Stocks Looking to Bounce Once More

Overseas markets are quiet, but a worldwide rally yesterday is pushing U.S. traders to play catch-up.
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Yesterday, while New York City's traders and (regrettably) sanitation workers frolicked at the beach and New York City's garbage slowly fermented at curbside, overseas markets booked some good gains. A not-too-cold, not-too-hot economic report from Japan helped Asian equities and a big energy deal boosted European stocks.

Those overseas gains are helping to fight traders' urge to take profits after a record-breaking run last week, and stocks are again poised to go higher at the open. But whether they will stay higher is another matter: There are a number of countervailing forces. Stock futures are still above fair value, but Treasuries have weakened significantly. And while one closely followed strategist,

Prudential Securities'

Ralph Acampora, has upped his year-end

Dow

target to between 12,500 and 13,000 from 11,500,

Morgan Stanley Dean Witter's

Byron Wien Tuesday said he was raising cash.

"We've got a little tug of war today," said Todd Clark, head of listed trading at

Charles Scwhab

. "Just from a technical perspective, this thing has to consolidate a bit."

At 9 a.m. EST, the

S&P 500

futures were off 2.3, still more than a point above fair value and indicating a positive open. The 30-year Treasury was off 26/32 to 88 30/32, putting the yield at 6.06%.

Japanese stocks gave back most of the gains they made yesterday, when they rallied 1.1% on the back of an in-line

tankan

and the

Bank of Japan's

subsequent intervention to weaken the yen. The

Nikkei

lost 84.33 to 18,050.73.

Hong Kong, too, saw a bout of profit-taking. The

Hang Seng

which Monday gained 2.3%, dropped 134.13 to 14,372.61.

Yesterday in Europe, the big news was Franco-Belgian oil giant

TotalFina's

(TOT) - Get Report

$43 billion unsolicited bid for smaller rival

Elf Aquitaine

(ELF) - Get Report

-- a deal that marched the major bourses higher.

Today the action has been strictly ruminative. In Frankfurt, the

Xetra Dax

was down 0.75 to 5624.87. In Paris, the

CAC

was down 36.17 to 4661.67. And in London, the

FTSE

was down 1.6 to 6590.4.

Tuesday's Wake-Up Watchlist

By

Brian Louis

Staff Reporter

  • Merrill Lynch and Prudential Securities upgraded Intel (INTC) - Get Report. Merrill upgraded Intel to near-term buy from near-term accumulate. Prudential upgraded the chip giant to strong buy from accumulate. James J. Cramer this morning explored the implications of the moves. In other news (earnings estimates are from First Call):
  • Alcoa (AA) - Get Report is expected to report second-quarter earnings tomorrow.
  • America Online (AOL) and drkoop.com (KOOP) , the Internet healthcare network led by the former U.S. surgeon general, set a four-year, $89 million strategic alliance.
  • Biomet (BMET) posted fourth-quarter operating earnings of 37 cents a share, beating the 22-analyst estimate by 2 cents and up from the year-ago 30 cents.
  • Britain's Cable & Wireless (CWP) was in the news over the weekend. The Sunday Times reported that Deutsche Telekom (DT) - Get Report, France Telecom (FTE) , Bell Atlantic (BEL) and SBC Communications (SBC) "are all believed to have made informal approaches in recent months to sound out C&W about a deal."
  • Cinergy (CIN) is selling its 50% interest in Midlands Electricity to GPU (GPU) for $700 million.
  • General Nutrition (GNCI) agreed to be taken over by Numico, a Dutch foods group, for $1.8 billion.
  • Merrill Lynch (MER) said it has hired a five-member team from Deutsche Asset Management to form Merrill Lynch Quantitative Advisors. Merrill said the asset management unit will offer an array of products that utilize quantitative techniques. TheStreet.com reported the move this morning.
  • Yahoo! (YHOO) is expected to report second-quarter earnings tomorrow, with the 21-analyst estimate calling for the company to earn 8 cents a share.
  • Since October, when it instituted its "plain English" rule, which requires all prospectuses filed with the agency to be written without legalese and jargon, and to be displayed in a readable format, the Securities and Exchange Commission has been reviewing, grading and in some cases returning filings from hundreds of companies, the Heard on the Street column in The Wall Street Journal reported.