Gravity Looks to Reassert Itself, Pulling Dow Back Toward Four Digits

The FOMC meeting has some traders playing it safe.
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Anyone who misses seeing the four-digit handle on the

Dow Jones Industrial Average

should get a chance to see it again this morning.

In no way is this a surprise. Investors have already shown that they have issues with the

10,000 level on the Dow, and a close above it is hardly the thing to resolve them. Though a few weeks ago there were plenty on Wall Street who were

saying 10,000 was "just a number," their ranks have thinned. Like all milestones, the decamillennial level has come to mean something. It makes people reflect on how far they have come. In the last eight years, the stock market has come an awfully long way. To start thinking about that is to start worrying about how much further it can go.

Of course, Dow 10,000 or not, the day after a 2.1% move in the

S&P 500

you expect to see a little pullback. And last night's

warning from

Coca-Cola

(KO) - Get Report

that its first-quarter revenue will be down 2% is weighing on the stock market.

"Clearly, we're going to be weighed down by Coke here and probably see some profit-taking," said Bill Meehan, chief market analyst at

Cantor Fitzgerald

. "And on a risk/reward basis, we might see some institutional money shifting into the bond market."

Furthermore, the market is showing its usual prudence ahead of a

Federal Open Market Committee

meeting. Nobody expects the Fed to move on rates today, but some worry that it will change to a tightening bias -- and that rather than wait until the minutes for this meeting get released a month-and-a-half from now, they will announce the change.

"We might get a little bounce this afternoon," said Meehan. "I don't think there's a change in bias from the Fed." Still, he doesn't think it will be enough to bring stocks to a positive close.

At 9 a.m. EST, the

S&P 500

futures were off 2.2 -- more than 7 below fair value, indicating a drop at the open.

While stocks look weak, Treasuries are doing better. The 30-year was up 8/32 to 94 19/32, dropping the yield to 5.63%.

Despite all the hoopla on Wall Street, Tokyo stocks fell prey to year-end profit-taking. The

Nikkei

slipped 149.72 to 15,859.12. A new post-war high unemployment rate of 4.6% also did some damage.

Hong Kong stocks, on the other hand, ran sharply higher. The

Hang Seng

hopped 251.74, or 2.4%, to 10,940.21.

With New York set for a fall, European stocks were mostly lower. In Frankfurt, the

Dax

was off 24.73 to 4852.19. In Paris, the

CAC

was down 1.17 to 4152.48. But in London, the

FTSE

was up 18.5 to 6271.4.

Tuesday's Wake-Up Watchlist

By

Brian Louis

Staff Reporter

  • Coca-Cola expects worldwide sales to drop up to 2% in the first quarter, and the company said it doesn't expect to meet its 7% to 8% annual volume growth target in 1999. Coca-Cola blamed the news on weak customer demand in Latin America and increased volatility in Russia. Goldman Sachs downgraded the stock to market perform and removed it from its recommended list.
  • Time Warner (TWX) is pondering a plan to turn some of its Internet holdings into a separate public company, though an offering isn't imminent, The Wall Street Journal reported.
  • Amazon.com (AMZN) - Get Report launched an online auction site. In other news (earnings estimates are from First Call):
  • AboveNet Communications (ABOV) set a 2-for-1 stock split.
  • Best Buy (BBY) - Get Report posted fourth-quarter earnings of 52 cents a share, beating the 16-analyst estimate of 50 cents and up from the year-ago 32 cents.
  • Delia's (DLIA) expects fourth-quarter sales of $59 million and earnings per share of 21 cents, in line with the seven-analyst estimate.
  • Gtech (GTK) set a $100 million stock-buyback program.
  • Hillenbrand (HB) posted first-quarter earnings of 67 cents a share, beating the four-analyst consensus estimate by 3 cents and up from the year-ago 64 cents.
  • Icon (ICLR) - Get Report reported third-quarter net income of 19 cents a share, beating the four-analyst consensus estimate by a penny and up from the year-ago 13 cents. For the year ending May 31, the company said earnings will rise more than 30%, short of the 40% growth forecast by analysts.
  • Microsoft (MSFT) - Get Report is slated to hold settlement talks regarding its antitrust case with the Justice Department and the state attorneys general today.
  • National Discount Brokers (NDB) posted third-quarter net income of 58 cents a share, up from the year-ago 30 cents. National Discount Brokers also said it intends to divest itself of its stake in Equitrade Partners, a New York Stock Exchange specialist firm.
  • Pioneer Hi-Bred (PHB) - Get Report posted second-quarter earnings of a penny a share, beating the 10-analyst estimate of a break-even quarter, and reversing the year-ago loss of a penny. Earlier this month, DuPont (DD) - Get Report agreed to buy the 80% of the company it doesn't already own.
  • Morgan Stanley Dean Witter upgraded Pitney Bowes (PBI) - Get Reportto strong buy from outperform.
  • BancBoston Robertson Stephens initiated coverage of Prodigy Communications (PRGY) with a buy rating. BancBoston was an underwriter on Prodigy's IPO in February.
  • Weyerhaeuser (WY) - Get Report said it is "exploring strategic options" for its composite products business, which produces and sells industrial-grade particleboard and medium-density fiberboard, including the possible sale of the business. Weyerhaeuser said the business employs 550 people and generated about $116 million in sales during 1998. For the year ended Dec. 27, 1998, the company reported sales of $10.77 billion.

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