Stocks Don't Want to Consolidate Yet

Some late strength in the futures market has improved the outlook for the open; in Beijing, China cuts a deal with the U.S. over its bid to enter the WTO.
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It looks like it's touch and go for stocks this morning.

At 9:05 a.m. EST, the

S&P 500

futures were down 0.9, about a point below fair value and indicating no clear trend for the open. So we won't be seeing an immediate consolidation after the furious comeback rally the market put together

Friday.

It's well known that there is room to consolidate, though. A quick review of a few indices will give you a pretty good idea of what the market's done since Oct. 15: the

Nasdaq Composite Index

, up 17.9%; the

Dow Jones Industrial Average

, 7.5%; the S&P 500, 11.9%; the

Russell 2000

, 8.4%; the

Philadelphia Stock Exchange Semiconductor Index

, a whopping 28%; the

Philadelphia Stock Exchange KBW/Bank Index

, a not inconsiderable 25%.

With that kind of performance behind us, and tomorrow bringing a

Federal Open Market Committee

meeting whose results are still

extremely uncertain , a mixed-to-lower day wouldn't be at all unexpected.

Still, that sort of logic hasn't made anyone much money in the past few weeks. The tech momentum train just may be moving too fast for many investors to get off. Tech was getting bids lately, with

Qualcomm

, the poster stock of upside momentum, up another 14 1/16 to 392 in premarket trading.

"There's still a decent tone in the markets," said Jim Volk, co-director of institutional trading at

D.A. Davidson

. "I hear what people are saying about valuations on Internet companies, about semiconductor stocks, but the market continues to show resilience."

No major economic data are scheduled for today, and the bond market wasn't making any dramatic moves lately. The 30-year Treasury was down 4/32 to 101 2/32, putting the yield at 6.047%. Fed watchers are stepping out of their sensory deprivation tanks right now as

Alan Greenspan

speaks on the topic of banking supervision before the American Council of Life Insurance in Washington.

The market will be digesting a smattering of U.S. merger news this morning.

Red Hat

(RHAT)

has set plans to buy privately held open source software maker

Cygnus Solutions

for $674 million of its richly valued stock. Yesterday,

Corning

(GLW) - Get Report

said it will buy

Oak Industries

(OAK) - Get Report

for about $1.8 billion in stock.

Also yesterday the

Federal Communications Commission

and the

Justice Department

both said that they had yet to take a position on

MCI WorldCom's

(WCOM)

planned $115 billion acquisition of

Sprint

(FON)

, shedding no light on a report in

The Washington Post

this weekend that Justice is unlikely to sign off on the deal.

But the big news this morning is coming out of Beijing, where a late agreement with the U.S. Trade Representative

Charlene Barshefsky

has resuscitated China's 13-year-old bid to join the

World Trade Organization

. Under the deal, which came after 6 days of agonizing negotiations, China agreed to cut its average import tariffs to 17% from 22.1% and make some of its markets more open to American companies. Specifically, China will permit foreign firms to own 49% stakes in Sino-foreign telecommunications ventures.

China's not in like Flynn yet, though. It still needs to ink a deal with the

European Union

before the WTO starts its global trade liberalization talks in Seattle on Nov. 30.

Hong Kong stocks surged ahead of the deal's announcement, the

Hang Seng

rising 372.55, or 2.6%, to 14,562.22. Well-founded optimism over China's WTO bid and word of a possible deal between Hang Seng constituent

Hutchison Whampoa

and

Global Crossing

(GBLX)

were driving the buying.

Equities were flat in Tokyo. The benchmark

Nikkei

lost 60.46, or 0.3%, to 18,198.09. The yen firmed modestly against the dollar despite news that Japan's closely watched measure of money supply -- M2 plus certificates of deposit -- grew a somewhat larger-than-expected 3.6% on a year-over-year basis in October. The dollar fell from the 105.3-yen level to below 104.7 yen overnight. The greenback was lately quoted at 104.85 yen.

The large European markets were moving higher in early afternoon trading amid the news that

Mannesmann

(MNNSY)

rejected a $107 billion all-stock takeover offer from

Vodafone AirTouch

(VOD) - Get Report

, a move that could spur a hostile bid by the U.K. mobile-phone firm. A 6% surge in Mannesmann was helping Frankfurt's

Xetra Dax

add 27.76 to 5818.81. London's

FTSE

was up 27.8 to 6539.4 despite selling in index heavyweight Vodafone.

In Paris, the

CAC

was up 10.93 to 5152.44.

The euro continues to test support at the $1.03 level, lately quoted at $1.0305.

