Stocks are going to start the week on a positive note.
At 9:05 a.m. EST, the
S&P 500 futures
were down 0.4. That's actually about 8 points above fair value and thus indicates a strong open for the broad market.
Last week's gigantic rallies among the market's more depressed sectors were certainly a welcome change from the worrisome trend of narrow tech strength and general market divergence. Indeed, the brief resurgence of the
Dow Jones Industrial Average
was exciting enough to make investors forget the mantra that has long been so oppressive to retail, basic materials and consumer products stocks: Interest rates are going higher.
It may be a bit more difficult to push that out of mind with the
Federal Open Market Committee
set to meet tomorrow. They'll almost certainly raise rates, and they'll almost certainly indicate that more rate hikes are in the can. It will be interesting to see whether stocks can hold any early strength they garner as the realization of that prospect takes hold again.
"I'm looking for a quiet day in light of the Fed meeting tomorrow," said Peter Coolidge, managing director of trading at
Brean Murray Foster Securities
. "That's a major inflection point for the market."
Still, if you have any faith in the market's predictive capabilities, the recent action in financial stocks could make you wonder whether investors might be betting that the Fed is nearing the end of its interest-rate tightening cycle. Brokerage stocks in particular have shown none of the much-ballyhooed Old Economy malaise, with the
American Stock Exchange Broker/Dealer Index
up around 30% in the past month and at an all-time high. More encouraging still is the fact that the move in financial stocks has been underpinned by a strong bond market, with the yield on the 10-year note having shed nearly 50 basis points in the past two months.
The brokers look strong once again this morning, with
having just blown its first-quarter earnings estimate out of the water. Lehman said it earned $3.69 a share, well above the 11-analyst
First Call/Thomson Financial
consensus of $2.88. The stock was lately indicated up at 96 1/2 from a close of 91 7/16.
Morgan Stanley Dean Witter
earnings are due out later this week.
Meanwhile, software firm
was falling apart in the pre-market after issuing a first-quarter earnings warning as well as restating its 1999 results -- the latter act swiftly turning a profit of 15 cents a share into a loss of between 43 and 51 cents a share. The stock was lately indicated down at 113 from 226 2/4.
The bond market was little changed this morning. The 10-year was off 4/32 to 102 1/32 and yielding 6.221%. No major economic data are scheduled for release.
The large European indices were solidly higher in afternoon trade, paced by Frankfurt's
, which was up 149.98, or 2%, to 7860.90. The Paris
was up 95.52, or 1.5%, to 6399.80, while London's
was up 88.7, or 1.4%, to 6646.7.
The euro was trading at $0.9714.
victory in Taiwan's presidential election this weekend didn't have the unilaterally negative effect on Asian markets feared by many. Taiwan's
index closed down 227.22 points, or 2.6%, at 8536.05, with losses stanched by buying from the government's market stabilization fund. But in Hong Kong, the
managed to come back from early losses to close higher, up 151.47 to 17,234.46.
China considers Taiwan a renegade province and has threatened military action if Taiwan pursues full independence.
Tokyo markets were closed for a national holiday. The dollar hung around 106.5 yen in Asian trading before edging higher in London. The greenback lately stood at 106.81 yen.
For a look at stocks in the preopen news, see Stocks to Watch, published separately.