Federal Open Market Committee
is set to cloister itself in the Marriner S. Eccles Building in Washington to decide the fate of short-term interest rates. And although that fate is as uncertain to market observers as it's been in a good long while, the stock market is preparing to start the trading session in rally mode.
At 9 a.m. EST, the
futures were up 7, more than 10 points above fair value, and indicating that stocks will see a strong wave of buying at the open.
What's behind that optimism? People started talking up the possibility of the Fed not raising rates about three weeks ago, when the
Employment Cost Index posted a smaller-than-expected increase. Since then we've seen a friendly
jobs report, stellar productivity and unit labor cost
figures, and nearly one hike's worth of yield -- around 25 basis points -- gone off the long bond. Not to mention a 12% gain in the
Nasdaq Composite Index
The problem is that we're really no closer to a consensus on we'll see today at 2:15 p.m., when the Fed will announce any changes in monetary policy. The latest
poll of 30 primary dealers of government bonds is evenly split between those expecting a hike and those not. In fact, one measure of bond market sentiment has actually grown more cautious in recent days: After pricing in a 50% chance of a rate hike last Tuesday, the November
fed funds futures contract is now putting the odds at more than 80%.
It's possible that the Fed decision just doesn't matter that much to the market right now. At least that's become the conventional wisdom on Wall Street in the past week or so.
"We're going to get a rally whichever way they decide," said Jim Benning, a trader at
. "If they do raise them, they'll probably go to a neutral bias, which would be viewed favorably by the market. If they don't raise them, I think that's also positive. People would assume that they're done for now."
The bond market was inching higher. The 30-year Treasury was up 7/32 to 101 17/32, putting its yield at 6.013%.
None of the day's economic data will garner much attention with the Fed meeting. Tomorrow the
Consumer Price Index
will give the market its latest read on inflation in the U.S. economy.
In Europe, the large indices were turning higher along with the U.S. stock futures in quiet early-afternoon trading. London's
was up 29.7 to 6563.3, while Frankfurt's
was 7.96 higher to 5867.25. Re-emerging in positive territory after some early weakness, the indomitable Paris
was up 7.58 to 5185.71.
Asian markets were mixed overnight. In Tokyo, stocks edged lower as investors took profits in recently surging telecoms ahead of today's FOMC meeting. The
sank 42.95, or 0.2%, to 18,155.14. The dollar firmed modestly against the yen in Tokyo trading, moving up from 104.8 yen to above the 105-yen level. The greenback has continued to add strength, lately quoted at 105.74 yen.
Investors were more optimistic in Hong Kong, although the island's interest rates effectively track those in the U.S. That's largely because of yesterday's
developments in China's bid to enter the
World Trade Organization
. That boosted sentiment enough to help the
rise 127.24, or 0.9%, to 14,689.46. The benchmark index was again led by constituent
, whose telecommunications operations are considered to have an inside line on penetrating the mainland telecom industry.
Tuesday's Wake-Up Watchlist
Mergers, acquisitions and joint ventures
said it plans to roll out its Brazilian Web site today, establishing a presence in Latin America. AOL, along with its regional collaborator, Venezuela's
media group, said it plans to invest $200 million in Internet access service and local Web pages in Latin America.
a contract for more than $1 billion to produce five-control radar that would be put into the Navy's next-generation fighter jet,
The Wall Street Journal
reported. According to the
competed with Raytheon for the deal.
announced plans to exchange Comcast's Lake County and Tallahassee, Fla., cable systems for Time Warner's Indianapolis system.
announced plans to purchase
for 3.5 million shares.
stepped up its
efforts to throw a wrench into the proposed merger of
American Home Products
Yesterday, Pfizer filed an amendment to its Nov. 4 lawsuit against Warner-Lambert and American Home Products, to request that their proposed merger be blocked by a Delaware court until Warner considers Pfizer's competing offer. Pfizer also wants the court to grant it the right to wage a proxy fight to unseat the current Warner board, to reduce the size of the board to seven directors and to elect an independent slate.
The amendment comes ahead of Pfizer's scheduled meeting with analysts today to discuss pipeline drugs and projected earnings growth.
said it would begin talks with investors this afternoon regarding what price it should bid for
. According to
, CEO Chris Gent said during a telephone conference call that the company's board plans to convene Thursday and launch a new bid for Mannesmann, which refused Vodafone's initial $106 billion offer Sunday.
In other Mannesmann news, the company has sued
, claiming a conflict of interest in Goldman's advisory relationships, reported in
The Wall Street Journal
Earnings/revenue reports and previews
posted third-quarter earnings of 65 cents a share, in line with the 13-analyst estimate and up from the year-ago 50 cents.
posted third-quarter net income of 31 cents a share, beating the eight-analyst estimate of 25 cents and the year-ago 19 cents.
posted second-quarter earnings of 37 cents a share, matching both the two-analyst estimate and the year-ago report.
posted fourth-quarter earnings of 22 cents a share, beating the three-analyst estimate of 20 cents and up from the year-ago 8 cents.
reported third-quarter earnings of 2 cents a share, beating the four-analyst estimate of a 1-cent loss and the year-ago 4-cent loss.
reported third-quarter earnings of 6 cents a share, beating the six-analyst estimate of 4 cents and up from the year-ago 8-cent loss.
reported third-quarter earnings of 37 cents a share, beating the 22-analyst estimate of 35 cents and the year-ago 26 cents.
posted third-quarter earnings of 51 cents a share, beating the 11-analyst estimate by a penny but down from the year-ago 68 cents.
reported first-quarter pro forma earnings after yesterday's close of 1 cent a share, in line with the 18-analyst estimate and up from a year-ago loss of 3 cents a share. The company told analysts that acquisitions will remain an important part of its growth in the coming months. In premarket activity, Lycos was trading up from Monday's closing price of 59 7/8 to 63. For a closer look at the
results, check out the story from
posted third-quarter earnings of 20 cents a share, beating the 22-analyst estimate by a penny and up from the year-ago 15 cents.
posted third-quarter earnings of 29 cents a share, beating the 18-analyst estimate of 25 cents and the year-ago 17 cents.
Offerings and stock actions
The initial public offering of communications software developer
was priced at $18 a share, above the expected $15-to-$17 estimated range. Lead underwriter
Donaldson Lufkin & Jenrette
said the number of shares was raised to 4.5 million from 4 million.
Warburg Dillon Read
upped its rating on
to a buy from a hold.
rolled out coverage of
with a buy rating.
said it plans to reduce its workforce by 500, in an effort to save $40 million.