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Stocks Seek Higher Ground After Post-Fed Stumble

The anticipated rate hike had mixed results overseas, as Asian markets fell and European indices surged upward.

You might be surprised that a market this stupid could spell relief. But it's trying to sound it out this morning, with stocks poised to go higher at the opening bell.

How long any relief rally will hold is far from clear, particularly to anyone who watched stocks

stumble around so blindly yesterday afternoon after the Fed announced its widely expected

decision to raise interest rates by 25 basis points and maintain its neutral policy bias.

But for now, things look good. At 9 a.m. EDT, the

S&P 500

futures were up 3.7, about 7 points above fair value, and indicating a strong open. The 30-year Treasury was surging, up 11/32 to 103 1/32, its yield slipping to 5.908%.

Positive sentiment may have been boosted a bit by relatively friendly

statement that the Fed released after yesterday's meeting, which emphasized the degree to which the hike should head inflation off at the pass. The dovish view is being bolstered today by a

Washington Post

article by John Berry, who writes that "a number of Fed officials also believe growth is slowing enough" to stay Alan Greenspan's hand for the rest of 1999.

Ultimately, though, the economic data will rule, and there aren't any hugely important numbers forthcoming this week, though Berry's "number of Fed officials" will find plenty to watch in next week's

Chicago Purchasing Manager's Index


National Association of Purchasing Managers


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In the meantime, people might just have to focus on companies themselves. "I think the Fed's kind of on the back burner now. Earnings are going to be the focus," said Jim Herrick, managing director of trading at

Robert W. Baird

. Herrick's looking for

Bank One's


profit warning this morning to drag the financial sector lower today and mute any gains the broader market may garner.

The Fed hike had no beneficent effect on Asian markets overnight. In Hong Kong, stocks continued to consolidate after their recent rise, with the

Hang Seng

dropping 154.74, or 1.1%, to 13,479.13 in its first full trading session since Friday. Weather disturbances caused by Typhoon Sam had truncated both of this week's preceding sessions.

In Tokyo, the


fell 240.25, or 1.3%, to 17,855.16, as the banking sector experienced a second straight day of profit-taking after running up on last week's news of the planned tie-up among

Industrial Bank of Japan


Dai-Ichi Kangyo Bank


Fuji Bank

. Export-related stocks, which have come under pressure lately as the yen has gained strength, weren't helped by some more evidence that the export sector is not driving the Japanese economy on the road to recovery. The government reported that exports fell 0.8% in July, though a 5.8% decline in July imports actually boosted Japan's trade surplus to a seasonally adjusted $11.09 billion from $9.49 billion in June.

The yen suffered through a volatile trading session against the dollar overnight. The greenback rallied to 112.4 yen amid a rumor of a

Bank of Japan

intervention. The greenback fell back toward 110.5 yen after the dollar-buying was attributed to a large Japanese trust bank. The greenback was lately sitting at 111.16 yen.

Yesterday's Fed action seems to have loosened the constricted European markets, which were all pumping higher in morning trading. The Paris


was up 84.32, or 1.9%, to 4624.72, while Frankfurt's

Xetra Dax

was up 80.84, or 1.5%, to 5404.86. In London, the


was up 71.3, or 1.1%, to 6386.4.

Bank One


warned after the close it expects to report 1999 operating earnings of $3.60 to $3.65 a share, below the

First Call

25-analyst estimate of $3.92. Bank One blamed the shortfall on reduced growth and margin prospects at its credit card unit,

First USA

. Bank One stock was getting decimated" in premarket trading it was down 12 1/8, or around 20%, at 43 1/2, according to


. It closed yesterday at 55 5/8.



Warburg Dillon Read


Morgan Stanley Dean Witter

all downgraded the stock.

Earnings/revenue reports and previews

(Earnings estimates are from First Call.)



posted first-quarter earnings of 72 cents a share, 6 cents ahead of the five-analyst estimate, but down from the year-ago 86 cents. Fleetwood blamed the slump in earnings on a slowdown in manufactured housing sales and the effect of eliminating intercompany profits on retail inventory.



posted third-quarter earnings of 66 cents a share, a penny shy of the seven-analyst estimate and down from the year-ago 81 cents.

Take-Two Interactive Software


posted third-quarter earnings of 12 cents a share, 3 cents ahead of the three-analyst estimate.



posted third-quarter earnings of 78 cents a share, 2 cents ahead of the one-analyst estimate of 76 cents.


Looks like labor trouble might be on the way at



. A negotiator representing the company's largest union predicted the union would strike on Sept. 2.



announced price cuts of up to 11% on most of its


commercial desktop PCs.

Cordant Technologies


, an aerospace components maker, said its

Thiokol Propulsion

division signed a follow-on rocket motors contract with


worth more than $1.7 billion.



Internet unit has taken a controlling stake in online educational toy retailer

. Separately, Disney's marriage of its TV production studio and its

ABC Television Network

-- which was announced last month -- is proving difficult to pull off,

The Wall Street Journal




unveiled plans to establish a separate

division to concentrate on Internet sales, and said it might offer shares in the unit in the future.

Analyst actions

Merrill Lynch








Genzyme General



Idec Pharmaceuticals