Skip to main content

Stock Market Poised to Go Higher Amid EarthLink-MindSpring Merger

But many eyes are trained on the Dow, which lingers close to a key support level of 10,500.

Stocks are leaning toward another precariously positive opening this morning.

Today we'll see the market, at least in terms of its major proxies, continue to try to work out its rather curious technical position. The

Dow Jones Industrial Average

closed yesterday at 10,524.07, its lowest level since June 11, and tantalizingly close to the bottom end of the trading range it's been in since April. The

Nasdaq Composite Index

, on the other hand, is just 1% off its all-time high, as investors' anxiety over the rising yen, interest rates and corporate earnings seem to be causing them to hug big-cap technology names all the harder.

There's been nothing curious about the broader market, though. Breadth has been

horrible for weeks.

But most people are watching the Dow right now as it tests its key support at 10,500. While technical analysis takes much, much more than its fair share of ridicule from fundamentalists, nice round numbers like this one do carry some psychological weight. The Dow passed its first test yesterday, bouncing strongly off the 10,500 level. But with sentiment still shaky, there's a good chance we may visit that proving ground again.

In the meantime, stocks are poised to show some strength early on. At 9 a.m. EDT, the

S&P 500

futures were up 6.2, about 3 points above fair value and indicating a positive open. The 30-year Treasury was lately up 1/32 to 100 17/32, its yield rising to 6.086%.

"It looks like this thing could take off today," said Ed Basile, director at

Warburg Dillon Read

in Chicago. Basile said that he sensed so much negativity during a recent trip to Wall Street that he's expecting a solid contrarian bounce. "Everyone's been so bearish. We're going to go the other way and say, 'Hey, you can't be bearish forever.'"

Specifically, Basile is looking for the S&P 500 futures to rally as far as 1351, which is where the December contract stood at Friday's close.

Scroll to Continue

TheStreet Recommends

In corporate news, news that Internet service providers are






are merging may shake up the Net sector with expectations of future consolidation.

No major economic data are forthcoming today. This morning, the

Labor Department

released figures showing

initial jobless claims

at 272,000 for the week ended Sept. 18, down from a revised 289,000 the week before and the lowest level since Jan. 5, 1974. At 10 a.m., we'll get the August

Help Wanted Index

, one of the lower-profile reports that



Alan Greenspan

is known to watch.

After putting together the biggest one-day


drop of the year yesterday, Japanese stocks took the day off in celebration of the autumnal equinox. But, as Finance Minister

Kiichi Miyazawa

has noted, there is no holiday for the foreign-exchange markets. The yen held its latest gains against the dollar, which fell below the 103.5 yen level overnight.

The greenback was lately quoted back up at 104.36 yen, though, fractionally above yesterday's New York close.

Still, some nonchalant comments yesterday from a couple of notable dignitaries may be ameliorating any hesitation traders are feeling about holding long yen positions into this weekend's


meeting. At a news conference,

International Monetary Fund

Chief Economist Michael Mussa said that "the yen is today about where it should be." Meanwhile, New York


President William McDonough told reporters that "the present level of the dollar is not one that is a problem for the American economy."

In Hong Kong, stocks steadied themselves from yesterday's selling, enduring a mixed session. The

Hang Seng

added 26.82 to 13,214.44.

The Taipei stock market remained closed for the third-straight day following Tuesday's massive earthquake. Taiwanese stocks will start trading again Monday.

The big European indices were on fire at midday. London's


was surging 91.1, or 1.5%, to 6005.0, while Frankfurt's

Xetra Dax

was up 71.22, or 1.4%, to 5309.98. Amid news that consumer spending increased 3.1% in August after a 6.8% jump in the previous month, the Paris


was up 33.21, or 0.7%, to 4601.33.

Thursday's Wake-Up Watchlist


Tara Murphy

Staff Reporter

Mergers, Acquisitions and Joint Ventures

EarthLink and MindSpring announced merger plans, creating a company that would have a combined market cap of $3 billion. According to the deal's terms, MindSpring holders would receive 1 share of the new company for each of their shares, while EarthLink holders would get 1.615 shares for each of their shares. In premarket trading, EarthLink was up at 46 from yesterday's closing price of 43 8/16, while MindSpring was down at 29 from Wednesday's closing price of 32 14/16.

ITT Industries

(IIN) - Get IntriCon Corporation Report

announced its plans to acquire



space division for $191 million.


(TXT) - Get Textron Inc. Report

said it plans to pay $24.50 per share to buy

Litchfield Financial





has forged a solid agreement with


(PE) - Get Parsley Energy, Inc. Class A Report

, a merger that would generate $12.4 billion in revenue.

Earnings/Revenue Reports and Previews

Allegheny Teledyne

(ALT) - Get Altimmune Inc. Report

warned investors that it would post third-quarter earnings between 17 cents to 21 cents a share, greatly missing the nine-analyst estimate of 28 cents. The company blamed the disappointing results on softness in oil and gas markets.

Bed Bath & Beyond

(BBBY) - Get Bed Bath & Beyond Inc. Report

posted second-quarter earnings after yesterday's close of 23 cents a share, beating both the 17-analyst estimates of 22 cents and the year-ago 18 cents. Last night,

reported the story.

Lehman Brothers


posted third-quarter earnings of $2.20 a share, beating both the 11-analyst estimate of $2.01 and the year-ago $1.10.

Texas Industries


reported first-quarter earnings of 75 cents a share, easily beating the five- analyst estimate of 49 cents but down from the year-ago $1.17.

Analyst Actions


sliced its rating on

Harken Energy


to a neutral from attractive.

Warburg Dillon Read

upped its average oil-price estimate to $17.60 per barrel for 1999 and to $18.50 from $17 per barrel for 2000.

Morgan Stanley Dean Witter

upped its rating on

Philip Morris

(MO) - Get Altria Group Inc. Report

to a strong buy from outperform.

Offerings and Stock Actions

In premarket trading,

Global Crossing


was up to 27 1/2 from Wednesday's closing price of 24 3/8. Yesterday, the company announced voter approval for its proposed merger with


(FRO) - Get Frontline Ltd. Report

and said it would take Frontier's place in the

S&P 500


Network Associates


said its

division has filed an IPO for $57.5 million of Class A common shares.



(AMKR) - Get Amkor Technology Inc. Report

said this week's earthquake in Taiwan would not hurt its operations. The company said that its manufacturing hubs were in the Philippines and South Korea.



said that its supervisory board would convene Friday to devise a restructuring plan that would include axing four of its 17 board members. According to media reports, the automaker would let go of North American President Thomas Stalkamp, while retaining CFO Manfred Gentz, a source confirmed in an interview with




(FDX) - Get FedEx Corporation Report

unveiled plans to broaden its intra-European services, adding more cargo flights and a new overnight delivery service,

The Wall Street Journal

reported. According to the


, FDX plans to centralize its operations in Paris.

Johnson & Johnson

(JNJ) - Get Johnson & Johnson Report

received kudos from 10,830 online survey participants as the American company with the best corporate reputation,

The Wall Street Journal


Rite Aid

(RAD) - Get Rite Aid Corporation Report

was charged yesterday with deceptive trade practices, civil theft and racketeering by the Florida Attorney General's Office for allegedly billing patrons different prices for the same prescription drugs.