Beefed-Up Market in Rest Mode This Morning

The futures are indicating a mixed open; across the pond, Vodafone AirTouch ups its bid for Mannesmann to $128 billion.
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It looks like stocks are headed toward a rest day this morning.

For the past week, the market has been beefing up through a standard plan of alternating workouts: up huge one session, modest consolidation the next. And stocks seem to be sticking to the program today. At 9:05 a.m. EST, the

S&P 500

futures were down 2.3, about 3 points below fair value, indicating some modest selling at the open.

"I'm not seeing much out there," said Doug Myers, vice president of equity trading at

Wachovia Securities

in Atlanta. "Outside of some stock-specific news, like

Vodafone

(VOD) - Get Report

, right now there's not much going on."

Vodafone AirTouch said today that it is offering 240 euros ($247.23) per share for German telecom firm

Mannesmann

(MNNSY)

. The offer, which totals 124 billion euros, or about $128 billion, could lead to the largest takeover ever, if accepted.

Although Wall Street's muscles don't look especially taut this morning, momentum is back in a big way, and yesterday's session had major benchmarks violating key thresholds all over the place: The

Nasdaq Composite Index

, the

S&P 500

, the

S&P MidCap 400

and

TheStreet.com Internet Sector

index all made new all-time highs. The

Dow Jones Industrial Average

poked back above 11,000. And the

Nasdaq 100

hit 3,000, that magical level that many investors were amazed to see the Comp break through two weeks ago.

Volume has been raging lately and should be strong again as investors move to exercise stock and stock-index options expiring today.

The bonds were giving up early modest gains lately, with the 30-year Treasury flat at to 99 13/32, putting its yield at 6.168%.

No major data are forthcoming. Crude-oil prices, whose renewed strength has been instilling some inflation fears in the bond market lately, were rising again this morning. December crude futures were trading at $26.30 a barrel, 50 cents above yesterday's close in New York.

Oil's uptrend hasn't yet put much of a dent in equities. "A few years back," Myers said, "oil and the market were definitely engaged in an inverse relationship. That doesn't seem to be the case now. The market is handling $25-a-barrel oil prices."

With sentiment boosted by yesterday's strength on Wall Street, Asian markets moved higher overnight.

In Hong Kong, the

Hang Seng

boomed above the 15,000 level, incited by heavy buying in index constituent

Hutchison Whampoa

, which investors were bidding up on account of its 10.2% stake in Mannesmann. The Hang Seng added 351.36, or 2.4%, to 15,073.10.

As expected, the

Hong Kong Association of Banks

voted to leave deposit rates unchanged at 3.75%. Though interest rates in Hong Kong track the trend of U.S. rates, the HKAB does not always match each move by the

Federal Reserve

.

In Tokyo, gains were more modest, but enough to send the

Nikkei

to a two-year high. The index advanced 38.03, or 0.2%, to 18,570.84.

The

Bank of Japan's

outright purchases of government notes didn't have any noticeable effect on the currency market, though it did help stanch the weeklong selling in Japanese government bonds, or JGBs. The dollar ranged between the 106.2-yen and 105.8-yen levels through the Tokyo session, and was lately trading at 106.35 yen.

Friday's Wake-Up Watchlist

By

Tara Murphy

and

Brian Louis

Staff Reporters

In a $6 billion deal,

CBS Sports

, a unit of

CBS

(CBS) - Get Report

, extended its pact for broadcast rights to the

National Collegiate Athletic Association's

Division I men's college basketball tournament and other selected championship events. The extended deal will begin in 2003 after the conclusion of its existing eight-year pact with the NCAA and run until 2014. CBS Sports has been the exclusive broadcaster of the men's basketball championship since 1982. The deal between CBS and the NCAA, which CBS called "the most comprehensive sports agreement in history," provides CBS with the television rights, including over-the-air broadcasting, cable television, satellite, digital and home video. CBS also obtains the rights for all content relating to these events on the Internet.

Mergers, acquisitions and joint ventures

Pitney Bowes

(PBI) - Get Report

announced it plans to sell its mortgage servicing division to

ABN Amro

.

Vodafone AirTouch

(VOD) - Get Report

said it will raise $37.2 billion in the syndicated loan market to fund its sweetened $128.5 billion offer for

Mannesmann

(MNNSY)

, making for the largest hostile takeover bid in history. According to bankers, the loan would set a record as the biggest ever, topping

AT&T's

(T) - Get Report

$30 billion loan in April.

Separately, according to

Reuters

, Vodafone CEO Chris Gent said during a news conference that the company has contacted the

European Commission

regarding its bid for Mannesmann and hopes to receive the EU's stamp of approval after the discussions.

