Stocks Not Ready to Consolidate Yet

The futures are indicating modest strength, though the bond market remains listless following yesterday's Fed decision.
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The market doesn't look willing to consolidate yet after

yesterday's eye-popping post-

Fed

rally.

At 9:05 a.m. EST, the

S&P 500

futures were down 0.5 to 1454. That's about two points above fair value and indicates a slight tilt toward a positive opening for stocks.

"We're really looking mixed this morning," said Jim Volk, co-director of institutional trading

D.A. Davidson

. "There's good news and bad news here. The

3Com

(COMS)

preannouncement is a little disappointing and pours a little water on tech. But people continue to throw money at these stocks."

This despite the tone of the bond market, which has reacted very coolly to the Fed's decision to leave interest rates unchanged and maintain its neutral policy directive. The bonds

sold off modestly after the Fed's

statement made it clear that its neutral bias signified a desire to ensure "a smooth transition into the year 2000," rather than any confidence that inflationary pressures are under control.

This morning, the 30-year Treasury was down 2/32 to 95 18/32, putting its yield at 6.463%. No major economic data are scheduled for release, though the

Commerce Department

has issued its final revision of third-quarter gross domestic product, which came in at 5.7%, two-tenths of a percentage point higher than the previous revision.

At 1:30 p.m. the Treasury will announce the results of its last monthly two-year note auction of the year. The Treasury will issue $15 billion of two-year notes.

The stock market seems relatively unconcerned about the rising yields. "You've got historically low rates here," said Volk. "Yeah, we were at 5.5%, but what's 6.5% if you're an equity investor, and your returns are so much higher than that?"

U.S. equities will have plenty of ratification around the globe if they try to go higher. Equities were leaping in early afternoon trading on the large European exchanges. Frankfurt's

Xetra Dax

was up 88.30, or 1.4%, to 6506.98, while the Paris

CAC

was 109.85 higher, or 2%, to 5639.09. London's

FTSE

was up 35.2 to 6742.7.

The euro was weakening slightly from yesterday's levels, lately quoted at $1.0062.

Yesterday's Fed decision ignited high-tech and electronics stocks in Japan, helping the

Nikkei

rise 381.55 points, or 2.1% to 18461.93.

The foreign exchange market showed little signs of life for most of Tokyo trading, with the dollar trading around 102.10 yen before losing ground late in the session. The greenback was lately sitting at 101.63 yen.

Tokyo markets will be closed tomorrow in celebration of the Emperor's birthday.

Things were more mixed in Hong Kong, where the

Hang Seng

sank 56.34 to 16,192.40.

Wednesday's Wake-Up Watchlist

By

Eileen Kinsella

Staff Reporter

Mergers, acquisitions and joint ventures

America Online

(AOL)

agreed to buy

Mapquest.com

(MQST)

for $1.1 billion in stock.

The

European Commission

said it gave regulatory approval to a takeover of

CDnow

(CDNW)

by

Sony

(SNE) - Get Report

and

Time Warner

(TWX)

. CDnow will subsequently be merged with Time Warner and Sony's jointly held

Columbia House

.

Electronic Data Systems

(EDS)

said it has a three-year agreement with

General Motors

(GM) - Get Report

North America.

Genome

(GENE) - Get Report

said it will team up with a unit of

American Home Products

(AHP)

on an osteoporosis drug.

Separately, a Mississippi judge struck down a $150 million jury award, which was given to five former users of the "fen-phen" diet-drug combination, against American Home Products after the company settled "substantially all" of hundreds of other diet-drug lawsuits pending in the state.

Earnings/revenue reports and previews

Corel

(CORL)

said it will post lower fourth-quarter revenue and a loss for the period. The company said it would report a loss of 14 cents a share, compared with year-ago earnings of 10 cents. The four-analyst estimate calls for earnings of 12 cents a share.

American-Swedish drugs group

Pharmacia & Upjohn

(PNU)

and

Monsanto

(MTC) - Get Report

said they estimated 2000 earnings to be from $1.55 to $1.62 a share if their planned merger went ahead. The companies said they expected annual EPS growth of more than 20% after 2000.

Pharmacia & Upjohn also said it sees reasons to sell Monsanto's agricultural unit earlier than it originally said.

3Com

(COMS)

last night

reported second-quarter earnings of 37 cents a share, beating the 26-analyst estimate of 34 cents and up from the year-ago 36 cents. Despite the solid earnings report, the stock was getting hit in

Instinet

trading, lately down 8 1/4 to 45 after its CFO said he expects third-quarter profits to be "comparable" with a year ago.

Offerings and stock actions

Cablevision Systems

(CVC)

said its board voted to create a new tracking stock to follow the activity of its entertainment unit, which includes cable-television stations

American Movie Classics

and the

MSG Network

.

Nashua

(NSH)

said its board authorized the repurchase of up to 1 million shares.

Network Solutions

(NSOL)

said it set a 2-for-1 stock split and that it registered for the sale of 7.73 million common shares. The company said it was considering separating its registry and registrar services, and that it had hired advisers to review its business structure. Network Solutions also said two of its board members resigned.

Analyst actions

Credit Suisse First Boston

raised its rating on

Burlington Northern

(BNI)

to buy from hold.

First Boston raised its rating on

Dynegy

(DYN)

to buy from hold.

Miscellany

Bell Atlantic

(BEL)

is expected to become the first of the Baby Bell local telephone carriers allowed into the long-distance market today,

The New York Times

reported. The story said the

Federal Communications Commission

is expected to make the widely anticipated announcement today, citing people close to the decision.

Eastman Kodak

(EK)

said it named

Unisys

(UIS) - Get Report

executive Robert Brust as its new chief financial officer, replacing Harry Kavetas, who died in May.

The Heard on the Street column in

The Wall Street Journal

takes a look at the stock of

Juno Online

(JWEB)

, which jumped more than four times in value after the company announced Monday that it will provide full Internet access at no charge, while also increasing its advertising spending. Investors easily looked past the fact that the new plan will cause the company's losses to widen. Also see yesterday's

story from

TheStreet.com

on Juno's jumping stock.