Stocks Set to Edge Higher

The market's strength still looks concentrated in technology. Meanwhile, European proxies continue to rage higher.
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It looks like the market is going to move a bit higher in the early going.

At 9:05 a.m. EST, the

S&P 500

futures were up 4, about 3 points above fair value and indicating some buoyancy at the open. Be careful, though. It hasn't paid lately to trust the early moods of the market, and more specifically of the technology sector, where all the momentum has been. A futures-led buying spree at the open turned tail quickly on Tuesday morning. And yesterday, improbably enough to some, large cap tech stocks managed to stage another rally after selling off initially on a hotter-than-expected core

Producer Price Index

.

In other words, it's been extremely difficult to predict the movement in tech recently, even though that movement has been virtually unidirectional. At record highs, indices are perpetually encountering key resistance levels, just as every level is key support when the bungee cord snaps -- a feeling tech shorts have been getting more and more accustomed to in the past week.

This morning, a bullish research note by

Merrill Lynch

on the semiconductor industry was helping tech stocks get bids. Merrill, which said it thinks a three-to-five year upturn in the chip industry is beginning now, isn't exactly ahead of the curve on this one -- the

Philadelphia Stock Exchange Semiconductor Index

is up nearly 30% since Oct. 27.

Outside of tech, the biggest corporate news on the Street this morning isn't positive.

Bank One

(ONE) - Get Report

cut its 1999 earnings target again last night, and that could put some of the recently alleviated pressure back on the big financial stocks.

TheStreet.com

covered Bank One's warning in

a story last night.

There aren't any major economic data on the slate for today. That's a good thing, since the bond market is closed today for Veterans' Day. Tomorrow the bondsmen return to weigh the October

retail sales

report and preliminary third-quarter productivity figures.

"It's going to be relatively quiet," said Bill Meehan, chief market analyst at

Cantor Fitzgerald

. "And I think we'll end on a pretty decent note. Enough traders are going to want to get long and stay long into tomorrow's productivity number."

European indices were moving higher in early afternoon trading, with telecom issues flying high after

The Wall Street Journal

reported that

Vodafone AirTouch

(VOD) - Get Report

is considering a $100 million hostile bid for Germany's

Mannesmann

. The London

FTSE

was up 77.1, or 1.2%, to 6524.1, while Frankfurt's

Xetra Dax

was 19.45 higher to 5761.87.

The Paris

CAC

was continuing its astonishing push into record territory, lately up 61.53, or 1.2%, to 5113.36. The CAC has closed at a record high for each of the last eight sessions.

Asian markets were split overnight. In Hong Kong, the

Hang Seng

was also feeling the telecommunications push. Gains in constituents

China Telecom

,

Cable & Wireless HKT

and

Hutchison Whampoa

(which also has telecom exposure) helped the benchmark index add 130.17, or 0.9%, to 14,105.71.

But the real action was in Tokyo, where the government unveiled its economic stimulus package early in the morning. The spending package -- Japan's ninth major economic stimulus package in the past decade -- totals 18 trillion yen, or $171 billion. About 6.5 trillion yen of that is what's known as real water spending, considered to have a direct and immediate impact on the economy.

Equity and forex markets didn't care much. After yesterday's 275-point

Nikkei

rally, investors weren't able to sustain their enthusiasm for the package, which officials and the media had already made clear would well exceed the expected 15 trillion yen. The Nikkei fell back below the key 18,500 level, losing 240.59, or 1.3%, to 18,327.28.

The yen weakened against the dollar immediately, having already priced in the spending plan's effect. The dollar moved from 104.49 yen to above the 105-yen level, where it ranged throughout Tokyo trading. The greenback was lately quoted at 104.85 yen.

The stimulus package will likely boost Japan's economy in the first half of fiscal 2000, starting in April, and the

Economic Planning Agency

has even upped its GDP growth forecast for fiscal 1999 to 0.6% from 0.5%. But economists warn that the "growth-at-all-costs" scheme the politicians keep repeating will hurt Japan's credit standing in the long run. With Japan's debt burden nearing 130% of gross domestic product, one of the largest ratios among developed nations, critics are wondering how much more the government can afford to spend.

Thursday's Wake-Up Watchlist

By

Eileen Kinsella

Staff Reporter

Mergers, acquisitions and joint ventures

Solutia

(SOI) - Get Report

said it would buy

Morgan Grenfell's

stake of

Vianova Resins

for $640 million.

Earnings/revenue reports and previews

Bank One

(ONE) - Get Report

said yesterday it is slicing its fiscal 1999 earnings outlook to $3.45 to $3.55 a share from $3.60 to $3.65 as a result of slowness at its

First USA

credit-card division. The company also announced the postponement of its Nov. 15 analyst meeting.

TheStreet.com/nytimes.com

joint newsroom covered the Bank One news in a

story last night, and

TSC

also analyzed the

postclose news.

Claire's Stores

(CLE)

posted third-quarter earnings of 25 cents a share, in line with the eight-analyst estimate and the year-ago 25 cents a share.

Lands' End

(LE) - Get Report

posted third-quarter earnings of 28 cents a share, beating the eight-analyst estimate of 25 cents a share and the year-ago 1 cent a share.

U.S. Industries

(USI) - Get Report

reported fourth-quarter earnings of 55 cents a share, beating the five-analyst estimate of 49 cents and the year-ago 46 cents a share.

Offerings and stock actions

SCPIE Holdings

(SKP)

said 2.13 million shares were tendered in a Dutch auction.

Analyst actions

Merrill Lynch

raised its 12-month price target on

Analog Devices

(ADI) - Get Report

to 71 from 53.

Credit Suisse First Boston

downgraded

Beyond.com

(BYND) - Get Report

to hold from buy, citing recent management turnover as well as

Amazon.com's

(AMZN) - Get Report

announcement that it will enter the software market.

Warburg Dillon Read

started coverage of

Kroger

(KR) - Get Report

with a buy rating and a price target of 27.

Schroder

upped its price target on

Liberty Media

(LMG.A)

to 50 from 45.

Warburg Dillon Read started

Safeway

(SWY)

at strong buy and set a price target of 51.

Miscellany

The Heard on the Street column in

The Wall Street Journal

takes a look at Internet companies' fondness for press releases and the often-volatile effect it can have on a company's stock. For instance, the story points out,

Amazon.com

(AMZN) - Get Report

shares jumped 20%, when the company

announced Monday it would make an announcement Tuesday. Shares then slid 9.2% on Tuesday when the less-than-stunning

news turned out to be its acquisition of a tool catalog company and entry into new markets.

In what sounds a lot like a confirmation of the above story,

Microsoft

(MSFT) - Get Report

said this morning that it would announce later today a "significant strategic alliance" in a telephone call with top executives, according to

Reuters

.

Staff reporter

Kaya Laterman contributed to this story.