Stocks Feeling the Pressure After Recent Rally

Tokyo slips around 1% as the yen continues to strengthen.
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Stocks are going to have their work cut out this morning to hold onto yesterday's gains.

Yesterday's tech-led

rally made it clear that the

Fed's

action on Tuesday isn't likely to

stop this market from frothing on its own. With corporate news still relatively scarce and earnings season a good month-and-a-half away, stocks seem to be itching to build on what so far has looked like a strong technical rebound from an oversold condition.

Right now, things look slightly overbought, and the market may ease a bit lower in the early going. At 9:10 a.m. EDT, the

S&P 500

futures were unchanged at 1383, about 2 points below fair value and indicating a flattish-to-negative open. The 30-year Treasury was unchanged at 103 26/32, its yield rising to 5.853%.

Ed Basile, director of futures trading at

Warburg Dillon Read

, sees a lot of upside momentum to come: "Everything's rosy above

1351 to

1354," a resistance area that had been giving the September futures contract trouble for weeks. "I can't help but go with the momentum here, above these levels," he said.

And Basile plans to respect any trend that emerges this morning. "I'm not going to fight the market today either," he said, adding that he sees support at about 1368, with upside resistance at 1396-97.

Today's economic data weren't having much impact on the market. The

Labor Department

released figures showing

initial jobless claims

at 283,000 for the week ended Aug. 21, down from a revised 288,000 in the previous week. Meanwhile, the

Commerce Department

said that

gross domestic product

grew by a revised 1.8% in the second quarter, a drop foreshadowed by the last week's wider-than-expected trade deficit.

Asian markets couldn't come up with a unanimous reaction to New York's late rally yesterday. In Hong Kong, the

Hang Seng

picked up 129.25, or nearly 1%, to 13,608.38. As has been its recent habit, the benchmark index sold off late from an intraday high, of 13,683.38.

Giving Hong Kong stocks a boost was speculation that China and the U.S. will be resuming talks soon over China's entry to the

World Trade Organization

; U.S. Commerce Secretary William Daley said yesterday that the U.S. has received "some positive signs, signals" that Beijing was ready to start talking.

In Tokyo, a third straight day of profit-taking has erased all the gains the

Nikkei

made in the two days following last week's announcement of the planned tie-up among

Industrial Bank of Japan

,

Dai-Ichi Kangyo Bank

and

Fuji Bank

. The Nikkei lost 188.87, or 1.1%, to 17,666.29, with export-oriented stocks coming under some pressure from the yen's strength overnight against the greenback. The dollar was lately quoted at 111.06 yen.

European markets were mixed toward midday. London's

FTSE

was up 36.8 to 6406.3. Paris and Frankfurt were both close to break-even, the

CAC

off 1.56 to 4627.67 and the

Xetra Dax

3.67 lower to 5396.65.

Thursday's Wake-Up Watchlist

By

Brian Louis

Staff Reporter

Cisco

(CSCO) - Get Report

agreed to buy two privately held companies for a total of roughly $7.4 billion, according to published reports. Cisco, the world's largest maker of computer networking equipment, agreed to acquire

Cerent

for $6.86 billion in stock and

Monterey Networks

for $501 million in stock, according to a

Reuters

report.

Mergers, acquisitions and joint ventures

Copper miners

Asarco

(AR) - Get Report

and

Cyprus Amax Minerals

(CYM)

will reconsider a three-way union with

Phelps Dodge

(PD) - Get Report

. The companies initially turned down proposals from Phelps, saying they'd pursue their own merger. But yesterday Asarco and Cyprus said they would begin negotiations if Phelps upped its all-stock offer to $3.3 billion from $2.5 billion.

British Telecommunications

(BTY)

has bought New York-based

Yellow Book USA

for $665 million.

Metropolitan Life Insurance

is close to buying

General American Life Insurance

for about $1.2 billion, according to published reports. An announcement on the deal is expected this morning,

Reuters

reported, citing a person familiar with the situation.

Rite Aid

(RAD) - Get Report

said it was in ongoing talks for potential corporate transactions that could be "material" if completed.

Vodafone AirTouch's

(VOD) - Get Report

CEO, Chris Gent, is said to be in discussions with

Bell Atlantic

(BEL)

, aimed at creating a joint venture in the U.S.,

The Times

of London reported. The newspaper reported that analysts believe the deal could involve a merger of AirTouch's West Coast operations and Bell Atlantic's mobile phone unit, which covers the East Coast. The newspaper reported that the combined businesses could be worth more than $100 billion.

Analyst actions

Merrill Lynch

upgraded

Georgia-Pacific

(GP)

to near-term accumulate from near-term neutral and to long-term buy from long-term accumulate.

Merrill Lynch upgraded

Micron Technology

(MU) - Get Report

to near-term buy from near-term accumulate. The earnings estimate for the August 2000 fiscal year was raised to $2.22 a share from $1.90.

Miscellany

MarketXT

, formerly

Eclipse Trading

, completed its first extended-hours trading

session last night for retail clients of

Morgan Stanley Dean Witter's

(MWD)

Discover Brokerage

and

Mellon Bank's

(MEL)

Dreyfus Brokerage Services

.

TheStreet.com

wrote about MarketXT's inaugural session in last night's

Evening Update. Check out

TheStreet.com's

updated

Night-Owl's Guide to After-Hours Trading for more information on postclose trading.

Some Wall Streeters say the stocks of companies that make stuff related to the

Pokemon

craze -- which have run up in part because of the phenomenon -- have soared so high that it's difficult to justify their current multiples even if they sell as much stuff as the Street is hoping they do, the Heard on the Street column in the

Journal

reported. Companies mentioned in the column:

Grand Toys International

(GRIN) - Get Report

,

Toymax International

(TMAX)

,

4 Kids Entertainment

(KIDE)

and

Topps

(TOPP)

. The Taskmaster wrote about Pokemon

last night.