Market Set to Show Modest Strength

The S&P 500 futures are firming slightly in late Globex trading. Overseas, European bourses are surging.
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It looks like stocks will open with modest strength.

The pre-holiday lull is leaving the market with few catalysts on the corporate level, and that's helped to keep the futures quiet for most of the morning, though they've lately firmed a bit. At 9:05 a.m. EST, the

S&P 500

futures were up 1.8, about 3 points above fair value and indicating a move to the upside at the bell.

After the buy programs have worked their swift magic, though, the market will confront what's become a very familiar conundrum: how to weigh the conventional wisdom that the market is due for a pullback with the knowledge that that conventional wisdom has failed many more times than not over the past weeks. To give the most extreme example, the

Nasdaq Composite Index

has closed at a record high for 14 of the past 17 sessions.

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"If we have another day like yesterday," said Bill Meehan, chief market analyst at

Cantor Fitzgerald

, "we're likely to see the Dow at 11,000 and the Nasdaq at 3400 with the 200-day advance/decline moving average at a new low. It's amazing. Everybody's cramming into tech stocks, and the riskier, the better."

"That said, I'm not telling anybody to short tech stocks right now. It's too hard to game the mania. I'm telling clients to enjoy the ride, just don't stray too far from the exit," he added.

The morning's most prominent corporate news is a

Wall Street Journal

report that Judge Thomas Penfield Jackson told lawyers for

Microsoft

(MSFT) - Get Report

last week that the time is as "propitious" as possible for a negotiated settlement of the company's antitrust suit. That news shouldn't come as a huge shock, given the fact that Judge Jackson appointed a mediator in the case

last Friday.

The 30-year Treasury was off 2/32 to 99 1/32, putting its yield at 6.196%. Crude-oil prices, whose

strength has been harassing the bonds lately, were holding relatively steady. Crude futures for January delivery were lately trading off 20 cents at $26.87 a barrel.

The large European bourses were surging higher in early afternoon trading, led by London's

FTSE

, which was up 97.9, or 1.5%, to 6539.9. The Paris

CAC

was 41.06 higher, or 0.8%, to 5189.02 amid news that consumer spending jumped 2.3% in October after sinking 2% the previous month. But French industrial production for October unexpectedly fell 0.1% vs. expectations for a 0.6% increase.

In Frankfurt, the

Xetra Dax

was up 37.51 to 5857.40.

Thinly traded, the euro hung tightly to the $1.031 level overnight before edging marginally higher in European trading. The euro was lately sitting at $1.0298.

Meanwhile, as part of its defense against

Vodafone AirTouch's

(VOD) - Get Report

$128 billion takeover offer, German telecom and engineering firm

Mannesmann

(MNNSY)

said it would accelerate its plans to spin off its less profitable engineering and automotive unit in mid-2000, a year earlier than previously announced.

In Hong Kong, big gains in

China Telecom

and

Hutchison Whampoa

offset broader profit-taking among constituents of the

Hang Seng

index, which added 108.17, or 0.7%, to 15,393.20. Hutchison Whampoa owns 10.2% of Mannesmann.

Markets in Tokyo were closed for the Labor Thanksgiving Day holiday. The dollar softened slightly against the yen in other Asian forex markets overnight, moving from 104.6 yen to 104.2 yen before firming in London. The greenback was lately quoted at 104.32 yen.

Tuesday's Wake-Up Watchlist

By

Eileen Kinsella

Staff Reporter

Mergers, acquisitions and joint ventures

America Online

(AOL)

and

Intuit

(INTU) - Get Report

said they will create an online bill-paying service.

Lycos

(LCOS)

said it will buy

Gamesville.com

for $207 million in stock.

Earnings/revenue reports and previews

Aurora Foods

(AOR) - Get Report

said it sees full-year earnings from 78 cents to 81 cents a share, below the current

First Call/Thomson Financial

consensus estimate of 87 cents. The company expects fourth-quarter earnings from 28 cents to 31 cents a share, also below the four-analyst consensus estimate of 37 cents a share.

H&R Block

(HRB) - Get Report

posted a second-quarter loss of 46 cents a share, a penny narrower than the seven-analyst estimate, but wider than the year-ago loss of 31 cents a share.

Offerings and stock actions

Lehman Brothers

priced a 6 million-share IPO last night for

deltathree.com

(DDDC)

at the top of its expected price range at $15 a share.

Credit Suisse First Boston

priced a 4.5 million-share IPO for

Digital Impact

(DIGI)

last night at the top of its expected price range at $15 a share.

Donaldson Lufkin & Jenrette

last night priced a 5 million-share IPO for

GetThere.com

(GTHR)

at the top of its expected range at $16 a share.

Morgan Stanley Dean Witter

priced a 9 million-ADR IPO for

NDS Group

(NNDS)

last night at the top its expected price range at $20. NDS Group is a spinoff of

News Corp.

(NWS) - Get Report

.

Salomon Smith Barney

priced a 9.2 million-share IPO for

TeleCorp PCS

(TLCP)

at $20 per share, above its expected $16-to-$18 price range.

Analyst actions

Credit Suisse First Boston

increased its earnings estimates on

Flextronics

(FLEX) - Get Report

to $1.78 a share from $1.75 a share for 2000.

Miscellany

Avista

(AVA) - Get Report

affiliate

Avista Energy

said it will refocus its energy trading unit and is exploring a number of options, including the sale of a portion of the unit. The company said the action will result in expenses of between $10 million and $15 million.

The federal judge in the

Microsoft

(MSFT) - Get Report

antitrust trial, Thomas Penfield Jackson, told both sides the time is right for a negotiated settlement of the case,

The Wall Street Journal

reported. During a meeting in his chambers last week, Judge Jackson told lawyers for the software company, the

Justice Department

and 19 states that "this is probably as propitious a time for any possible negotiated outcome as you could have," according to the story.

The Heard on the Street column in the

Journal

examines the pressures faced by Credit Suisse First Boston analyst Michael Mayo after he put a sell recommendation on a handful of bank stocks. According to the story, Mayo's ranking in an influential analyst poll conducted by

Institutional Investor

magazine dropped, and his motives were questioned after he told investors to reduce bank holdings in general and sell four major ones:

Bank One

(ONE) - Get Report

;

J.P. Morgan

(JPM) - Get Report

;

Citigroup

(C) - Get Report

; and

Chase Manhattan

(CMB)

.