Anyone who doubted that stocks are taking their cues from the bond market these days found out how wrong they were yesterday. Painfully.
On the back of
suggestion that the
has moved to a tightening bias, yesterday's two-year auction proved pretty hard for the Treasury market to digest. The selling drove the yield on the long bond above 5.5% for the first time since August. And the stocks, which looked like they were on the brink of breaking out of their range, fell.
At 9 a.m. EST, the 30-year Treasury was up 9/32 to 96 16/32. Significantly, that puts the yield at 5.49% -- just below 5.5%, the level that everyone is watching. Will it hold?
"If we rally from here, you could say we had a successful test," said Tony Crescenzi, chief bond market strategist at
Miller Tabak Hirsch
. "But the fact is we're facing a very treacherous road next week. The month of March is a minefield when it comes to indicators."
What reports we've gotten for this month have been flashing economic strength, so there's a real chance that the Treasuries will be in a world of hurt when things like the February
come out next week. Crescenzi notes that though bonds have been falling, there has yet to be any real capitulative action yet. Next month could be a very treacherous time to be in Treasuries. Or stocks.
The nervousness in bonds is spilling over to stocks this morning. After early indications of strength, it looks like there will be a bit of weakness at the open. The
futures were up 0.7 -- 2 points below fair value.
A number of companies announcing restructuring plans, and an article in the
suggesting that the government may allow corporate pension funds to invest in the stock market, helped Tokyo stocks end higher. The
added 115 to 14,470.45.
Hong Kong stocks edged lower as some of the investors who piled into market heavyweight
took chips off the table. The
dropped 19.5 to 9658.07.
European stocks are still digesting yesterday's decline on Wall Street. In Frankfurt, the
was off 93.12, or 1.8%, to 4969.19. In Paris, the
was off 24.72 to 4188.98. And in London, the
was off 49.2 to 6258.4.
Thursday's Wake-Up Watchlist
posted 1998 net income of $5.7 billion, excluding merger costs, up 29% from the year-ago pro-forma earnings of $4.5 billion.
In a sop to regulators,
relaunched its $58 billion takeover bid for
set a cyberspace push, saying it would invest at least $100 million on making strategic investments in Web sites that fit the Reader's Digest brand and strategy. It will also use the company's magazine and direct marketing capabilities to drive traffic to those sites, which it said will be rebranded or co-branded with the Reader's Digest name.
set a 2-for-1 stock split and said it will move its shares to the
New York Stock Exchange
from the much smaller
American Stock Exchange
, where Viacom was the marquee listing. The media concern posted fourth-quarter operating earnings of 30 cents a share, beating the
16-analyst view of 13 cents.
In other news (earnings estimates are from First Call):
analyst Steven Milunovich had cautious comments about
in a talk to the firm's sales force,
set a 2-for-1 stock split.
reported fourth-quarter earnings of 53 cents a share, beating the 18-analyst estimate of 50 cents and up from the year-ago 36 cents.
An advisory panel of the
Food and Drug Administration
yesterday voted not to back
flu treatment drug
. The panel doesn't set FDA policy, but the agency generally follows its lead.
agreed to buy the operating leases, fixtures and equipment of 11 Caldor sites in Massachusetts, New York, New Jersey and Delaware. In January, Caldor, which has been in bankruptcy since 1995, said that it would be liquidating inventory and selling real estate.
posted fourth-quarter earnings of 72 cents a share, excluding items, falling a penny shy of the 15-analyst estimate and down from $1.22 in the year-ago period, excluding items.
February same-store sales rose 16.9%. The company also said it anticipates fourth-quarter earnings will be only "slightly positive," in line with what it forecast in January when it said it saw sales coming in at $450 million.
reported fourth-quarter earnings of 58 cents a share, excluding items, in line with the 11-analyst view and up from the year-ago 16 cents, which excludes items.
posted fourth-quarter earnings of 23 cents a share, in line with the six-analyst view, but down from the year-ago 51 cents.