Stocks Emboldened by Benign ECI This Morning - TheStreet

Stocks Emboldened by Benign ECI This Morning

Gross domestic product came in slightly higher than expected, but that's not killing the buzz in the stock futures and bonds.
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A benign

Employment Cost Index

is hopping up the stock market this morning in a big way.

The third-quarter ECI showed a gain of 0.8%, just below the 0.9% increase economists had forecast. The relative weakness of that number -- which suggests that labor costs, an inflation indicator closely watched by the

Fed

, are rising less than expected -- seems to be overshadowing slightly hot third-quarter

gross domestic product

figures. The advance estimate of GDP showed a gain of 4.8%, against expectations of a 4.7% increase.

Phooey to GDP. The

S&P 500

futures were exploding higher on the ECI, up 22.50 to 1328 at 9:05 a.m. EDT. That's about 23 points above fair value and spells a huge open for stocks.

"It's been a good jump," said Charles Farra, president of

Global Trading LLC

in Chicago. "But it's kind of weird. Today is like Part Two -- yesterday was Part One. The

stock futures and bonds both had a pretty good day yesterday. It just seemed like the market was coming into the week probably too pessimistic."

Farra said that on a technical basis, the S&P 500 futures have been following a downward trend line since July, and that 1330 marks important resistance for that trend. "If we go through that, that's a pretty bullish sign. I think we'd get a pretty good follow-through, and it could happen today."

The bond market was also moving higher, though less rabidly. The 30-year Treasury was up 24/32 to 98 even, putting its yield at 6.273%. The December

bond futures were up 21 ticks to 112 4/32.

We're now on the down slope of earnings season, with about three-quarters of S&P 500 companies and all but three

Dow Jones Industrial Average

components --

Wal-Mart

(WMT) - Get Report

,

Hewlett-Packard

(HWP)

and

Disney

(DIS) - Get Report

-- having already reported. This morning, Hewlett-Packard is set to take some more points off the Dow after

saying it was comfortable with recent cuts in its fourth-quarter earnings estimates.

Elsewhere,

Aetna

(AET)

,

MCI WorldCom

(WCOM)

and

CBS

(CBS) - Get Report

are out this morning with upside numbers, while

Pharmacia & Upjohn

(PNU)

has reported in line with expectations.

Amazon.com

(AMZN) - Get Report

was trading down about 5 points in premarket action after its

report last night, which revealed upside earnings but also thinning margins. Still, Amazon doesn't seem set to guide the Net sector as unilaterally lower as

eBay

(EBAY) - Get Report

did yesterday morning.

Wall Street's late gains gave the major Asian markets some strong early momentum, though profit-taking left them only modest gains to show at the close. After rocketing up 2% in early trading, Hong Kong's

Hang Seng

ended up 49.81, or 0.4%, to 12,758.88. About a quarter of total volume was represented by Hang Seng constituents

Hutchison Whampoa

and 49.97%-parent

Cheung Kong

, which were buzzing because of the successful IPO of Hutchison's 36.53%-owned

Partner Communications

(PTNR) - Get Report

yesterday in New York and London.

In Tokyo, the

Nikkei

ended up 31.35 to 17,413.71. The yen's recent resurgence put a cap on stocks' upside. The dollar fell to as low as 103.9 yen in Tokyo trading, and was lately trading at 104.29 yen.

Stocks surged in Seoul despite reports that a Tokyo meeting of troubled

chaebol

Daewoo

and its foreign creditors failed to yield a concrete debt-repayment plan. The

Korea Composite Stock Price Index

gained 27.53, or 3.5%, to 820.95

The big European indices were booming higher along with the U.S. stock futures. London's

FTSE

was up 81.4, or 1.4%, to 6127.1. The Paris

CAC

was up 59.79, or 1.3 %, to 4754.84. Frankfurt's

Xetra Dax

was 95.44 higher, or 1.8%, to 5459.30.

The euro was tanking against the dollar, lately quoted at $1.0474.

Thursday's Wake-Up Watchlist

By

Eileen Kinsella

Staff Reporter

Earnings/revenue reports and previews

Aetna

(AET)

posted third-quarter operating earnings of $1.27 a share, beating the 17-analyst estimate of $1.16 and the year-ago 96 cents. The company said it would aggressively repurchase stock as conditions allow.

Amazon.com

(AMZN) - Get Report

posted a smaller-than-expected loss

last night, but warned losses would deepen in the current quarter.

Merrill Lynch

cut its rating on Amazon to near-term accumulate from buy.

Fellow online book behemoth

barnesandnoble.com

(BNBN)

posted a third-quarter loss of 15 cents a share, smaller than the four-analyst estimated loss of 23 cents and the year-ago loss of 16 cents. All figures reflect pro forma consolidated operations.

American General

(AGC)

posted third-quarter earnings of $1.16 a share, in line with the 14-analyst estimate and up from $1.03 a share a year ago.

American International Group

(AIG) - Get Report

posted third-quarter earnings of 79 cents a share, a penny shy of the 20-analyst estimate and up from the year-ago 69 cents.

CBS

(CBS) - Get Report

reported third-quarter earnings of 5 cents a share, beating the seven-analyst estimate by a penny and the year-ago 5-cent loss, which includes charges. The company attributed increased revenue to growth at

Infinity

and its television segment.

Shares of

Hewlett-Packard

(HWP)

fell in preopening trading after CEO Carly Fiorina said she was comfortable with the latest forecasts after analysts cut profit estimates.

TheStreet.com

wrote about H-P's

earnings worries yesterday.

Infinity Broadcasting

(INF) - Get Report

posted third-quarter earnings of 13 cents a share, a penny better than the 10-analyst estimate and up from a year-ago 10 cents, which includes a charge.

MCI WorldCom

(WCOM)

posted third-quarter earnings of 55 cents a share, a penny ahead of the 25-analyst estimate and up from the year-ago 19 cents.

News Corp.

(NWS) - Get Report

reported first-quarter earnings of 16 cents an ADR, better than the five-analyst estimate of 14 cents, but down from a year-ago 20 cents.

Pharmacia & Upjohn

(PNU)

posted third-quarter earnings of 47 cents a share before charges, in line with the 17-analyst estimate and up from the year-ago 41 cents. The company said U.S. prescription sales were up 17% in the latest quarter.

Offerings and stock actions

Lehman Brothers

priced 21.8 million shares of

Spanish Broadcasting

(SBSA)

at $20 a share, above the estimated $17-to-$19 range. The company is one of the largest Spanish-language radio broadcasters in the U.S.

Shares of

Data Return

(DRTN)

are set to make their trading debut after

Bear Stearns

priced the 6.25 million-share IPO last night at $13 a share, above the expected range of $10 to $12.

Morgan Stanley Dean Witter

priced 10 million shares of

Triton PCS

(TPCS)

at $18 a share last night, above the estimated $15-to-$17 range.

Miscellany

The Heard on the Street column in

The Wall Street Journal

says some investors have begun to pull back on

Microsoft

(MSFT) - Get Report

after eyeing a drop in its closely watched "unearned revenue" account to $4.13 billion on Sept. 30, from $4.24 billion in June.

A separate

Journal

story says some major PC makers are working on a number of products that won't use Mister Softee's Windows PC-operating system, including

Gateway

(GTW)

,

America Online

(AOL)

and

Compaq

(CPQ)