Stocks Set to Head Higher

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Let's face it, we are not going to know whether Japan will be able to craft genuine reform for its troubled banking system this week. Heck, we're not going to have any really good indications of how the process is going until the beginning of July, and nothing will be finalized until at least early August.

Those, at least, are some of the notions running through Wall Street's head. In the meantime, last Wednesday's joint intervention appears to have adequately slowed the pace of decline in the yen to ease fears, for now, of a global meltdown. Whether it is up to it or not, Japan has gotten the time it needs to put its house in order. That may not be enough to launch a major rally, but it is enough to prompt some cautious buying.

"It looks like it's going to be a similar day to yesterday," said Dan Mathisson, head stock trader at

D.E. Shaw

. "There are bids in a lot of these tech stocks. The total market doesn't look like it's going to run that strong."

Some investors are cheered by the recent action in the techs, which appear to have put in a bottom. For many, the rule of thumb is that moves in tech precede moves in the broader market. In the current market, that makes some sense. If techs are especially sensitive to Asia, their finding a low would suggest that the light at the end of Asia's tunnel is in sight.

At 9 a.m. EDT, the

S&P 500

futures were up 3.10. They closed above fair value, indicating a fairly nice move at the open. The 30-year Treasury bond was up 3/32 to 106 23/32, putting the yield at 5.65%. Dollar/yen was up 0.48 to 138.35.

The news out of Japan was light, with few new details of the proposed "bridge bank" -- an institution to be modeled after the U.S.'

Resolution Trust Corp.

One of the issues there is that the creation of such a bank would likely mean a fuller disclosure of Japanese banks' bad loans. The banks themselves have set the figure on those loans at 77 trillion yen ($556 billion), but most bank watchers, including

Moody's

, suspect that the real figure is much higher. Some officials in Japan, particularly those from the Ministry of Finance, blanch at the possibility of a fuller disclosure of bad debt. Balancing that, several politicians, including Prime Minister

Ryutaro Hashimoto

, are at least making noises suggesting that such a disclosure will be necessary.

The

Nikkei

slipped 254.49 to close at 15,054.60. It will likely be mired in a range until details of what the government plans to do begin to filter out.

Hong Kong stocks, bruised badly yesterday by concern over the island's recession and yen fears, managed to eke out slight gains today. Volume was light, with investors still weighing the possible effects of the government's announcement late last night that it will suspend land sales until next April and that it will launch a series of tax cuts. The

Hang Seng

climbed 15.46 to 8219.67.

German stocks advanced on a stronger dollar and cheer over Wall Street's action yesterday. The

Dax

closed up 63.96 to 5718.71. In electronic trade, the

Xetra Dax

was at 5729.04.

London stocks were also in the black. The

FTSE

was up 41.3 to 5753.7.