Despite a resurgence of merger news this morning, it looks like stocks will have a halting start to the week.
Given what happened Friday, this probably isn't too much of a surprise. That stocks were able to break ranks and head higher despite the bond market's poor reaction to what looked like a favorable
was somewhat bizarre. Today the Treasuries are under pressure again, and that's putting a somewhat negative tone on equities.
Now back to the merger front. First off, community Web site
agreed to a three-way merger with
Internet service and the Web assets owned by
. The new company,
, will be the seventh largest Web site, Xoom said.
Then there are reports that
is in talks to acquire
, and the news that
Republic New York
(a Luxembourg-based bank Republic has a 49% stake in) for $10.3 billion.
Plus, Internet stocks are benefiting from a report in
The Wall Street Journal
will abandon its bid for
. Several major Lycos shareholders had been critical of the deal.
"We're looking at a slight down day in the broader market, and a slight up day in the Internet stocks," said Dan Mathisson, head stock trader at
D.E. Shaw Securities
. "Lycos is going to be up nicely."
At 9 a.m. EDT, the
futures were off 2.5, about 2 points below fair value. The 30-year Treasury was down 4/32 to 91 28/32, lifting the yield to 5.83%.
U.S. markets will be keeping a close eye on any developments following the
bombing of the Chinese embassy in Belgrade. The Chinese press continues to characterize the incident as a wanton attack: The
called the mishap an example of the "barbaric acts of U.S.-led NATO."
But while the bombing threatens both the prospects for a U.N.-brokered peace in Kosovo (
-- the official Chinese news agency -- quoted Chinese President
that it's "impossible for the U.N. Security Council to discuss any plan to solve the problem") and China's entrance into the
World Trade Organization
, it looks as though any effect on markets will be, at this point, limited.
This, at least, is the impression one gets from the action in Hong Kong, where the news that HSBC Holdings will acquire Republic New York and Safra Republic was enough to lift the market despite the trouble in China. The
added 165.77, or 1.3%, to 13,163.20.
More rumblings from the government on the possibility of a new round of stimulus helped Tokyo stocks, but late-day selling limited the gains. The
added 30.49 to 16,977.01.
, the head of the
Economic Planning Agency
, said Sunday said that an extra budget was a possibility. Over the past week, the
Liberal Democratic Party's
-- whose job it is to float balloons to the market -- has been making similar suggestions.
European bourses were all lower. In Frankfurt, the
was down 85.2, or 1.6%, to 5212.18. In Paris, the
was off 11.07 to 4278.49.
HSBC, down on the merger news, was weighing on the London market. The
was down 40.3 to 6315.7.
Monday's Wake-Up Watchlist
NBC unit of
General Electric (GE) - Get Report agreed to merge its Internet properties with
Xoom.com (XMCM) and
NBC Internet, the first public Internet company integrated with a major broadcast network,
HSBC said it will acquire
Republic New York (RNB) and its sister company, Luxembourg-based
Safra Republic Holdings, for $10.3 billion in cash.
Bloomberg over the weekend and
The Wall Street Journal this morning have sources close to the matter saying that
Chevron (CHV) and
Texaco (TX) - Get Report are in slow-moving merger talks that aren't expected to produce an agreement any time soon. Neither company is commenting on the rumors. Texaco, which tacked on more than 5 points on Friday on takeover speculation to close at 67 1/4, traded at 69 in premarket activity.
Microsoft (MSFT) - Get Report will buy $600 million of
Nextel's (NXTL) common stock at $36 a share in exchange for Nextel offering its customers Microsoft wireless Internet services, the companies announced. Nextel closed Friday at 36 3/8.
USA Networks (USAI) - Get Report will probably abandon its three-month-long bid to acquire
Lycos (LCOS) after determining that it probably can't win the approval of the portal company's shareholders, the
Journal reported, citing people familiar with the matter. Lycos traded up 95 1/2 in premarket activity, up 6 from Friday's close at 89 1/2.
Norsk Hydro (NHY) , a state-controlled oil-and-gas giant, launched a bid to acquire exploration-and-production company
Saga Petroleum (SPM) at a 35% premium.
In other news:
Autocam (ACAM) - Get Report reported third-quarter earnings of 32 cents a share, beating the consensus estimate by a dime.
Comcast (CMCSK) reported a first-quarter profit of 10 cents a share, reversing the year-ago loss of 12 cents.
Action Computer Supplies Holdings agreed to merge with
Insight Enterprises (NSIT) - Get Report in a deal valued at around $150 million in stock.
Omnipoint (OMPT) reported a first-quarter loss of $3.42 a share, missing by 29 cents the consensus estimate of a loss of $3.13 a share.
Tarrant Apparel (TAGS) - Get Report reported first-quarter earnings of 30 cents a share, beating the consensus estimate by a penny.
Consolidated Natural Gas (CNG) was upgraded to accumulate from hold by
Protein Design Labs (PDLI) - Get Report was upgraded to buy from attractive by
Sonat (SNT) was upgraded to accumulate from hold by Prudential.
Union Pacific (UNP) - Get Report was downgraded to neutral from attractice by PaineWebber.
Western Gas (WGR) was upgraded to accumulate from hold by Prudential.
Williams (WMB) - Get Report was upgraded to strong buy from hold by Prudential.