A smattering of mergers this morning apparently won't be enough to ease Wall Street's nervousness over interest rates.
The market doesn't look very good this morning. With bonds not showing any bounce-back from Friday's selling, and tension gathering ahead of tomorrow's
Federal Open Market Committee
meeting, stocks are under heavy pressure.
By the market's lights, it is now a nearly forgone conclusion that the Fed will announce after the meeting that it has adopted a tightening bias.
"To me, it appears that it's at least a 50-50 proposition," said Bill Meehan, market analyst at
. "I think it would be greater, except the Fed does not want to raise rates if they can have the market do it for them." Given the poor interest-rate environment, Meehan suspects small-cap and value stocks will continue to outperform large-cap growth.
It could be a thin and choppy session. With the FOMC meeting looming, and the nice weather in New York, Meehan said a lot of people are hitting the links rather than going to the office to get depressed by the market.
At 9 a.m. EDT, the
futures were off 4.9, putting them about 8 below fair value and indicating a negative open. The 30-year Treasury was down 3/32 to 98 19/32, driving the yield up to 5.93%.
Though the lines of cause and effect between U.S. inflation and the Japanese economy are uncertain, Tokyo stocks sold off in reaction to Friday's strong
consumer price index
shed 389.37, or 2.3%, to 16,421.02.
Also weighing on stocks was frustration that Finance Minister
did not suggest that any fresh rounds of stimulus are in the offing when he met with the
, at the
Asia Pacific Economic Cooperation
meeting in Malaysia this weekend.
In Hong Kong, the links with the U.S. economy are far clearer. Because of its peg to the dollar, for Hong Kong a raise in U.S. rates is a raise in rates. Adding to the pressure on stocks: rumors that
Morgan Stanley Dean Witter
would lower Hong Kong's weighting in its international indices today. The
dropped 266.92, or 2.1%, to 12,588.60.
European stocks fell, hurt by Wall Street's poor performance Friday and expectations of further losses today. In Frankfurt, the
was off 73.93, or 1.4%, to 5099.32. In Paris, the
was down 65.96, or 1.5%, to 4257.87. In London, the
was down 113.3, or 1.8%, to 6187.1.
Monday's Wake-Up Watchlist
David A. Gaffen
- Global Crossing (GBLX) and
U S West (USW) confirmed last week's reports that they would merge in a stock swap valued at $37 billion. Global Crossing, which in March said it would acquire
Frontier (FRO) - Get Report, will fold that acquisition into the merged entity.
Morgan Stanley Dean Witter cut its ratings on
Ford (F) - Get Report and
General Motors (GM) - Get Report to neutral from outperform this morning. It also began coverage of
Wellpoint (WLP) and
United Health (UNH) - Get Report with strong buy ratings, and started coverage of
Trigon (TGH) - Get Report,
USWeb (USWB) and
Foundation Health (FHS) with outperform ratings. Lastly, it upped
Commerce Bancshares (CBSH) - Get Report to outperform from neutral.
Xerox (XRX) - Get Report set a technology and product alliance with
Microsoft (MSFT) - Get Report, designed to make it easy to connect Xerox digital copiers to networks running Microsoft software,
The Wall Street Journal reported this morning.
Citigroup (C) - Get Report will apply for one of the six enhanced banking licenses for foreign banks created by the
Monetary Authority of Singapore.
Dow Jones (DJ) and
Reuters (RTRSY) are combining their interactive business services to create an Internet-based database product for corporate clients, the companies said this morning.
General Dynamics (GD) - Get Report said it would buy jet manufacturer
Gulfstream Aerospace (GAC) in a $5.3 billion stock swap.
Gerald Stevens (GIFT) said it filed for an offering of 5 million shares.
Niagara Mohawk (NMK) reported first-quarter earnings of 27 cents a diluted share, up from 8 cents a year ago.
TRW (TRW) , a defense contractor, said it would sell four noncore automotive operations for $1.2 billion to $1.5 billion to reduce debt.
Foamex (FMXI) reported first-quarter earnings of 24 cents a diluted share, up from 12 cents a year ago.
Aztec Technology (AZTC) reported first-quarter earnings of 1 cent a share, up from break-even for the same period a year ago.
TicketMaster Online-Citysearch (TMCS) said it will acquire
Cendant (CD) .
Synetic (SNTC) and
Medical Manager (MMGR) agreed to merge in a deal valued at about $1.4 billion.
EarthLink Network (ELNK) and
Sprint (FON) said they will offer co-branded high-speed Internet access using Sprint's DSL network.
Precision Castparts (PCP) agreed to buy
Wyman-Gordon (WYG) for $20 per share, or $721 million, in cash. Wyman-Gordon closed Friday at 13 1/4.
Toys R Us (TOY) reported first-quarter earnings of 7 cents a share, just as it did at this time last year. The company is hoping for a boost in earnings this quarter with the sale of
Star Wars: Episode I -- The Phantom Menace-related action figures and video games.