Stocks Showing Some Strength This Morning

Monsanto and Pharmacia & Upjohn set plans to combine in a $29 billion stock deal.
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The pre-holiday week seems set to start on a decent note.

At 9:05 a.m. EST, the

S&P 500

futures were up 1.3. That's actually about 5 points above fair value, giving a positive indication for the open.

"We're looking at a continuation of the trends we've been witnessing since early October," said Dan Mathisson, head stock trader at

D.E. Shaw Securities

. "The big tech names are looking higher."

Cisco

(CSCO) - Get Report

was up 1 to 100 5/8 in premarket trading after setting plans to buy the optical-systems business of Italian cable-and-tire maker

Pirelli

for $2.15 billion. But these days nothing brings momentum like a stock split, and

Check Point Software

(CHKP) - Get Report

and

Oracle

(ORCL) - Get Report

are each set to trade higher after announcing 2-for-1 split plans this morning.

Though volume has shown no signs of abating recently, this is the week that things are finally supposed to start slowing down. The holiday season thins out the Wall Street herd every year, and one would assume -- most observers have been doing so for some time -- this year's millennium should only compound the quietude.

The bonds, for their part, have been following that script lately. They moved through Friday's session in a near-coma, and weren't looking much livelier this morning, with the 30-year Treasury lately up 2/32 to 96 22/32, putting the yield at 6.374%.

No major data are scheduled for today, but tomorrow's

Federal Open Market Committee

meeting could invigorate the bond market some. Though virtually no one expects the Fed to disrupt Y2K liquidity by raising rates, two-thirds of the primary dealers polled by

Reuters

think the FOMC will adopt a tightening bias. There's also speculation that the Fed will issue a statement clarifying just how its biases should be interpreted.

On the equity side, the day's biggest corporate news is the $29 billion merger between

Monsanto

(MTC) - Get Report

and

Pharmacia & Upjohn

(PNU)

.

Equities were moving higher in early afternoon trading on the large European bourses. London's

FTSE

was 29.3 higher to 6753.9, while the Paris

CAC

was up 41.50, or 0.8%, to 5543.90. Frankfurt's

Xetra Dax

was up 13.85 to 6367.75.

The euro was moving back in the direction of dollar parity again, having fallen as low as $1.0044 overnight. The European currency was lately quoted at $1.0089.

Stocks had another mixed day in Tokyo, though the

Nikkei

managed to add 80.37 points to close at 18,175.49, its first positive finish in the last six sessions.

The announcement of the draft of Japan's main budget for the next fiscal year didn't have much effect on currency markets. Finance Minister

Kiichi Miyazawa

announced an 84.99 trillion yen budget, 3.6% higher than the initial budget, but largely in line with expectations.

The dollar remains pretty much where it was against the yen late in New York trading Friday, lately quoted at 103.14 yen.

Hong Kong's

Hang Seng

surged 226.04, or 1.4%, to 16,212.39.

Monday's Wake-Up Watchlist

By John J. Edwards III
Markets Editor

Mergers, acquisitions and joint ventures

Burlington Northern Santa Fe

(BNI)

and

Canadian National Railway

(CNI) - Get Report

agreed to link up in a $19 billion stock merger. The partners expect the combined company, to be called

North American Railways

, to realize $500 million to $600 million in improved income during its first three years.

Cisco

(CSCO) - Get Report

announced that it will buy the optical-networking systems business of Italy's

Pirelli

for $2.15 billion.

Conexant

(CNXT) - Get Report

agreed to buy

Maker Communications

(MAKR)

in a $990 million stock deal. Maker holders will receive 0.66 of a Conexant share for each Maker share.

MCI WorldCom

(WCOM)

was up in European trading after

Der Spiegel

reported that

France Telecom

(FTE)

and

Deutsche Telekom

(DT) - Get Report

both plan to bid for control of

Global One

, their joint venture with

Sprint

(FON)

. WorldCom is in the process of acquiring Sprint.

World Access

(WAXS)

agreed to acquire

Star Telecommuncations

(STRX)

in a $650 million stock swap. The deal values Star at $10.50 a share. Combined with World Access' acquisition of privately held

Long Distance International

, the Star buy gives World Access an annual revenue run-rate of more than $2.3 billion.

Earnings/revenue reports and previews

(

Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified.

)

A.G. Edwards

(AGE) - Get Report

reported third-quarter earnings of $1.23 a share, crushing the two-analyst estimate of 81 cents and the year-ago 70 cents.

Morgan Stanley Dean Witter

(MWD)

reported fourth-quarter earnings of $2.84 a share, far ahead of the 14-analyst estimate of $1.96 and up from the year-ago $1.49.

Red Hat

(RHAT)

reported a third-quarter loss of 5 cents a share, a penny wider than the three-analyst expectation and down from the year-ago break-even result. The Linux distributor also set a 2-for-1 stock split and said it may pursue a secondary share offering.

Offerings and stock actions

Check Point Software Technologies

(CHKP) - Get Report

set a 2-for-1 stock split for shareholders of record "at or around" Jan. 23 of next year.

Oracle

(ORCL) - Get Report

set a 2-for-1 stock split for shareholders of record Dec. 30. The company split its stock 3-for-2 just this past February.

Analyst actions

Credit Suisse First Boston

analyst Lise Buyer initiated coverage of

Digital Impact

(DIGI)

with a buy rating. Credit Suisse was the lead underwriter on the firm when it went public last month.

Bear Stearns

initiated coverage of

GetThere.com

(GTHR)

with a buy rating and a price target of 63.

First Boston analyst Stephen DeNelsky initiated coverage of

InfoCure

(INCX)

with a strong buy rating and a price target of 35.

Staff reporters Justin Lahart and Thomas Lepri contributed to this report.