Playing Out the String on Wall Street

Trading's thin and stocks may be volatile.
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In these waning days of 1998 when trading floors are half-staffed and portfolio managers, happy to have survived a difficult year, have left the scene, it does not take much to move the market around. So while stocks look like they will begin the day on a pretty even footing, action will likely be choppy.

It's also the time of year to tidy up the portfolio for year-end. Out with losers, in with the winners, and stocks act accordingly. There will likely also be some index-change related action, ahead of the

S&P

index rebalancing after the close tomorrow.

"You're going to get some stock-specific situations vis-a-vis the S&P in the next couple of days," said Bob Basel, director of listed trading at

Salomon Smith Barney

. "Outside of that, I don't expect too much to happen."

At 9 a.m. EST, the

S&P 500

futures were off 1.6. That puts them about 2 points over fair value, indicating a somewhat positive open.

Despite another bad day in the Japanese government bond market, Treasuries were holding up. The 30-year was up 6/32 to 102 2/32, dropping the yield to 5.11%.

In a shortened trading day, Tokyo stocks closed out what has been a very bad year in muted fashion. Volume was slim -- the few traders in today were more interested in handicapping who would win the annual New Year's singing contest,

Kohaku Utagasen

. (Bet on the red team.) The

Nikkei

slipped 4.73 to 13,842.17, though advancing issues beat decliners. For the year, the index lost 9.3%. But the yen, running counter to most currency strategists' expectations, was strong in 1998, so in dollar terms Japanese stocks actually gained 2.7%.

In their last full day of trading, Hong Kong stocks again saw declines as investors locked in profits in thin trading. The

Hang Seng

dropped 104.53 to 10,121.44.

Trading is thin in Europe as well, where the forthcoming conversion to the euro has made investors even less willing to change positions at year-end. In Frankfurt, the

Dax

was off 29.98 to 5002.39. In Paris, the

CAC

was down 21.49 to 3869.61. In London, the

FTSE

was off 58.9, or 1%, to 5882.6.

Wednesday's Wake-Up Watchlist

By

Brian Louis
Staff Reporter

  • The Federal Trade Commission this week is expected to conditionally clear British Petroleum's (BP) - Get Report acquisition of Amoco (AN) - Get Report, according to news reports.
  • Cable & Wireless Optus, an Australian telecommunications company, said it signed a five-year outsourcing agreement with IBM (IBM) - Get Report totaling roughly $460 million.
  • E*Trade (EGRP) set a marketing partnership with CNNfn.com. Under the deal, E*Trade will have a "significant branded presence" on main trafficked areas of the Web site, E*Trade said. The presence will be promoted on CNNfn, the cable network, E*Trade said.
  • Excite (XCIT) and Genesis Direct (GEND) , a direct merchandiser, announced an e-commerce deal to bring 20 Genesis Direct brands, including proteam.com, the Web site for Genesis Direct's 800-PROTEAM sports brand, to Excite's flagship portal services, excite.com and webcrawler.com.
  • Interlinq Software (INLQ) and W.R. Hambrecht announced a deal in which Hambrecht will take Interlinq private.
  • Service Merchandise (SME) said latest-quarter same-store sales declined in the "low-double-digit range." Also, the company said it hasn't made an interest payment due Dec. 15 on its 9% subordinated debentures. The company said it "continues to evaluate available alternatives."
  • Charles Schwab (SCH) , E*Trade and Ameritrade (AMTD) - Get Report are flying not only because of their online-trading business, but also because -- at least lately -- a big portion of their online trading involves cyberspace stocks themselves. And if the Internet-stock bubble bursts, the air will likely be drained first from the Internet-broker stocks, the Heard on the Street column in The Wall Street Journal said today.