An unexpected jump in core producer prices has set stocks up for a bout of selling when the market opens.
Things looked good for the headline October
Producer Price Index
, which fell 0.1% overall, cooler than expectations for a 0.1% gain in the
poll. But Wall Street is reacting less than enthusiastically to a larger-than-expected spike in the core rate, which excludes food and energy prices. The core gained 0.3%, hotter than the expected 0.1% increase, though down from last month's whopping 0.8% gain.
Stock futures fell back from early highs on the news. At 9:05 a.m. EST, the
futures were off 9, about 8 points below fair value and indicating a wave of selling at the open.
"The core number's getting everybody a little fired up here," said Bryan Piskorowski, market analyst at
. "With that number, I think we'll see a little more profit-taking in the early going. We'll just have to see where
stocks bottom and form a base."
The PPI hasn't done what many on Wall Street were hoping for: bolster the growing sense that the
may not be raising rates when it meets next Tuesday. That task has been deferred to Friday's preliminary second-quarter productivity report, which is closely watched by Fed boss
In the meantime, stocks certainly have some more room to consolidate. "It's just a case of too much, too soon," said Piskorowski. "Forty-two percent on the Nasdaq year to date is a pretty heady number. So I think this will lead to a little backing and filling."
Profit-taking in technology stocks will be stanched some this morning by
, which last night posted upside
first-quarter earnings. More important, unlike some of its tech-bellwether brethren, the company said that it expects little or no impact from Y2K. So much for the rumor that circulated briefly last month about a possible Cisco shortfall.
Meanwhile, traders are keeping an eye on
United Parcel Service's
(UPS: NYSE) $5.47 billion IPO.
wrote about the intense demand that offering has met with in
a story last night.
The bond market was also falling back on the core PPI, but more moderately so. The 30-year Treasury was down 14/32 to 100 9/32, putting the yield at 6.104%. Today the
will conclude its quarterly refunding with an auction of $10 billion in 10-year notes. The results of the auction will be announced at about 1:30 p.m.
The large European indices saw their early gains evaporate after the PPI's release. Frankfurt's
was 19.20 lower to 5675.53, while the London
was off 10.8 to 6424.7. The Paris
was essentially flat at 4998.13
The euro was lately quoted at $1.0415, near where it stood late in New York yesterday.
In Tokyo, the
closed above the key 18,500 level for the first time since mid-July. The benchmark index rose 275.71, or 1.5%, to 18,567.87, its highest level in more than two years.
Sentiment in stocks was boosted by an unconfirmed wire report that Japan's economic stimulus package would total more than 16 trillion yen, vs. the 15 trillion-yen package the market has been expecting. But Finance Minister
did better than that after the close, indicating to reporters that the stimulus package will be close to 17 trillion yen.
Ultimately, the yen was little changed against the dollar amid all this talk of new government spending. After sinking as low as 104.5 yen early in the Tokyo session, the dollar rallied back above the 105-yen level, where it was late in New York trading last night. The greenback was lately quoted at 104.78 yen.
In Hong Kong, the
closed up 305.84, or 2.2%, to 13,975.54, with buying concentrated in a handful of the index's large constituents. The blue-chip strength may have been bolstered by renewed optimism over China's bid to enter the
World Trade Organization
, but it was sparked by stocks' performance in Tokyo.
Wednesday's Wake-Up Watchlist
Morgan Stanley Dean Witter
priced a 109.4 million-share initial public offering for
United Parcel Service
above its expected $47-to-$49 price range at $50, making it the largest IPO ever. The IPO raised $5.5 billion. According to
First Call/Thomson Financial
, UPS stole the IPO heavyweight title away from
, which brought in $4.4 billion internationally and more than $3.9 billion domestically through its IPO in October 1998. As a delivery service, UPS could serve as a major player in the e-commerce explosion, making it even more appealing to investors.
wrote about the IPO in a story
after the close posted first-quarter earnings of 24 cents a share, which beat the First Call/Thomson Financial estimate by a penny and came in above the year-ago 17 cents. Yesterday Cisco said it was purchasing rival
in a $799 million stock swap.
joint newsroom wrote about Cisco's
earnings and its
acquisition of Aironet in stories yesterday.
