Inflation Fears Ease as Price, Sales Data Suggest Slowing Growth

Plus, a look at the IBM bandwagon.
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Huzzah, inflation is still dead.

That, at least, is the message Wall Street is taking from a couple of key economic reports this morning. With the bond market rebounding, stocks are set to run higher.The

producer price index

, which provides an early read on whether inflation is getting into the pipe, gained 0.5% in April. Most of that gain resulted from higher oil prices. The core, which excludes the food and energy sectors, gained 0.1%. Economists thought the headline PPI would grow by 0.6% and that the core would gain 0.1%.

The

retail sales

report is far more difficult to forecast, and there were a lot of worries in the bond market that it would exceed expectations. It did not. Sales expanded only 0.1% overall, 0.4% excluding auto sales. Economists predicted the headline number would grow by 0.1% and that the ex-auto number would gain 0.4%. With the March figures revised downward, it looks as though consumer demand could be slowing.

With that kind of backdrop,

IBM

(IBM) - Get Report

picked a great time to thrill analysts at its annual meeting. There's a good deal of gushing about Big Blue today, with a raft of analysts raising their price targets on the company. Among the highlights: IBM said that about 25% of total revenue is getting generated by e-business solution.

"Basically, it's an IBM story," said Dan Mathisson, head stock trader at

D.E. Shaw Securities

of the today's market. The company was up 9 1/2 to 238 in early action. "There are quite a lot of bids on the

Instinet

and the offer has been pretty light," said Mathisson. "If anything it looks like it's going up from here."

At 9 a.m. EDT, the

S&P 500

futures were up 6.5, nearly 7 above fair value and indicating a hop at the open. The 30-year Treasury was up 28/32 to 92 24/32, dropping the yield to 5.76%.

Japanese stocks fell in light trading. The

Nikkei

fell 96.11 to 16,851.25.

In Hong Kong, the

Hang Seng

edged higher despite the damping effect of

HSBC's

share placement yesterday. The

Hang Seng

rose 40.7 to 13,053.67.

European stocks were open in quiet Ascension Day action. In Paris, the

CAC

was up 56.47, or 1.3%, to 4411.26, while London's

FTSE

was up 91.7, or 1.5%, to 6434.8. The Frankfurt market was closed.

Thursday's Wake-Up Watchlist

By

David A. Gaffen

Staff Reporter

  • Copper Mountain's (CMTN) initial public offering of 4 million shares was priced at 21, above the estimated range of 16-18. Morgan Stanley Dean Witter was the lead underwriter for the supplier of high-speed digital subscriber lines.
  • Lycos (LCOS) forecast that third-quarter results will be in line with analysts' estimates for a loss of 3 cents a share. The company also said it signed new e-commerce agreements with a total value of $200 million during the quarter, highest for any quarter in its history.
  • AT&T (T) - Get Report is being sued by Naevus International, a closely held consumer products distributor, The Wall Street Journal reported this morning. Naevus contends the phone company accepted new mobile-phone users while it was aware it could not accommodate them.
  • Oracle (ORCL) - Get Report was reportedly talking about preannouncing earnings and was expected to hold a conference call with analysts this morning. The stock closed yesterday at 25 5/16.
  • Gateway (GTW) said it will invest $200 million in CMGI (CMGI) in a strategic alliance.
  • Gap (GPS) - Get Report reported first-quarter earnings of 34 cents a share, up from 22 cents a year ago.
  • Global Telesystems (GTSG) reported a first-quarter loss of $2 a share, wider than the 81-cent loss for the same period a year earlier.
  • Navistar (NAV) - Get Report reported second-quarter earnings of $1.42 a diluted share, up from 89 cents a share a year ago. The company said it would increase spending for product development and new plants.
  • Dillard's (DDS) - Get Report reported first-quarter earnings of 63 cents a diluted share, up from 58 cents a share a year ago.
  • Intelligent Life's (ILIF) initial public offering of 3.5 million shares was priced at 13, the high end of the range. ING Barings served as lead underwriter for the online provider of independent research concerning consumer banking and credit products.
  • Red Roof Inns (RRI) reported first-quarter earnings of 5 cents a diluted share, up from 2 cents a year earlier.
  • Bluefly (BFLY) reported a first-quarter loss of 26 cents a share, compared to a year-ago loss of 11 cents.
  • Symons International (SIGC) reported first-quarter operating earnings of 28 cents a share, down from 34 cents a year ago.
  • Laser Center's (LZRC) 4 million-share follow-on offering was priced at 43. PaineWebber was the lead manager. The stock closed yesterday at 43 7/8.
  • Lehman Brothers upgraded Federated Department Stores (FD) to buy from outperform.
  • Patriot American (PAH) - Get Report reported a first-quarter loss of 13 cents a diluted share, reversing year-ago earnings of 16 cents.
  • Sotheby's Holdings (BID) - Get Report reported a first-quarter loss of 17 cents a share, compared with a loss of 11 cents a year ago.
  • The Cleveland Indians (CLEV) hired Goldman Sachs and McDonald Investments to explore selling the baseball team. The team, whose shares closed yesterday at 9 15/16, is currently on top of the American League's Central Division with a 24-9 record.