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Stocks Look Mixed; Big Merger in the Oil Services Sector

It's tough to get a read on the market's direction this morning.

First, things look pretty good overseas, and news that


(HAL) - Get Halliburton Company Report

will acquire

Dresser Industries


in a one-for-one stock swap valued at $7.7 billion certainly puts a shine on the market.

On the less happy side, the stock market has been tracking the bond market lately, and the bond market is down -- even after January

durable goods

were basically in line with estimates. They showed an increase of 0.7%, 1.1% excluding defense orders. At 9 a.m. EST, the 30-year Treasury bond is off 22/32 at 102 13/32, lifting the yield to 5.95%. And the

S&P 500

futures, down 2.20, are indicating a dip at the open.

"Even though the market's looking lower, I wouldn't be surprised to see it end the day up," says Mike Driscoll, block trader at

Hambrecht & Quist

. "Whenever the market does sell off, stock just doesn't come for sale. It just points to further demand."

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Oil services, of course, look like they'll be the big winner today on the Halliburton/Dresser news. The merged company will have a market cap, based on yesterday's close, of more than $19 billion, and will be larger on all counts than current leader


(SLB) - Get Schlumberger NV Report

. It will also likely fuel the usual who's-next speculation in the sector.

"I think that this announcement will do what the failed

SmithKline Glaxo

did for drugs," says Driscoll. "Don't forget that, as a group, these are oversold. They could blow the roof off of this thing."

Japanese stocks climbed on rumors that public pension funds will begin buying bank stocks ahead of the March 31 fiscal-year end. (Those funds are widely said to take their cues from government officials -- effectively propping up, or putting a shine on, the stock market in times of need.) Last fiscal year, the


closed at 21,406.85. Apparently, the government doesn't want this year to look like too much of a bummer.

There are also rumors that the ruling

Liberal Democratic Party

will introduce some new stimulus measures in the middle of March, but, according to

Deutsche Morgan Grenfell

currency analyst Marc Chandler, there probably won't be too much to crow about. The government's real focus will be on passing the next fiscal year's budget -- something that it will likely do toward the end of March.

"After, and only after that is passed, can the government really consider a supplemental budget," writes Chandler in his morning note today. "And indeed such appears to be likely ahead of the May G7 meeting. That package is likely to include new tax cuts and public works spending."

All of which seems like it


set up for a pretty good stock market in Japan. Public fund buying holds the market up through the end of the year, followed by speculation that the government will finally come through with the kind of measures it needs to draw the Japanese economy out of its deep funk.



climbed 141.06 to close at 16,501.70.

Expectations that the government will soon cut its prime rate sparked a rally in the Hong Kong stock market. A lower prime rate will do a couple of things for Hong Kong. First, it means that interbank rates will be lower -- crucial for the stock market's two biggest sectors, banks and property. Second, it indicates that the SAR believes that pressure on the Hong Kong dollar has eased -- in effect, that the worst of the Asian crisis, at least for Hong Kong, has finally passed.

Good news, indeed. The

Hang Seng

climbed 338.04, or 3.11%, to close at 11,224.78.

In Germany, the


closed up 56.21 at 4692.02.

London stocks, have been choppy in futures-led trading. The


up 6.20 at 5751.30.

After the close yesterday,


(ADSK) - Get Autodesk, Inc. Report

reported fourth-quarter earnings of 60 cents per share, 4 cents ahead of

First Call

consensus estimates.