Stocks Look Quiet Ahead of FOMC Meeting

With the Fed convening this morning, all eyes are on the policy bias.
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It looks like a touch-and-go morning for stocks ahead of the results of today's

Federal Open Market Committee

gathering.

At 9 a.m. EST, the

S&P 500

futures were down 2 to 1433, near fair value and indicating a flattish open.

The FOMC meeting, now underway, is the day's guiding event, though there's not much mystery about its outcome. Wall Street knows it won't be getting another rate hike from the Fed this Christmas, as Y2K liquidity concerns are all but certain to stay

Alan Greenspan's

hand this time around.

The real speculation concerns the Fed's policy bias. About two-thirds of the primary dealers polled by

Reuters

expect interest rates to go up when the FOMC meets in February, and are looking for the Fed to telegraph that move by assuming a tightening bias. But there are also

questions about whether the FOMC will issue a statement clarifying the meaning of its policy bias, or possibly even scrap it entirely.

"I think you'd definitely see a tempering of the market" if the Fed were to announce a bias toward tightening," said Doug Myers, vice president of equity trading at

IJL Wachovia

in Atlanta. "As it stands now, you've got relatively cheap and easy money. If you put the brakes on that, things will tighten up."

"Whether that portends for a market downturn, I don't know," he continued. "All traders have a 7-minute time frame."

The Fed will announce any changes it makes to monetary policy at about 2:15 p.m.

The bond market was bouncing from

yesterday's selloff, which chased the 30-year Treasury to its highest closing yield of the year. The long bond was lately up 6/32 to 96, putting the yield at 6.428%.

The large European bourses were all lower in early afternoon trading. The Paris

CAC

was down 24.27 to 5496.84, while Frankfurt's

Xetra Dax

was 38.90 lower to 6339.76. London's

FTSE

was down 27.6 to 6703.6.

The euro continues to slosh around just above parity with the dollar, lately trading at $1.01.

The European currency was unable to garner support from the

Ifo

economics institute's forecast that Germany's economy -- the largest in the euro-zone -- would grow by 2.7% in 2000, well above this year's pace.

Meanwhile, European statistics agency

Eurostat

said that euro-zone consumer prices in November rose 1.6% on a year-over-year basis, the highest jump in two years. But

European Central Bank

President

Wim Duisenberg

told the

Frankfurter Allgemeine Zeitung

that "we are at present certain that the inflation rate in the medium term will remain below the upper limit we have set of two percent."

In Tokyo, caution ahead of today's FOMC meeting put pressure on Japanese stocks, with the

Nikkei

sinking 95.11 to 18,080.38.

The yen's strength continues to cap the upside on Japan's export-oriented stocks. The dollar hovered around 102.50 yen for most of the Tokyo session before falling back some. The greenback was lately sitting at 102.09 yen.

Equities turned in a mixed performance in Hong Kong, where the

Hang Seng

inched up 36.35 to 16,248.74.

Tuesday's Wake-Up Watchlist

By

Eileen Kinsella

Staff Reporter

Mergers, acquisitions and joint ventures

Akamai Technologies

(AKAM) - Get Report

said it entered a strategic alliance with

Road Runner

, which provides high-speed Internet access over cable lines, to speed up its network. Road Runner is a joint venture between

Time Warner

(TWX)

Media One Group

(UMG)

,

Microsoft

(MSFT) - Get Report

,

Compaq

(CPQ)

and closely held publisher

Advance/Newhouse

. Road Runner will use Akamai servers in its network to improve the speed of its Web sites..

General Electric's

(GE) - Get Report

NBC

network said it completed a series of new long-term affiliation deals for

CNBC

and

MSNBC

that it expects could bring in more than $1.5 billion in subscriber fees over the next 10 years,

The Wall Street Journal

reported.

Honda

(HMC) - Get Report

said it formed a cooperative agreement with

General Motors

(GM) - Get Report

, including supplying engines and transmissions to GM and joint cooperation in technology. Honda said the agreement would not involve the automakers taking any equity stake in each other.

IBP

(IBP) - Get Report

said it agreed to buy privately held meat and poultry processor

Corporate Brand Foods America

for $261 million. IBP said it expects the acquisition to be dilutive to 2000 earnings by 7% to 10% a diluted share. The current seven-analyst estimate calls for earnings of $2.71 a share.

CBS

(CBS) - Get Report

and venture capital firm

Benchmark Capital

have teamed up with a cluster of sports stars including

John Elway

,

Michael Jordan

and

Wayne Gretzky

to form an online sporting goods store.

MVP.com

, as the venture will be known, expects to start selling sporting goods on the Internet next month, and has plans to go public next year. MVP.com will receive $85 million in advertising from CBS over four years.

Additionally, MVP.com said it will acquire

SportsLine.com

, an Internet sports media company and publisher of

CBS SportsLine

. The companies signed an agreement for a 10-year relationship where SportsLine will receive a $120 million in guaranteed cash payments over 10 years and receive an equity interest in MVP.com.

Milacron

(MZ)

said it will sell its Austrian-based plastics extrusion systems unit to

SMS Plastics

for $47 million in cash. Milacron said the deal will result in a gain of 30 cents a share.

Phone.com

(PHCM)

said it will buy

AtMotion

for $285 million.

Earnings/revenue reports and previews

Emmis Communications

(EMMS) - Get Report

reported third-quarter earnings of 9 cents a share, which includes $799,000 in preferred dividends. The four-analyst estimate was for 13 cents a share, while the year-ago earnings were 19 cents a share. Emmis also declared a 2-for-1 stock split.

Offerings and stock actions

DoubleClick

(DCLK)

announced last night that it has set a 2-for-1 stock split.

Analyst actions

Credit Suisse First Boston

raised its 2000 earnings-per-share estimates on

Cabletron Systems

(CS) - Get Report

to 40 cents from 35 cents.

Miscellany

Qwest Communications

(QWST)

will move to the

New York Stock Exchange

from the

Nasdaq

on Jan. 3. Qwest will trade under the stock symbol Q.

The Heard on the Street column in the

Journal

takes a look at at a two-sided investment strategy known as a "paired trade," aimed at profiting from valuation gaps between two related securities. The latest such pairing to pop up is that of

Williams Communications

(WCG) - Get Report

with

Williams

(WMB) - Get Report

. In this case, investors are buying shares of Williams, while shorting, or selling, its telecommunications offshoot. The hope is that Williams' management will unlock the hidden value in its energy assets by potentially spinning off its Williams Communications shares.