Ziff-Davis

(ZD)

is selling its 64% interest in

ZDTV

to Paul Allen's

Vulcan Ventures

for $204.8 million. Allen is a co-founder of

Microsoft

(MSFT) - Get Report

.

Earnings/revenue reports and previews

(Earnings estimates are from

First Call/Thomson Financial

.)

Caterpillar

(CAT) - Get Report

issued a downward revision for sales and revenues for the fourth quarter. Caterpillar expects sales, revenue and profit to be slightly above the third quarter's. The company earned 61 cents a share in the third quarter. In the fourth quarter of 1998, it earned 83 cents a share. Analysts are calling for Caterpillar to earn 97 cents in the fourth quarter.

Newbridge Networks

(NN)

executives, in a presentation before the company's earnings release yesterday, informed employees that Newbridge is open to takeover offers, according to a source close to the firm. The company reviewed its plans for a 10% workforce reduction, which includes slicing 720 jobs and said it has not dismissed the option of a possible sale, although it has no current suitors. Regarding the company's earnings, Newbridge posted earnings of 8 cents a share, missing the 10-analyst estimate by a penny and down from the year-ago 18-cent profit.

TheStreet.com/NYTimes.com

joint newsroom covered the Newbridge news in a

story last night.

Valspar

(VAL) - Get Report

posted fourth-quarter earnings of 55 cents a share, beating the six-analyst estimate by a penny and up from the year-ago 48 cents.

Offerings and stock actions

Credit Suisse First Boston

priced

CacheFlow's

(CFLO)

5.5 million-share IPO yesterday above-range at $24 a share.

Morgan Stanley Dean Witter

priced

ImClone Systems'

(IMCL)

2.75 million-share public offering at $32 a share. ImClone closed yesterday at 34 1/2.

Analyst actions

Warburg Dillon Read

initiated coverage of

BMC Software

(BMCS)

with a buy rating and a price target of 88.

Wachovia Securities

rolled out coverage of

Ciber

(CBR)

with a neutral rating.

Warburg initiated coverage of

Computer Associates

(CA) - Get Report

and

Legato

(LGTO)

with buy ratings.

Warburg initiated coverage of

C-Cor.net

(CCBL)

and

Westell

(WSTL) - Get Report

with buy ratings.

Warburg rolled out coverage of

WatchGuard

(WGRD)

with a buy rating and set a price target of 35 on the stock.

CSFB analyst Wendell Laidley upgraded shares of

Portal Software

(PRSF)

to strong buy from buy.

Merrill Lynch

raised its intermediate-term rating on the stock to buy from accumulate.

Morgan Stanley upped its rating on

Triad Hospitals

(TRIH)

to outperform from strong buy.

Miscellany

Microsoft

(MSFT) - Get Report

and government lawyers convened briefly with Judge Thomas Jackson, the first meeting since he ruled the company a monopoly,

The Wall Street Journal

reported.

Rite Aid

(RAD) - Get Report

announced after yesterday's close that the

Securities and Exchange Commission

is launching a formal probe into the financially stressed drugstore chain, while revealing that its former auditors,

KPMG

, resigned, saying they could no longer depend on Rite Aid management's representations.

Rite Aid said it has filed a report of unscheduled material events with the SEC called a Form 8-K, which explains the reasons behind KPMG's resignation. On Monday, Rite Aid said that KPMG was expected to examine its previous statements relating to its restated earnings, however KPMG backed out, saying it was unavailable. Earlier this month, Rite Aid cautioned investors to discount previously stated profit and cash flow reports and revised its earlier results.

For more on

Rite Aid's stock troubles, check out

TheStreet.com/NYTimes.com

joint newsroom's coverage for the latest news.

Investors are scurrying for the few wireless companies they think are takeover candidates for the big telecommunications companies, the Heard on the Street column in the

Journal

reports. Listed as among the most likely acquisition cell-phone targets in the column:

VoiceStream

(VSTR)

,

Powertel

(PTEL)

,

Nextel Communications

(NXTL)

and smaller companies such as

Rural Cellular

(RCCC)

.

In the Inside Wall Street column in

Business Week

, written by Gene Marcial,

Viatel

(VYTL)

is named as a possible takeover target, with Sven Monberg, a special-situations analyst at

Starr Securities

in New York, stating he thinks the company will be acquired this year, most likely by

Deutsche Telekom

(DT) - Get Report

. The column quotes Leslie Stonestreet, an analyst at

Banc of America Securities

as saying she "wouldn't be surprised if Viatel becomes a target."

Elsewhere,

Arvin Industries

(ARV)

and

Pier 1

(PIR) - Get Report

are also mentioned as possible takeover candidates in the column.