With the news yesterday that

Intel

(INTC) - Get Report

had reached a tentative agreement with the feds over the looming antitrust suit, many on Wall Street were idly wishing that

Microsoft

(MSFT) - Get Report

would abandon its hard line and do the same.

Today they wish that they'd logged on to the

Seattle Times

Web site yesterday afternoon, when the paper reported that Microsoft and the feds are "exploring ways to settle the landmark antitrust suit."

But early indications that the Microsoft news could help techs to another day of outperformance have faded. "This morning I think you're seeing some profit-taking, with the excuse being that

AMD

(AMD) - Get Report

is going to miss its number," said Jim Volk, co-director of institutional trading at

D.A. Davidson

in Portland, Ore. Advanced Micro Devices warned after the close yesterday that it expects to see a first-quarter loss.

At 9 a.m. EST, the

S&P 500

futures were off 4.5, more than 5 below fair value and indicating a lower open. That drop-off in the futures comes at the hands of the Treasury market. Selling in the Japanese government bond market overnight was hurting the U.S. bonds. The 30-year was off 9/32 to 94 24/32, lifting the yield to 5.62%.

"The Treasuries are down a little bit; the futures are down a little bit," said Bill Allyn, head of block trading at

Jefferies

. "There is still some nervousness about the strength in our economy." Yet both Volk and Allyn agreed that, though stocks may go lower today, the trend is up.

For Tokyo stocks, yesterday's break was the pause that refreshes. Today they climbed again, with the

Nikkei

gaining 317.65, or 2.2%, to 15,096.7. It was the first time the index broke 15,000 since late November. The big mover was market heavyweight

Sony

(SNE) - Get Report

, up 9% after it announced a major restructuring that will include a 10% cut in its workforce.

Hong Kong stocks rallied on the back of heavy buying of

HSBC

, the market's flagship stock, and news that Microsoft is in talks with

Hongkong Telecom

. The

Hang Seng

added 268.96, or 2.6%, to 10,532.95.

European indices were mixed. In Frankfurt, the

Dax

was off 27.39 to 4761.30. In Paris, the

CAC

was down 22.5 to 4153.47. In London, the

FTSE

was up 0.3 to 6209.1.

Tuesday's Wake-Up Watchlist

By

Brian Louis

Staff Reporter

  • RJR Nabisco (RN) set a plan to separate its domestic tobacco business, R.J. Reynolds Tobacco, from its Nabisco (NA) food business. RJR Nabisco will also sell its international tobacco business for $8 billion to Japan Tobacco, including the assumption of $200 million of debt. The spinoff of the food business will take place following completion of the international tobacco sale, the company said. Meanwhile, the Heard on the Street column in The Wall Street Journal says spinning off assets could subject the company and its directors to civil charges that they funneled money to holders that legally belongs to creditors, namely plaintiffs in tobacco suits or settlements.
  • Microsoft and the government are looking at ways to settle the antitrust lawsuit before it resumes next month, The Seattle Times reported, citing people close to the case. Microsoft has been saying privately it isn't talking about a settlement; the company's chief operating officer, Bob Herbold, is quoted in the article as saying: "You never block out the notion of settlement, but we're not going to talk about it publicly." Yesterday, Intel and lawyers from the Federal Trade Commission agreed to a proposed antitrust settlement. That trial was slated to begin today.
  • CMGI's (CMGI) chairman and chief executive, David S. Wetherell, quit Lycos' (LCOS) board, calling Lycos' deal to merge with parts of USA Networks (USAI) - Get Report "inadequate for Lycos shareholders." For its part, Lycos said this morning it "remains fully committed to the USA/Lycos Interactive Networks transaction."
  • The FTC is making a big push to expand its investigation of pharmaceutical giants to determine if they are unfairly stifling generic competition, The Wall Street Journal reported. The FTC's probe involves Eli Lilly (LLY) - Get Report, DuPont (DD) - Get Report, Abbott Laboratories (ABT) - Get Report, and Hoechst (HOE) . The investigation is prompted by concerns over spiraling drug-price inflation and possible anticompetitive practices, the Journal reported, citing people recently contacted by the FTC. In other news (earnings estimates are from First Call):
  • Advanced Micro Devices (AMD) - Get Report yesterday warned of a "significant" first-quarter loss. The company cited a failure to meet its goal of shipping 5.5 million K-6 processors during the quarter and said that it will take charges during the second and third quarters to cut 300 jobs. The 21-analyst outlook called for a first-quarter loss of 9 cents a share vs. the year-ago loss of 39 cents. TheStreet.com wrote about AMD this morning.
  • Borders (BGP) reported fourth-quarter earnings of $1.06 a share, beating the 11-analyst estimate by a penny and up from the year-ago 96 cents.
  • H.J. Heinz (HNZ) posted third-quarter operating earnings of 60 cents a share, in line with the 16-analyst estimate and up from the year-ago 55 cents.
  • Industrial Distribution Group (IDG) posted fourth-quarter earnings of 17 cents, in line with the three-analyst estimate and up from the year-ago 12 cents. The company also named Richard Seigel acting chairman and CEO.
  • Integrated Health Services (IHS) reported fourth-quarter earnings, excluding charges, of 37 cents a share, beating the seven-analyst estimate by a penny, but down from the year-ago of 61 cents, excluding charges.
  • Cowen downgraded Microsoft to buy from strong buy.
  • Sony set a major restructuring, including job cuts totaling 17,000 over four years. The company will also slice the number of manufacturing facilities worldwide to 55 from 70.