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An intense rally in the long bond is helping the stock market shake off its post-


ennui in a big way.

The market: Join the discussion on


Message Boards. At 9:05 a.m. EST, the

S&P 500

futures were up 8.2, more than 8 points above fair value and indicating some good strength at the open. The outlook for large-cap tech stocks was looking brighter as well, with the

Nasdaq 100

futures up 70 to 3804.

Things looked a lot cooler before the long bond started soaring. After rising as high as 100 14/32 shortly after 8 a.m., the long bond was lately up 2 2/32 to 99 29/32, putting its yield at 6.132%. The 10-year note, meanwhile, was catching a bit of wind as well. It was up 7/32 to 96 6/32 and yielding 6.544%.

"It's crazy," said Charles Farra, bond trader at

Goldenberg Hehmeyer

in Chicago. "There's a massive short-covering in the Treasury market, especially in the long bond. The basis has blown up by 2 points in the last 24 hours."

Today's short-covering is an extension of a rally that's been going on for the past few weeks, sparked by concerns over dwindling supply. Everyone has known that the

Treasury Department

was planning to sell fewer 30-year bonds in the future, and the release yesterday of the details of those plans has sent the long bond flying anew.

"I don't think it's going to stop," Farra said. "I don't want to do anything. This is worse than trading pork bellies."

The stock market could well use an extended bond rally. Yesterday's Federal Open Market Committee meeting didn't change much for the stock market, which will have to continue to fight for its points in the same environment of

incremental rate hikes that it's been operating in since last June. Few would hazard that 25 basis points will be sufficient to slow an economy growing at a pace well above what the Fed believes to be its maximum noninflationary speed. Most economists expect another rate increase next month, and more than half of the 30 primary dealers of government securities polled by


see a fed funds rate 50 basis points higher than it is now by year-end.

But, lest anyone forget, the upshot of strong growth is strong earnings, and this reporting season is turning out to be one of the best the market's seen in a while. Of the 70% of S&P 500 companies that have already reported, 64% have exceeded expectations, according to

I/B/E/S International

. And even if one takes the cynical view of corporate guidance as an exercise in lowballing analysts, it's hard to deny that bottom lines look good. Fourth-quarter growth has come in at an impressive 21%.'s


bottom line certainly didn't beat expectations last night: The company posted a wider-than-expected

loss, but enthusiasm over the coming quarters had that stock flying on


. It was lately trading at 81 1/4, up from a close of 69 7/16.

The morning's top corporate news is

VA Linux Systems'


agreement to buy



, exchanging 0.425 of a VA Linux share for each share of Andover, which was lately trading at 50 7/16 after closing the previous session at 36.

The big European bourses were moving higher in early afternoon trading after the

European Central Bank

decided to

raise the key eurozone interest rate by 25 basis points to 3.25%. The Paris


was up 166.41, or 2.8%, to 6113.27, while Frankfurt's

Xetra Dax

was up 124.61, or 1.7%, to 7296.56. Across the channel, London's


was off 12.7 to 6290.1.

Markets were abuzz with

news that



has accepted

Vodafone AirTouch's


hostile bid.

The euro was trading at $0.9763.

The largest Asian markets moved higher overnight.

In Tokyo, the


closed within spitting distance of 20,000, a level it hasn't seen since Aug. 1, 1997. Hopes that the recent introduction of several new investment trusts will buoy demand for stocks helped that index rise 207.51, or 1.1%, to 19,786.42.


garnered particular interest, picking up more than 20% after

Lehman Brothers

raised its price target on the stock to 400,000 yen from 100,000 yen. (Softbank owns shares of the Inc.


through its unit

Softbank Technology Ventures


The dollar dipped below 108.00 yen in early Tokyo trading but recovered ground later in the session. The greenback was lately trading at 108.45 yen.

Hong Kong's

Hang Seng

rose 178.32, or 1.1%, to 15,968.12, with index heavyweight

China Telecom


gaining 5.4%.

Other Asian indices were mixed. Singapore's

Straits Times

index fell 22.07 to 2249.33, while Korea's


rose 6.63 to 950.22.

For a look at stocks in the preopen news, see Stocks to Watch, published separately.