The cash is still out of the bag this morning.
Yesterday's barely lower-than-expected
Employment Cost Index
loosed a lot of sidelined money on the market. And it looks like stocks aren't done moving higher, even after another customarily cautionary
last night. At 9:05 a.m. EDT, the
futures were up 11.6 to 1362.2, about 11 points above fair value and indicating another big open.
In the long view, you've got to be cautious about calling this the real McCoy. There's still a lot of data between now and Nov. 16, when the Fed next meets, most notably next Friday's jobs report. Today at 10 a.m., the
Chicago Purchasing Managers' Index
will give the market its latest read on pricing pressures in the manufacturing sector.
But in the meantime, momentum looks strong. "I think the real story yesterday was the S&P 500 taking out that downward trend line that's been in place since the July highs," said Todd Clark, head of listed trading at
Volpe Brown & Whelan
in San Francisco. "That put some wind at the market's back. And the same thing can be said for the bond
futures market by getting above 112."
"I think the
can easily get to 10,720. I think we'll get there today, and then we'll see the market start to consolidate a bit," he added.
You'd do well to keep your eye on the financial sector and the bond market. No one's forgotten the thesis that stocks were going to remain under pressure as long as the weakness in financials and the bonds persisted. Yesterday was hugely encouraging, though the sheer ferocity of the strength in financials may be causing more than a few traders to ask themselves whether it's time to book some profits. The
Philadelphia Stock Exchange/KBW Bank Index
rose 6.3% yesterday and more than 25% in just the past two weeks.
This morning, after adding a full point yesterday, the 30-year Treasury was lately up another 15/32 to 98 24/32, putting its yield at 6.217%. The December bond futures contract was up 15/32 to 112 24/32.
"We really have both markets working together for a change," Clark said. "We haven't had that for some time."
Yesterday's ECI-inspired rally on Wall Street certainly did much to cheer Asian markets overnight. In Tokyo, the general boost in sentiment helped the
gain 528.37, or 3%, to 17,942.08. The launch of eight much-anticipated trust funds also helped demand, while the yen's relative stability helped the rally stay intact through the session. The dollar pretty much bobbed around the 105-yen level in Tokyo trading. It was heading lower in early New York trading, though, lately quoted at 104.23 yen.
Hong Kong stocks also rallied hard. The
added 498.07, or 3.9%, with buying especially heavy in
, whose secondary offering was met with intense demand.
After yesterday's across-the-board rally, the large European bourses were brimming over again in early afternoon trading. London's
was up 84.4, or 1.4%, to 6233.5, while Frankfurt's
was 33.89 higher, or 0.6%, to 5512.78. The Paris
was up 101.20, or 2.1%, to 4849.82 amid news that France's unemployment rate fell to 11.1% in September, its lowest level since 1993.
Relatively firm overnight, the euro resumed its breakdown when markets opened in Europe, falling from $1.055 to $1.044 in the first few hours of trading. The euro was lately quoted at $1.0457.
Friday's Wake-Up Watchlist
Mergers, acquisitions and joint ventures
Starwood Hotels & Resorts
launched a $295 million cash takeover offer for the ordinary and savings shares it doesn't already own of Italian hotels operator
. Sheraton already owns 72.91% of Ciga's ordinary shares and 30.85% of its savings shares.
Earnings/revenue reports and previews
Electronic Data Systems
last night posted third-quarter earnings of 51 cents a share, beating the 18-analyst estimate of 49 cents a share and the year-ago 39 cents, which included charges.
posted third-quarter earnings of 57 cents a share, which includes two gains that contributed 9 cents a share to the quarter's earnings. The report beat the 15-analyst estimate of 47 cents but fell below the year-ago 83 cents.
reported third-quarter earnings of 53 cents a share, in line with the nine-analyst estimate and up from the year-ago 47 cents.
Offerings and stock action
set a 2-for-1 stock split, its seventh such split in seven years.
said it has set a public offering of subordinate voting shares.
Morgan Stanley Dean Witter
RBC Dominion Securities
have been tapped to underwrite the offering.
said that lead underwriter
will release the lock-up restrictions on 10% of the company's shares on Nov. 2. That will increase eToys' float by as much as 9.5 million shares.
Commerzbank Global Equities
cut its rating on
to hold from buy.
Morgan Stanley cut its rating on
to an outperform from a strong buy, based on valuation, but raised its price target to 179 from 175.
started coverage on
with a buy rating and set a price target of 61.
slashed its rating on
to an intermediate-term accumulate from a buy.
Warburg Dillon Read
rolled out coverage of
with a buy rating
Merrill Lynch cut its intermediate-term rating on
to an accumulate from a buy. Last night, Methode warned investors that it expects to post second-quarter earnings 10% to 20% below the year-ago 26 cents a share. Methode said its second-quarter results would include a 6-cent charge from the bankruptcy of a large automotive customer. The four-analyst estimate has the company pegged to make 27 cents a share in the quarter.
Warburg Dillon Read started coverage of
with a buy rating.
J.P. Morgan initiated coverage of
with a buy rating.
said last night that Y2K computing issues will have "little to no" impact on its business. The company also said that demand is strong for its new Pentium III chips and that PC prices are currently stabilizing.
said it rolled out an ad campaign marketing itself as an online shopping source,
The Wall Street Journal