Job Growth Slows in August

Futures are soaring on the jobs report, with 124,000 jobs added in August vs. a consensus forecast of 220,000.
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A weaker-than-expected

jobs report

is putting a shine on Wall Street this morning.

The economy added just 124,000 jobs in August, significantly undercutting economists' expectations that 220,000 jobs would be added. The jobless rate ticked down 0.1% to 4.2%, in line with expectations. Hourly wages gained only 0.2% against a forecasted 0.4% gain.

With the odds that the

Federal Open Market Committee

will hike again Oct. 5 significantly lowered, stock futures and bonds hopped higher on the report. At 9 a.m. EDT, the

S&P 500

futures were up 23.3, more than 24 above fair value and indicating a big jump at the open. The 30-year Treasury was up 1 9/32 to 101 5/32, dropping the yield to 6.04%.

"All of a sudden, everything is well in the world," said Jim Benning, a trader at

BT Brokerage

. "It looks like we're going to be pushing 200 points."

While Benning thinks the market may be going a little too far in its joy over the number, there are very few economic hurdles between now and the October Fed meeting.

An early move to the upside stalled out in Tokyo, as investors squared positions ahead of the weekend. The

Nikkei

ended the day off 1.26 at 17,629.99.

Next week will be an interesting one in Japan. First, traders will have to figure out the U.S. jobs report in a thin market; with Wall Street off for Labor Day, many will stick to the sidelines. Then there will be the inevitable gaming ahead of Thursday's second-quarter

gross domestic product

report. Economists have lately been revising up their GDP estimates -- current forecasts range from down 0.8% to up 0.5% -- but they won't get the last bits of data they need until a couple of days before. And in any case, Japanese GDP is nearly impossible to predict.

Hong Kong stocks stumbled out of the blocks and never got back up. Worried about the prospects of another Fed hike and nervous about what the jobs report would bring, traders brought the

Hang Seng

down 189.25, or 1.4%, to 13,178.31.

European stocks skipped higher after the U.S.' good economic news. In Frankfurt, the

Xetra Dax

was up 112.34, or 2.2%, to 5302.26.

Commerzbank

was a big winner amid chatter that it is mulling a combination with other European banks. In Paris, the

CAC

was up 95.01, or 2.1%, to 4645.61.

London's

FTSE

was up 100.5, or 1.6%, to 6296.1. Traders there were also cheered by the news that National Westminster Bank is in takeover talks with

Legal and General

.

Friday's Wake-Up Watchlist

By

Brian Louis

and

Tara Murphy

Staff Reporters

Coca-Cola

(KO) - Get Report

warned third-quarter earnings will come in shy of Wall Street expectations. The company expects third-quarter earnings of between 34 cents and 35 cents before the financial impact of its European product withdrawal, which it estimates will be about 2 cents to 3 cents a share. For the third quarter, the 16-analyst consensus estimate calls for Coke to earn 36 cents a share. Coke said it's "comfortable" with the current range of analyst projections for earnings per share for full year 2000. The 15-analyst consensus estimate projects earnings of $1.56 a share for 2000.

PepsiCo

(PEP) - Get Report

said it anticipates a rise in third-quarter earnings per share despite lower operating income from its North American operations. The company said earnings will be helped by increased operating income at

Frito-Lay

and

Tropicana

. The 15-analyst estimate calls for third-quarter earnings of 33 cents a share.

Sterling Software

(SSW) - Get Report

sees fourth-quarter earnings, before charges, coming in at about 47 cents a share, which would be below the seven-analyst estimate of 52 cents.

Mergers, acquisitions and joint ventures

Nokia

(NOK) - Get Report

said it would provide digital packed radio system, or GPRS equipment to Norway's

Telenor Mobile

for possible commercialization in the year 2000. GPRS allows for faster transmission in mobile-phone systems, which would make more proficient use of Internet functions and multimedia in future phone models.

Viacom

(VIA) - Get Report

and

CBS

(CBS) - Get Report

have been discussing a possible deal involving their television stations,

The New York Times

reported. According to the

Times

, the two media companies are considering ways to benefit from a recent federal judgment that permits a company to own two stations in the same market. Both companies own stations in Dallas, Boston, Miami, Philadelphia and Pittsburgh.

Analyst actions

Donaldson Lufkin & Jenrette

sliced its rating on

Campbell Soup

(CPB) - Get Report

to underperform from market perform.

Warburg Dillon Read

rolled out coverage on

West Pharmaceuticals

(WST) - Get Report

with an initial buy rating and a price target of 45.

Miscellany

Amazon.com's

(AMZN) - Get Report

vice president of logistics Jimmy Wright has announced his retirement from the company,

The Wall Street Journal

reported. The

Journal

said that Wright's decision to leave was amicable and the company would look outside the company to fill his position.

Law enforcement officials said that hundreds of accounts at international banks took in about $10 billion in connection with a money laundering investigation at the

Bank of New York

(BK) - Get Report

, the

Journal

reported. According to the newspaper, the Fed conducted an inquiry in 1995 into possible illegal banking activities at Russian bank

Menatep

, which is now a focus of the investigation.

Seagate Technology

(SEG)

announced plans to restructure its software division and purchase all of its outstanding shares. The company is attempting to cut costs and excess production.

Tandy

(TAN) - Get Report

said August same-store sales at

Radio Shack

rose 10%.

In the Inside Wall Street column in

BusinessWeek

this week, Gene Marcial writes that a U.S. telecom company is set to invest $25 million for a 10% stake in

Log On America

(LOAX)

.

Elsewhere, the column says

MTI Technology

(MTIC)

has been soaring because of its switch to fiber channel-based technology and, more importantly, because it has acquired a 25% stake in privately held

Caldera Systems

, a provider of the

Linux

operating system. Brion Tanous, a senior analyst at

First Security Van Kasper

, is cited in the column as saying that based on

Red Hat's

(RHAT)

valuation -- Red Hat is the biggest distributor of the Linux operating system whose stock has skyrocketed since going public -- MTI's 25% stake in Caldera is worth 21 3/4 a share to MTI shareholders. MTI closed yesterday at 23 7/8.

Finally,

MicroTherapeutics

(MTIX)

is mentioned as a takeover target with Joanne Wuensch, an analyst at

ING Baring Furman Selz

, quoted as saying "

Guidant

(GDT)

appears the most likely to go after MicroTherapeutics."