Publish date:

Market Set to Test Its Trading Range This Morning

The anticlimactic October CPI has come out in line with expectations.

The October

Consumer Price Index

is out, and it's not turning many heads on Wall Street today.

The headline CPI gained 0.2% overall, matching the

Reuters

poll consensus estimate of 0.2%. The core rate, which excludes food and energy prices, gained 0.2%, also in line with expectations.

At first, stock futures and bonds didn't budge an inch from their modest morning lows. They've since weakened a bit further. At 9:05 a.m. EST, the

S&P 500

futures were down 7 to 1424, about a point below fair value and indicating a mixed open.

The bond market isn't looking helpful this morning, extending yesterday's pullback and being bothered by another spike in crude oil. The 30-year Treasury was lately down 26/32 to 100, putting its yield at 6.124%.

Crude futures had lately broken through the $26-a-barrel level, up from $25.70 in early trading.

Though normally the

ne plus ultra

of economic data, the CPI is proving a bit anticlimactic after yesterday's

Federal Open Market Committee

meeting, which resulted in a 25 basis-point rate hike and a move to a neutral bias. It's pretty safe to assume that the Fed has already seen these numbers and factored them into yesterday's decision, for one thing.

Meanwhile, it's about time that the market came to terms with an old friend, the trading range. The phenomenal

Nasdaq Composite Index

notwithstanding, a host of major proxies are challenging the top end right now: The

S&P 500

nosed above its July high yesterday, closing at 1420.03. And it's not just the big-caps that are testing resistance now. The

S&P MidCap 400

finished just two-tenths of a point below its July high, and the

Russell 2000

and the

S&P SmallCap 600

are each just 1% and 1.8% off theirs, respectively.

"Yesterday we made new closing highs on both the S&P 500 cash and

December futures," said Charles Farra, president of

Global Trading LLC

. "That's pretty good, and this isn't much of a pullback at all. We're basically making a breakout here and should be able to see the market continue to make its way higher, although we may have a little profit-taking along the way."

On the downside, Farra said he sees strong support in the 1414-to-1418 range. "We spent quite a bit of time trading between those 4 points. I think if we do try to press the thing down today, it's not going below there. We still have the mentality out there of people trying to buy dips."

Starting in Asia overnight, world markets have pretty much followed the same script thus far: Incited by Wall Street's positive reaction to yesterday's Fed hike, stocks erupted to the upside in early action, though profit-taking pared those gains considerably later in the session.

Hong Kong's

Hang Seng

advanced more than 300 points higher in early trading before faltering and falling back into negative territory. A late surge, underpinned by constituent

HSBC

, helped the benchmark index gain 15.02 to 14,704.48.

Things went better in Tokyo, where, after having been up more than 350 points, the

Nikkei

finally closed up 119.68, or 0.7%, to 18,274.82.

For most of the Tokyo session, the yen stayed close to the level at which it traded in New York late yesterday. It firmed early this morning in London, the dollar sinking from the 106-yen level to 105.1 yen. The greenback was lately quoted at 105.54 yen.

This morning, all the big European indices have fallen into the red after jumping higher at the open. Frankfurt's

Xetra Dax

was down 42.34 to 5867.18, while the Paris

CAC

was off 37.02 to 5153.99. London's

FTSE

was down 41.3 to 6541.7.

The euro took off like a rocket when trading started in London, moving quickly from $1.031 to the $1.0425 level. Press reports are focusing on comments by

European Central Bank

Chief Economist Otmar Issing, who told Swiss paper

HandelsZeitung

that the ECB shouldn't forget "the influence of the slip in the external value of the euro on price developments" when looking at eurozone inflation.

But the euro's protracted weakness has also made it ripe for a bounce. Also, the yen's simultaneous rally this morning could recast the euro's strength as more a case of dollar weakness. The euro was lately trading at $1.0405.

Wednesday's Wake-Up Watchlist

By

Tara Murphy

and

Brian Louis

Staff Reporters

Mergers, acquisitions and joint ventures

BB&T

(BBT) - Get BB&T Corporation Report

is buying

Hardwick Holding

in a stock swap valued at $138.7 million.

