moving higher in early afternoon trading. Frankfurt's

Xetra Dax

was up 38.79 to 6380.08, while the Paris

CAC

was 30.21 higher to 5570.37. London's

FTSE

was up 36.5 to 6708.5.

The euro is generally holding yesterday's strength. It hovered around the $1.018 level overnight, and after briefly breaking higher when trading started in London, was lately sitting back at $1.0135.

Hong Kong stocks snapped back from two days of intense selling, the benchmark

Hang Seng

rising 414.99, or 2.7%, to 15,986.35.

In Tokyo, the

Nikkei

fell 16.19 to 18,095.12, its fifth-straight day in the red. The currency market was quiet, the dollar bobbing around the 103-yen level as the

Bank of Japan's

policy board left its zero interest rate policy unchanged at its meeting today. The greenback was lately quoted at 103.24 yen.

Friday's Wake-Up Watchlist

By

Tara Murphy

and

Brian Louis

Staff Reporters

Pharmacia & Upjohn

(PNU)

is in merger talks with

Monsanto

(MTC) - Get Report

,

The Wall Street Journal

reported. Pharmacia and Monsanto are having serious talks about a merger of equals, the newspaper reported, citing people familiar with the matter.

Mergers, acquisitions and joint ventures

Abbott Laboratories

(ABT) - Get Report

and

Alza

(AZA)

said they called off their $7.3 billion merger because they were unable to resolve

Federal Trade Commission

concerns. Alza said it will take a fourth-quarter cancellation charge between $10 million and $15 million and now expects to report earnings in the range of 26 cents to 29 cents a share, well below the current seven-analyst estimate of 45 cents.

TheStreet.com/NYTimes.com

joint newsroom covered the prewedding divorce in a

story yesterday.

Daleen Technologies

(DALN)

said it has agreed to buy

Inlogic Software

in a stock deal valued at $64.8 million.

Duke Energy

(DUK) - Get Report

and

Phillips Petroleum

(P)

said they formed a gas-gathering, marketing venture. Duke said the new company would offer about 20% of its stock in an IPO in the first half of 2000.

Headhunter

(HHNT)

said it has entered a distribution pact with

NBC Internet

(NBCI)

.

Telewest Communications

(TWSTY)

and

Flextech

said their proposed merger would dilute earnings in the first two years. Charles Burdick, who would serve as the finance director for the merged group, said during a conference call that EBITDA would be diluted by roughly 12% in the first year before it becomes accretive in the third.

Earnings/revenue reports and previews

(Earnings estimates are from

First Call/Thomson Financial

.)

Adobe

(ADBE) - Get Report

posted fourth-quarter earnings of 76 cents a share, crushing the 12-analyst estimate by 34 cents. For more on Adobe's earnings,

TheStreet.com/NYTimes.com

joint newsroom has the complete

story .

Circuit City

(CC) - Get Report

posted third-quarter earnings of 26 cents a share, in line with the 17-analyst estimate and up from the year ago 8 cents. Circuit City also said it tapped its president and COO, W. Alan McCollough to be its CEO.

Nike

(NKE) - Get Report

posted second-quarter earnings of 38 cents a share, beating the 17-analyst estimate of 34 cents and the year-ago 28 cents, which excludes a restructuring charge. Nike said earnings rose more than 50%, and that it achieved quarterly revenue growth for the first time in two years. The company said it saw revenue grow in every region, but that its sales increase was largely fueled by growth outside the U.S. For more on the sneaker behemoth's earnings, check out

additional coverage from

TheStreet.com/NYTimes.com

joint newsroom.

Potlatch

(PCH) - Get Report

warned it expects fourth-quarter earnings will fall "significantly below" below the consensus estimate of 48 cents a share. The three-analyst estimate calls for the diversified forest products company to earn 48 cents a share in the fourth quarter and $1.77 in fiscal 1999.

Tandy

(TAN) - Get Report

said same-store sales are currently 8% to 10% below its goal this month. The company did say that it sees double-digit sales gains for the fourth quarter and the year.

Offerings and stock actions

AVT

(AVTC)

set a 2-for-1 stock split and said it tapped Richard Laporte as its next CEO.

Robertson Stephens

priced 4 million shares of

C-bridge

(CBIS)

at $16 each, above the estimated $12-to-$14 range.

Copart

(CPRT) - Get Report

said it set a spinoff of its Internet divisions. The company is seeking the

Internal Revenue Service's

approval to distribute the unit's shares as a dividend.

Progress Software

(PRGS) - Get Report

said it set a 2-for-1 stock split. The company posted fourth-quarter earnings of 60 cents a share, beating the three-analyst estimate of 55 cents and the year-ago 43 cents.

Truetime's

(TRUE) - Get Report

3 million-share IPO was priced at $5 a share.

Analyst actions

Credit Suisse First Boston

analyst David Nelson upgraded

General Mills

(GIS) - Get Report

to buy from hold.

First Boston upped its fiscal 2000 estimates on

Jabil Circuit

(JBL) - Get Report

to $1.60 a share from $1.55 a share.

Miscellany

America Online

(AOL)

said membership of its AOL service has surpassed 20 million.

Bell Atlantic's

(BEL)

plan to offer long-distance service in New York state could be awarded

Federal Communications Commission

approval as soon as next week, making it the first Baby Bell to enter the long-distance market, the

Journal

reported.

Gilatech

(GLIA)

said the

Food and Drug Administration

has ended its restrictions on the company's European-made

ADCON-L

product line. The company said that shipments would begin again in the first quarter of 2000.

Modis Professional Services

(MPS)

said its board gave the company permission to create two publicly traded companies: information technology and professional services. The board also authorized management to continue to look at strategic alternatives, including an IPO, for the company's e-business unit which is included in the information technology division.

Raytheon

(RTN.A)

said it was awarded a $1.3 billion United Kingdom defense contract for a radar system.

This week's "Inside Wall Street" column in

Business Week

, penned as usual by Gene Marcial, offers up a positive piece on

Silverleaf Resorts

(SRV) - Get Report

. The column cites money manager Geoffrey Nixon of

MCM Associates

, which holds a 6% stake in Silverleaf, who says the stock is worth 27 based on 15 times estimated earnings per share of $1.80 a share in 2000.

The column also offers up positive pieces on

EarthWeb

(EWBX)

and

GlobalNet Financial.com

(GLBN)

.