Stocks Await Cue From Tomorrow's CPI
Stocks are open to suggestions this morning.
Gone is the updraft stocks got Friday from a weaker-than-expected
Producer Price Index
. Tomorrow brings the
Consumer Price Index
, to which investors will look for a confirmation of the low-inflation reading in the PPI -- and the suggestion that the
Fed's
expected quarter-point hike Aug. 24 will be its last.
In the meantime, don't be surprised to see a bit of consolidation ahead of that key number, especially after Friday's gains.
The market often follows the
S&P 500
futures on low-volume, news-starved days like today. But Charles Farra, president of
Global Trading
in Chicago, isn't expecting the futures to make any drastic moves.
"Today's going to be a range day. My gut feeling's that we'll see both sides of Friday's close." The September S&P 500 futures contract finished at 1332.90 on Friday -- Farra said he sees it moving between 8 to 10 points lower or higher through the session, settling near unchanged.
"The wild stuff is tomorrow," he continued, remembering how "people got killed in May" by trading ahead of the hotter-than-expected April CPI.
TheStreet Recommends
At 9:05 EDT, the S&P 500 futures were up 0.7, near fair value and indicating a somewhat flat open.
The 30 year Treasury was off 5/32 to 100 6/32, its yield rising to 6.111%.
Wall Street's PPI-inspired surge on Friday took the big Asian markets along for the ride overnight. Tokyo's
Nikkei
climbed 390.86, or 2.2%, to 17,826.03 as Japan said its June industrial output rose 3.2% in June, 0.2 percentage points higher than initially reported. Trading was once again light amid the continuing summer obon holidays.
The revised production report, along with the selling of dollars for yen by exporters seeking to book profits for their half-year book-closing in October, helped take the yen higher against the greenback. The dollar lately was off 1 yen to 114.70.
In Hong Kong, the
Hang Seng
advanced 286, or 2.3%, to 12,894.78, bouncing back from Friday's decline on the news that
Morgan Stanley Capital International
will put Malaysia back into its benchmark indices -- a move that will reduce Hong Kong's index weighting to about 26% from the present 33%.
Having already spent their big post-PPI rally on Friday afternoon, European bourses were mixed to higher this morning. The London
FTSE
was down 4.1 to 6241.0. Nearly 15 negative points were coming from 11 stocks -- including
Barclays
(BCS) - Get Barclays PLC Report
,
BP Amoco
(BPA)
,
British Telecom
(BTY)
and
HSBC Holdings
(HSBHY)
-- that went ex-dividend today.
In Paris, the
CAC
was up 12.40 to 4446.68, and Frankfurt's
Xetra Dax
was up 23.67 to 5243.10.
Monday's Wake-Up Watchlist
By
Brian Louis
Staff Reporter
Alcoa
(AA) - Get Alcoa Corporation Report
said it is going to launch a cash tender offer this week for
Reynolds Metals
(RLM) - Get Realm Therapeutics PLC Sponsored ADR Report
at a price of $65 a share. Reynolds Metals' board unanimously decided in a special meeting yesterday that Alcoa's more than $4 billion offer to buy Reynolds was "inadequate for our shareholders." The board also said -- with the assistance of its financial adviser
Merrill Lynch
-- that the company "should explore all alternatives to maximize shareholder value," including selling the company.
Rodney Proto, COO and president of
Waste Management
(WMI)
, has stepped aside, and John Drury, chairman and CEO, who is undergoing medical treatment, is also being replaced. Drury will remain on the board. Waste Management's board elected Ralph V. Whitworth chairman and Robert S. Miller president and CEO. The company also announced a new strategic plan, which includes disposing of "nonstrategic and underperforming assets." Also, Waste Management anticipates earnings per share, as adjusted, to be in the range of 90 cents to $1.00 a share for the six-month period ending Dec. 31, 1999.
Mergers, acquisitions and joint ventures
Cisco
(CSCO) - Get Cisco Systems Inc. Report
is buying
Calista
, a privately held U.K.-based Internet technology group for $55 million in stock.
Harrah's Entertainment
(HET)
has made an offer to acquire
Players International
(PLAY) - Get Dave & Buster's Entertainment Inc. Report
for $8.50 a share in cash. Players closed Friday at 6 9/16. The deal has been approved by Players' board, and Players has given notice to terminate its existing merger agreement with
Jackpot Enterprises
(J) - Get Jacobs Engineering Group Inc. Report
.
VNU
, a Dutch publisher, is buying
Nielsen Media Research
(NMR) - Get Nomura Holdings Inc ADR American Depositary Shares Report
for $37.75 a share in cash. Nielsen closed Friday at 32 13/16.
Miscellany
UnionBanCal
(UB)
set a streamlining plan and will take a one-time pretax restructuring charge of $85 million, or 33 cents a share after tax, in the third quarter. The company plans to cut 1,400 jobs, about 15% of the bank's work force, over the next 18 months.
Venator Group's
(Z) - Get Zillow Group Inc. Report
board has elected Dale W. Hilpert president and CEO, effective today. Hilpert was Venator's president and COO, a post the company said it has no present plans to fill. Venator also said it is getting out of eight noncore specialty businesses that operate, in the aggregate, nearly 500 stores.
The premium paid in mergers and acquisitions, which is frequently cited as a barometer of the fate of a transaction, does not have a correlation to subsequent shareholder value, according to a study by
Booz Allen & Hamilton
, a Washington consulting firm, the Heard on the Street column in
The Wall Street Journal
said.
Analyst actions
ABN Amro
upgraded
Boston Scientific
(BSX) - Get Boston Scientific Corporation Report
to buy from hold.
Credit Suisse First Boston
, which was lead underwriter on
Gadzoox Networks'
(ZOOX)
IPO last month, initiated coverage with a buy rating and set a price objective of 85 to 95.
Morgan Stanley Dean Witter
initiated coverage of
Genentech
(DNA)
with a neutral rating.
CSFB, which was lead underwriter on
MP3.com's
(MPPP)
IPO last month, initiated coverage of the stock with a buy rating.
Warburg Dillon Read upgraded
National Semiconductor
(NSM)
to buy from hold.
