Stocks Look Strong Out of the Millennial Gate

There don't seem to be any New Year's resolutions for the bonds, which were lately getting crushed.
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It may sound hard to believe, given the furious year-end run-up in equities, but by almost all accounts, there's a lot of money yet stashed on the sidelines. Cash raised in tax-loss selling. Cash raised during this past fall's correction. Cash raised ahead of the century data change, and itching to move back into the market's riskier instruments, stocks.

The cash goes back to work this morning.

At 9:05 a.m. EST, the

S&P 500

futures were up 10.6, more than 9 points above fair value and indicating a strong start for stocks. It's not clear where that strength will ultimately concentrate, and how long it will last. Many observers anxious to see the technology rally broaden out are predicting that the long-deferred bout of profit-taking in the market's momentum leaders is just around the corner. But

Qualcomm

(QCOM) - Get Report

, for one, was lately having another huge premarket session, trading up 23 15/16 to 200 on

Instinet

.

"Right now, we've got Y2K relief around the world in the markets that are open," said Bill Meehan, chief market analyst at

Cantor Fitzgerald

. "There's no reason that shouldn't continue here, and there's no reason that the enthusiasm for technology, momentum stocks and cyclicals" should abate, he continued. The

Morgan Stanley Cyclical Index

is up 10.7% since Nov. 29.

To go higher, stocks will have to do something at which they've grown rather adept: Ignore the bond market. The bonds were getting crushed in thin trading, with the 30-year Treasury tanking 1 4/32 to 94 6/32, putting the yield at 6.572%. The

National Association of Purchasing Management's

index, due out at 10 a.m., could change the session's tone, particularly if its prices-paid component comes in soft.

Investors have already started moving into stocks around the globe. In early afternoon trading in Europe, Frankfurt's

Xetra Dax

was up 69.72, or 1%, to 7027.86, while the Paris

CAC

was 89.56 higher, or 1.5%, to 6047.88.

London's

FTSE

remains closed for the holiday weekend.

The euro was marginally higher against the dollar, quoted at $1.0084.

Those Asian markets open for business were booming higher. In Hong Kong, the

Hang Seng

surged 407.53, or 2.4%, to 17,369.63, and Singapore's

Straits Times Index

tacked on 103.36, 4.2%, 2582.94.

Markets were closed in Tokyo. The dollar fell modestly against the yen overnight in the other Asian forex markets, and was lately quoted at 101.55 yen.

Monday's Wake-Up Watchlist

By

Brian Louis

and

Eileen Kinsella

Staff Reporters

Internet market research firm

Media Metrix

said e-commerce traffic rose 27% for the week ended Dec. 26 over the year-ago period. Media Metrix also unveiled the top 25 e-commerce sites for the five-week holiday shopping season, with the list topped by

Amazon.com

(AMZN) - Get Report

. Following Amazon was

eBay

(EBAY) - Get Report

and then

eToys

(ETYS)

.

Mergers, acquisitions and joint ventures

Equitable Resources

(EQT) - Get Report

said it will buy the Appalachian production assets of

Statoil

in a deal valued at about $630 million. Equitable said it expects to complete the deal in the first quarter.

Kansas City Power & Light

(KLT)

has terminated its merger deal with

Western Resources

(WR)

. KCPL cited problems at Western's

Protection One

subsidiary and its impact on Western as a whole as a big factor in Kansas City Power's decision. "These problems and the related dramatic decline in Western's stock price since we signed the Merger Agreement in March 1998 obviously have a direct bearing on the value of the contemplated transaction to our shareholders, as well as the future prospects of Western and its affiliated companies assuming such transaction was consummated,'' wrote KCPL's CEO A. Drue Jennings, in a letter to Western's CEO David Wittig. KCPL pointed out that Western's stock closed at $43.13 on March 18, 1998, the date of the merger pact, and closed at $16.94 Friday. KCPL said over the next few weeks "it will review strategic alternatives available" including separating its generation and distribution/transmission assets into subsidiaries.

Rolls-Royce

is looking at a merger with aero-engine rival

Pratt & Whitney

, a division of

United Technologies

,

Sunday Business

of London reported.

Thomson-CSF

(TCSFY)

could launch a takeover bid for

Racal Electronics

(RCALY)

as early as this week, the

Sunday Times

reported.

U.K. conglomerate

Tomkins

(TKS)

is looking for someone to purchase its handgun unit,

Smith & Wesson

, the

Financial Mail

reported Sunday, with sources telling the newspaper that the unit could fetch up to $161 million.

Earnings/revenue reports and previews

(Earnings estimates are from

First Call/Thomson Financial

.)

Allegiance Telecom

(ALGX)

said it sees fourth-quarter revenue in the range of $38.5 to $40 million. The company said it plans to be operational in 36 of the largest metropolitan areas by the end of 2001.

Radware

(RDWR) - Get Report

estimated revenue for the fourth quarter will exceed $4.9 million, compared with the year-ago $1.8 million, and said it expects to post a profit for the first time. The three-analyst estimate called for the company to break even in the quarter.

Analyst actions

Merrill Lynch

raised its price target on

Best Buy

(BBY) - Get Report

to 100,

CNBC

reported.

ABN Amro

started

Dynegy

(DYN)

with a buy rating and set a 12-month price target of 47.

Credit Suisse First Boston

analyst Gary Yablon upgraded

Landstar Systems

(LSTR) - Get Report

to strong buy from buy.

Deutsche Banc Alex. Brown

upped its rating on

Mississippi Chemical

(GRO)

to strong buy from market perform.

First Boston analyst Phillip Pace upgraded

Pogo Producing

(PPP)

to buy from hold.

Alex. Brown upped its rating on

Sprint PCS

(PCS)

to market perform from underperform.

Alex. Brown raised its rating on

Terra

(TRA)

to strong buy from market perform.

First Boston analyst Dennis Rosenberg downgraded

Tommy Hilfiger

(TOM)

to buy from strong buy and sliced its 12-month price target from to 32 from 45.

Warburg Dillon Read

upped its rating on

Virata

(VRTA)

to buy from hold.

Alex. Brown cut

Voicestream

(VSTR)

to buy from strong buy.

Miscellany

Carnival

(CCL) - Get Report

has exercised an option to order a new cruise vessel worth about $375.5 million from a Finnish yard owned by engineering group

Kvaerner

. The new vessel, expected to be delivered in 2002, would be the 11th cruise vessel built by Kvaerner for Carnival.

The Heard on the Street column in

The Wall Street Journal

takes a look at

Merrill Lynch's

(MER)

new ad campaign, the brokerage firm's effort to spice up its image. The firm is phasing in a series of spots on TV featuring real-life clients talking about how they've done well financially because of their relationship with their broker at Merrill and also another series of ads promoting the company's corporate icon, the column said.

Walgreen

(WAG)

said it plans to open 450 new stores in fiscal 2000. The company said same-store prescriptions rose 20.7% in the first quarter.