Monday's Wake-Up Watchlist

By

Tara Murphy

and

Brian Louis

Staff Reporters

Mergers, acquisitions and joint ventures

Air Express International

(AEIC)

said it would be bought by European parcel giant

Deutsche Post

in a deal valued at $1.14 billion. The transaction calls for Deutsche Post to combine Air Express into its

Danzas

freight forwarding division.

Corning

(GLW) - Get Report

said yesterday that it is acquiring

Oak Industries

(OAK) - Get Report

in a stock deal valued at $1.8 billion. Under terms of the deal, Corning will swap 0.83 of a share of its stock for each of Oak's shares. The deal, which signifies a 51% premium over Oak's 49 3/4 closing price Friday, will enable Corning to offer both components and modules for optical communications.

Data Broadcasting

(DBCC)

is merging with the specialist asset valuation business (FTAM) of the

Financial Times

group, which is part of

Pearson

. Under the deal, the FT group will transfer ownership of FTAM to Data Broadcasting in exchange for a 60% stake in the combined business. Data Broadcasting owns about 32% of

MarketWatch.com

(MKTW)

, which operates

CBS MarketWatch.com

, a competitor of

TheStreet.com

. Under the deal,

CBS.MarketWatch.com

and the

Financial Times'

FT.com

, will form an international and domestic marketing alliance.

CBS

(CBS) - Get Report

owns a third of MarketWatch.

priceline.com

(PCLN)

said it has inked a deal with

Ford

(F) - Get Report

. The two companies said that they would roll out test-marketing for a "name-your-own-price online" buying feature for Ford Motors in Florida this week.

Red Hat

(RHAT)

said it plans to buy

Cygnus Solutions

for $647 million. Red Hat also said it tapped Matthew Szulik as its new president and CEO.

Schwab

(SCH)

,

TD Waterhouse

(TWE)

and

Ameritrade

(AMTD) - Get Report

, along with three venture capital firms, are forming a new online investment bank. The venture capital firms are

Kleiner Perkins Caufield & Byers

,

Trident Capital

and

Benchmark Capital

.

Specialty Foods

announced plans to sell its

Metz Baking

division to

Earthgrains

(EGR)

in a cash transaction valued at $625.

Vodafone AirTouch's

(VOD) - Get Report

all-stock $107 billion bid for

Mannesmann

(MNNSY)

was rejected. Mannesmann called the offer "extremely unattractive" monetarily, stirring up rumors that Vodafone will launch the largest hostile takeover bid in history in an effort to gain control of Mannesmann. Industry sources told

Reuters

that Mannesmann plans to explain to its shareholders today and Tuesday why it refused the offer.

Warner-Lambert

(WLA)

, which has agreed to merge with

American Home Products

(AHP)

, is considering terminating its

Lipitor

agreements with

Pfizer

(PFE) - Get Report

, which has made an unsolicited takeover bid for Warner. Pfizer and Warner have a co-marketing deal for Lipitor, the blockbuster cholesterol-fighting drug.

Earnings/revenue reports and previews

(Earnings estimates are from First Call/Thomson Financial.)

Lowe's

(LOW) - Get Report

posted third-quarter earnings of 44 cents a share, beating the

First Call/Thomson Financial

20-analyst estimate of 42 cents a share and up from the year-ago 33 cents a share.

Sotheby's

(BID) - Get Report

posted a third-quarter loss of 41 cents a share, wider than the three-analyst estimate of a 27-cent loss and the year-ago 37-cent loss.

Analyst actions

Credit Suisse First Boston

started coverage of

AnswerThink

(ANSR)

with a buy rating and a price target of 40.

Merrill Lynch

started coverage of

Martha Stewart Living Omnimedia

(MSO)

with near-term accumulate and long-term buy ratings.

Morgan Stanley Dean Witter

rolled out coverage of the stock with an outperform rating.

Warburg Dillon Read

initiated coverage of

PC-Tel

(PCTI) - Get Report

with a buy rating.

Merrill reinstated coverage of

Staples

(SPLS)

with a buy rating and named it a Focus 1 selection.

Bear Stearns

upped its fiscal 2000 earnings-per-share outlook for

Tyco

(TYC)

to $2.20 from $2.10.

Offerings and stock actions

Three-Five Systems

(TFS)

set a 4-for-3 stock split.

Miscellany

Nokia

(NOK) - Get Report

said it has been awarded a contract for digital subscriber line broadband Internet protocol equipment from German Internet service provider

KKF.net

.

Rite Aid

(RAD) - Get Report

said it has named Leonard Green chairman, while Timothy Noonan will continue as interim CEO.