Greenspan's Got the Spotlight on a Down Morning

Futures are down, as are stock markets around the globe.
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To begin with, there's going to be some selling. That's to be expected: With everyone a little leery of what

Alan Greenspan

will say this morning, overseas markets are down and stock futures are lower.

After that likely initial drop, it's doubtful that much will happen. The

Fed

chairman's

Humphrey-Hawkins

testimony before Congress doesn't begin until 11 a.m. EDT, and many won't brave the market until he starts talking. A good time to work on your euchre game.

Once the speech does come out, however, things are going to be wild. There's a lot of debate on the Street over whether the Fed will raise rates at its late-August meeting. Though lately the odds have moved in favor of the central bank standing pat, people are still waiting for confirmation.

"I think there's a hope that the chairman will be somewhat less hawkish than he was at his

Joint Economic Committee

appearance in June," said Bill Sullivan, chief money-market economist at

Morgan Stanley Dean Witter

.

Since that speech, there have been several things that suggest policy is more balanced. Retail sales and housing figures have been benign and, more important, the inflation data have been good. In themselves, these data argue for moderation. And politically, to give a hawkish speech in the face of those reports would be dangerous -- Congress likes the budget surplus and

President Clinton

just went on a poverty tour.

"The markets may come out of this with the sense that, yeah, they're predisposed to tighten, but the next move may be a way down the road," said Sullivan.

That could set the stage for a significant rally in stocks.

"I expect the market will respond favorably to Mr. Greenspan's testimony," said Bill Meehan, market analyst at

Cantor Fitzgerald

, who is advising aggressive trading accounts to buy the initial dip this morning. "If we can rally up on that, it looks to me that we could make marginal new highs on the major indices." At that point, Meehan thinks it would be a good time to raise cash and wait out the summer doldrums.

At 9 a.m. EDT, the

S&P 500

futures were off 2.5, more than 6 below fair value and indicating a drop at the open. The 30-year Treasury was up 5/32 to 91, yielding 5.90%.

Japanese stocks got hit hard by heavy profit-taking by foreign accounts, set off by continued yen strength. The

Nikkei

lost 527.18, or 2.9%, to 17,730.34.

Though the

Bank of Japan

has been in the market this week, it did not, as traders expected, try to lift the yen above the 120-to-the-dollar level. This suggests that there may have been a bit of a change in the way Japanese authorities view exchange rates. Rather than setting a fixed target, they may be acting instead to merely keep the yen from moving against the dollar too rapidly, and will allow a crawling appreciation.

Hong Kong stocks fell. The

Hang Seng

dropped 50.6 to 13,369.06.

European bourses were all lower.

In Frankfurt, the

Xetra Dax

was down 73.89, or 1.4%, to 5340.28. Electronics-maker

Siemens

bucked the trend, gaining ground on a strong earnings report.

In Paris, the

CAC

was down 32.19 to 4469.08, weighed down by a selloff in bank stocks.

London's

FTSE

was down 34.8 to 6295, with banks leading the way. But good first-half results set off a rally in

Imperial Chemical Industries

. The company was lately up 6.9%.

Thursday's Wake-Up Watchlist

By

Brian Louis

Staff Reporter

America Online

(AOL)

reported fourth-quarter earnings of 13 cents a share, topping both the 30-analyst

First Call

estimate of 11 cents and the year-ago 6 cents. The leading Internet service provider said revenue for the quarter jumped to $1.38 billion from the year-ago $943 million.

Amazon.com

(AMZN) - Get Report

posted a second-quarter loss of 51 cents a share, meeting the First Call 21-analyst forecast and wider than the year-ago loss of 12 cents. Amazon also set a 2-for-1 stock split.

Bear Stearns

downgraded Amazon to attractive from buy today.

Earnings/revenue reports and previews

(Earnings estimates are from First Call.)

Adolph Coors

(RKY)

reported second-quarter earnings of $1.23 a share, beating the four-analyst estimate of $1.19 and up from the year-ago $1.06.

Disney

(DIS) - Get Report

posted third-quarter operating earnings of 20 cents a share, which excludes the impact of its November 1998 acquisition of a 43% interest in

Infoseek

(SEEK)

, a penny ahead of the 18-analyst estimate and unchanged from the year-ago 20 cents. Earlier this month, Disney agreed to buy the rest of Infoseek.

Ingersoll-Rand

(IR) - Get Report

posted second-quarter earnings of 99 cents a share, a penny ahead of the 18-analyst estimate and up from the year-ago 85 cents.

Level 3 Communications

(LVLT)

posted a second-quarter loss of 37 cents a share, which excludes nonoperating gains, narrower than the seven-analyst estimate of a loss of 42 cents.

Network Solutions

(NSOL)

reported second-quarter earnings of 17 cents a share, a penny ahead of the eight-analyst estimate and up from the year-ago 7 cents. Network Solutions said it registered a record 1.2 million net new Internet domain names in the second quarter, up 166% from the year-ago period.

Nokia

(NOK) - Get Report

posted second-quarter pretax profit of 877 million euros, up 61% from the year-ago period. Net profit increased to 581 million euros from 365 million euros in the year-ago period, a jump of 59%.

Schlumberger

(SLB) - Get Report

posted second-quarter earnings of 23 cents a share, 2 cents shy of the 29-analyst estimate and down from the year-ago 69 cents.

Sears

(S) - Get Report

posted second-quarter earnings of 86 cents a share, beating the 15-analyst estimate by a penny.

Sprint

(FON)

reported second-quarter earnings of 44 cents a share, in line with the 17-analyst estimate and up from the year-ago 41 cents.

Warner-Lambert

(WLA)

reported second-quarter earnings of 51 cents a share, in line with the 21-analyst estimate and up from the year-ago 37 cents.

Xerox

(XRX) - Get Report

posted second-quarter earnings of 62 cents a share, in line with the 12-analyst estimate and up from the year-ago operating earnings of 54 cents.

Miscellany

Fidelity Investments

,

Charles Schwab

(SCH)

and

Donaldson Lufkin & Jenrette

(DLJ)

agreed to take equal stakes in electronic communications network

RediBook

, owned by

Spear Leeds & Kellogg

.

TheStreet.com

wrote about the move in a story

this morning.

As shares of

Unistar Financial Service

(UAI)

tumbled 55% over two days last week, the

American Stock Exchange

halted trading for news, and yesterday the stock was halted once again before the opening bell for unspecified reasons and never resumed, reported the Heard on the Street column in

The Wall Street Journal

. The column said that last week the company's CEO said there weren't any material developments and there wasn't any word yesterday, either.

But in documents filed with the

Texas Department of Insurance

, one piece of news not disclosed in financial filings is that Unistar last month told regulators it plans to sell a key subsidiary to its principal shareholders, the

Journal

reported. The company's CEO said Unistar hasn't disclosed the planned sale in financial filings because it concluded it was too small to be a material transaction, the

Journal

reported.