Compaq Net Announcement Draws Attention
Things have been relatively quiet at
ever since CEO Michael Capellas took over the reins of this bucking Houston-based PC and server company back in July. But Compaq's stock may receive a boost this morning when the company's top brass invades New York City to unveil new commercial Internet products and services.
What makes this announcement a bit unusual, and maybe even a little exciting for beleaguered shareholders, is that
CEO David Wetherell and Rick Belluzzo -- now a vice president of
and former CEO of
-- will also be in attendance.
Wetherell's presence makes sense because his company just bought
from Compaq, which still retains a minority stake in the portal. But Belluzzo, who now runs Microsoft's Internet operations, including
, is another story. His presence could mean Compaq may be rolling out an Internet strategy (finally) that includes Microsoft's content on a new line of commercial desktops. It's a good bet that AltaVista's portal will be very easy to access on these new boxes. Now if Compaq can lure a top CFO candidate, it might really get some momentum going in its stock.
Mergers, acquisitions and joint ventures
set a strategic relationship under which NextCard will be the exclusive provider of a co-branded Amazon.com NextCard credit card. Amazon also has obtained a warrant to acquire up to 4.4 million shares of NextCard stock, a stake of about 9.9%. Amazon was in the news yesterday after saying it was launching four online stores.
joint newsroom wrote about the move in a story
Herb Greenberg also wrote about the news in a column
said they were in a deal to provide content for a portal. The alliance will provide CNET technology through a Commerce One market site.
A new joint venture company involving an Irish consortium and
said it planned to compete in Ireland's deregulated electricity market beginning in February. The company, known as
, said it would invest $264 million over the next three years.
Earnings/revenue reports and previews
(Earnings estimates are from First Call/Thomson Financial.)
, the Dutch business software firm, said it expects to return to profitability in 2000 and that sales and license revenue were improving in the fourth quarter,
reported third-quarter earnings of 56 cents a share, beating the 18-analyst estimate of 53 cents a share and the year-ago 50 cents a share.
reported third-quarter earnings of nine cents a share, missing the 13-analyst estimate by a penny, but up from a year-ago 8 cents a share.
reported third-quarter earnings of $1.11 a share, in line with the seven-analyst estimate and up from a year-ago 98 cents a share.
reported third-quarter operating net of 7 cents a share, falling short of the five-analyst estimate of 15 cents a share, but up from a year-ago 6 cents a share. The company said it expects to achieve $105 million in cost savings by the end of next year.
reported third-quarter earnings of 44 cents a share, missing the 10-analyst estimate of 47 cents and down from the year-ago 49 cents. Last night,
joint newsroom covered Waste Management's
third-quarter earnings report.
Offerings and stock actions
has decided to ax its IPO plans, citing unfavorable market conditions. Merrill was expected to price Centerprise Advisors' 10.5 million-share IPO on Wednesday in a price range of $11.50 to $13.50 a share.
board approved a 3-for-2 stock split.
priced a 5.2 million-share IPO for
above its expected $10-to-$12 price range at $14.
Merrill cut its rating on
to near-term neutral from accumulate.
Warburg Dillon Read
started coverage of
with a buy rating.
Bay View Capital
to intermediate-term accumulate from intermediate-term neutral and long-term buy from long-term accumulate.
to strong buy from buy. QLT said yesterday its losses widened in the third quarter because of higher marketing costs.
announced a restructuring plan under which it will cut 200 jobs. The plan, which includes new initiatives focused on the Internet and advanced work group solutions, is expected to produce annual cost savings of about $20 million. Avid will take a charge of between $9 million and $10 million in the fourth quarter related to the revamping.
The Heard on the Street column in the
takes a look at the recent vogue for tracking stocks, which are hybrid, publicly traded shares of a wholly owned subsidiary. As companies including Microsoft and
ponder the possibility of issuing tracking stocks for their Internet units, the story points out the disappointing longer-term performance of an older tracking stock,