Stocks Look Tentative This Morning as Earnings Season Picks Up the Pace

The bond market's back from vacation, and chipmakers Intel and Motorola are scheduled to report third-quarter earnings today.
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Reunited with their old guide, the bond market, stocks are set to churn this morning.

The bonds are back from their Columbus Day vacation and looking slightly cranky. At 9:00 a.m. EDT, the 30-year Treasury was down 12/32 to 98 21/32, putting the yield at 6.224%. Accordingly, the

S&P 500

futures were down 4.7, a couple points below fair value and indicating a negative bias to the open.

"The bonds are going to make it very difficult for the market to move higher," said Bill Meehan, chief market analyst at

Cantor Fitzgerald

.

The bond market will have to trump some very nice earnings reports to keep stocks lower this morning.

Hertz

(HRZ)

,

Merrill Lynch

(MER)

,

PaineWebber

(PWJ)

and

Dow Jones

(DJ)

have already come out with upside third-quarter numbers.

Yesterday, with relatively few reports and without the sobering influence of the bonds, the market took a dry run with hardly unfamiliar results: Another tech-led rally on more poor breadth took the

Nasdaq Composite Index

to a new record high.

"Yesterday we saw what we saw all summer," said Meehan. "Tech and energy. And that's it. As long as the bond market is under pressure it's going to be difficult for tech stocks alone to hold

stocks up."

Tech leadership may soon get tested. Chipmakers

Intel

(INTC) - Get Report

and

Motorola

(MOT)

, both of which rallied strongly yesterday in anticipation of upside numbers, are scheduled to report later today. Though no one's very worried about Intel this quarter, investors will be watching to see whether the earthquake in Taiwan will have any effect on fourth-quarter performance.

No major economic data are due out today. Thursday will bring

retail sales

figures for September, and the

Producer Price Index

comes out on Friday.

In Tokyo, stocks came back from a three-day weekend tentative, the

Nikkei

rising 28.63 to 18,090.81 ahead of tomorrow's key meeting of the

Bank of Japan's

policy board. The BOJ has given no indications that it is ready to take steps toward a quantitative easing of its monetary policy, which several government officials have aggressively advocated.

The dollar continued to consolidate after its recent strength against the yen, trading in a range between 106.9 yen and 106 yen overnight, and lately quoted at 106.29 yen.

In Hong Kong, worries over the deluge of new issues set to hit the market helped drive the benchmark

Hang Seng

down 233.37, or 1.8%, to 12,759.35. The Hong Kong government will unload a good chunk of the stock it acquired during its $15 billion market intervention last August when it launches a massive index-tracking

fund on Oct. 25. In addition, Chinese oil company

CNOOC

yesterday announced plans to list 2 billion shares in Hong Kong and New York.

The big European indices were flat to lower in early afternoon trading. Frankfurt's

Xetra Dax

was 24.03 lower to 5390.47, while the Paris

CAC

was off 40.26, or 0.9%, to 4682.09. London's

FTSE

was down a scant 0.2 to 6234.6.

Tuesday's Wake-Up Watchlist

By

Eileen Kinsella

and

Brian Louis

Staff Reporters

Intel is expected to post earnings today. The

First Call/Thomson Financial

27-analyst estimate calls for the chip giant to earn 57 cents a share. Motorola is also expected to report earnings today. The 27-analyst estimate calls for Motorola to earn 53 cents a share.

Merrill Lynch

(MER)

posted third-quarter operating earnings of $1.34 a share, beating the nine-analyst estimate of $1.29 and above the year-ago operating earnings of 28 cents.

Earnings/revenue reports and previews

(Earnings estimates are from First Call/Thomson Financial.)

ADTRAN

(ADTN) - Get Report

reported third-quarter earnings of 36 cents a share, better than the 12-analyst estimate of 33 cents and up from the year-ago 29 cents.

American Freightways

(AFWY)

posted third-quarter earnings of 44 cents a share, beating the eight-analyst estimate of 40 cents and above the year-ago 26 cents.