Pegasus

(PEGS)

is buying

REZsolutions

, in a deal valued at $250 million.

priceline.com

(PCLN)

will sell tickets for the three major airlines it does not already serve,

United Airlines

,

American Airlines

and

US Airways

(U) - Get UNITY SOFTWARE, INC. Report

, and will take a one-time $1.1 billion charge related to the move. United is a unit of

UAL

(UAL) - Get United Airlines Holdings, Inc. Report

-- while American is a unit of

AMR

(AMR)

.

Vodafone AirTouch

(VOD) - Get Vodafone Group Plc Sponsored ADR Report

said it will increase its bid for Germany's

TheStreet Recommends

Mannesmann

(MNNSY)

, in what could potentially be the biggest takeover ever,

The Wall Street Journal

reported. The newspaper, citing people familiar with the situation, reported that Vodafone is pondering a bid valued at between 220 euros and 230 euros a share, which would value Mannesmann at as much as 116.7 billion euros, or $120.59 billion. Earlier this week, Vodafone offered to buy Mannesmann; however, Mannesmann said no thanks.

Earnings/revenue reports and previews

(Earnings estimates are from

First Call/Thomson Financial

.)

Brookstone

(BKST)

posted a third-quarter loss of 55 cents a share, narrower than the three-analyst estimate of a 57-cent loss and the year-ago 56-cent loss.

CBRL Group

(CBRL) - Get Cracker Barrel Old Country Store, Inc. Report

posted first-quarter earnings of 25 cents a share, in line with the 12-analyst estimate but down from the year-ago 42 cents.

Consolidated Stores

(CNS) - Get Cohen & Steers, Inc. Report

posted a third-quarter loss of 14 cents a share, narrower than the 14-analyst estimate of a 17-cent loss and the year-ago 15-cent loss.

Dillard's

(DDS) - Get Dillard's, Inc. Class A Report

posted third-quarter earnings of 33 cents a share, missing the 13-analyst estimate of 38 cents, but up from the year-ago 47-cent loss.

Ericsson

(ERICY)

President Kurt Hellstrom warned that problems in increasing handset output made it difficult for the company to meet its forecasted operating margins for 1999. According to

Reuters

, Hellstrom said during a briefing in London that the output is probably in the low end of its projected range but "within what we consider normal."

Goody's Family Clothing

(GDYS)

reported third-quarter earnings of 5 cents a share, in line with the four-analyst estimate but down from the year-ago 10 cents.

Talbots

(TLB)

posted third-quarter earnings of 63 cents a share, beating the 13-analyst estimate by a penny and the year-ago 40 cents.

Offerings and stock actions

Phone.com

(PHCM)

is selling 6.6 million shares at a price of $135 per share in a public offering.

Goldman Sachs

priced

Terra Networks'

(TRRA)

22.3 million-share IPO above-range at $13.41 a share.

Analyst actions

Credit Suisse First Boston

analyst Mark Wolfenberger resumed coverage of

AppNet

(APNT)

with a strong buy rating and a 12-month target price of 75.

First Boston analyst Harry DeMott III, reinstated coverage of

Radio One

(ROIA)

with a buy rating and a 12-month target price of 77.

Wachovia Securities

upped its rating on

Tropical Sportswear

(TSIC)

to strong buy from neutral.

Miscellany

British Telecommunications

(BTY)

announced that it has selected

N2H2

(NTWO)

as its preferred Internet filtering provider.

Ford

(F) - Get Ford Motor Company Report

and

DaimlerChrysler

(DCX)

are ratcheting up consumer rebates on some of their most profitable light trucks, the

Journal

reported.

Kennametal

(KMT) - Get Kennametal Inc. Report

said it has hired

Goldman Sachs

to explore "strategic alternatives" regarding its

JLK Direct Distribution

unit, including selling it. Also, the company said it will incur special charges of about $25 million to $30 million in the quarter ended Dec. 31. The company plans to close, consolidate or downsize several warehouses, offices and plants and cut 400 to 500 jobs.

Kimberly-Clark

(KMB) - Get Kimberly-Clark Corporation (KMB) Report

said Thomas J. Falk has been named president and chief operating officer and will join the company's board of directors.

The Heard on the Street column in the

Journal

takes a look at

Warner-Lambert's

(WLA)

defensive maneuvers to protect its merger pact with

American Home Products

(AHP)

and fend off an unfriendly bid from

Pfizer

(PFE) - Get Pfizer Inc. Report

, reporting that some legal and financial specialists say that some of the moves by Warner may be legal but that does not necessarily mean they are fair to shareholders.