Amway Asia Pacific

(AAP) - Get Report

reported fourth-quarter earnings of 25 cents a share, well above the two-analyst estimate of 14 cents and the year-ago 5 cents. The company said fourth-quarter sales rose 84.8% in China.

Donaldson Lufkin & Jenrette

(DLJ)

posted third-quarter earnings of 85 cents a share, topping the seven-analyst estimate of 76 cents and above the year-ago 15 cents.

Dow Jones

(DJ)

posted third-quarter earnings of 50 cents a share before a special gain, 2 cents ahead of the 11-analyst estimate and up from the year-ago 37 cents, which excludes a special charge.

Enron

(ENE)

posted third-quarter earnings of 27 cents a share, in line with the 19-analyst estimate and up from the year-ago 24 cents.

Hertz reported better-than-expected third-quarter earnings of $1.28 a share, beating the nine-analyst estimate of $1.25 and the year-ago $1.09. The company also said longtime exec Frank Olson will retire from his CEO post Dec. 31, but will continue as chairman. The company's president and COO, Craig Koch, will succeed Olson as CEO.

Hubbell

(HUB.B)

said it expects third- and fourth-quarter earnings to fall below estimates. The company said it expects to post earnings between 52 cents and 54 cents a share in the third quarter. The eight-analyst estimate currently calls for earnings of 56 cents. The company also said it sees fourth-quarter earnings to come in at 40 cents to 45 cents. The current seven-analyst estimate calls for the company to earn 57 cents.

MGIC Investment

(MTG) - Get Report

posted third-quarter earnings of $1.11 a share, beating the 10-analyst estimate of $1.04.

Metro-Goldwyn-Mayer

(MGM) - Get Report

reported third-quarter earnings of 7 cents a share, beating the two-analyst estimate of a 19-cent loss and up from a year-ago 61-cent loss.

Mueller Industries

(MLI) - Get Report

posted third-quarter earnings of 66 cents a share, ahead of the four-analyst estimate of 62 cents and up from the year-ago 47 cents. The company said earnings were helped by operational improvements and acquisitions.

Novellus

(NVLS)

reported third-quarter earnings of 54 cents a share, beating the 22-analyst estimate of 46 cents and above the year-ago 22 cents.

PaineWebber

(PWJ)

posted third-quarter earnings of 86 cents a share, beating the nine-analyst estimate of 83 cents and above the year-ago 51 cents.

Stanley Furniture

(STLY)

reported third-quarter earnings of 64 cents a share, ahead of the six-analyst estimate of 57 cents and up from a year-ago 46 cents a share.

Mergers, acquisitions and joint ventures

AirGate PCS

(PCSA)

and

Lucent

(LU)

said they set a three-year supply deal worth $150 million.

Consolidated Edison

(ED) - Get Report

is in talks to buy

Northeast Utilities

(NU)

, according to published reports.

Excite@Home

(ATHM) - Get Report

said

IBM

(IBM) - Get Report

will use the Excite portal as an Internet launch page.

HCC Insurance

(HCC) - Get Report

agreed to buy

Centris Group

(CGE)

for $171 million. HCC is offering $12.50 a share for each of Centris' 11.6 million shares outstanding. HCC also agreed to acquire $25 million in debt.

TD Waterhouse Group

(TWE)

said it signed a letter of intent to join the

RediBook

electronic communication network (ECN)

consortium. Members include

Fidelity Investments

, Donaldson Lufkin & Jenrette and

Spear, Leeds & Kellogg

.

Analyst actions

PaineWebber upgraded

Monsanto

(MTC) - Get Report

to buy from neutral.

Miscellany

Bank of America

(BAC) - Get Report

is expected to reveal today a service that will allow companies to set up an online store through the bank,

The Wall Street Journal

reported.

Raytheon

(RTN.A)

is behind schedule or over cost on more than a dozen of its fixed contracts with the

Pentagon

, the

Journal

reported, citing people familiar with the programs.

Seagram's

(VO) - Get Report

Universal Studios

has set a marketing pact with

America Online

(AOL)

, which will result in AOL kiosks at Universal Studios' Islands of Adventure theme park, the

Journal

reported.