Stocks Straining Their Leash but Dog Days Aren't Yet Behind

Only if what looks like a strong open holds will some doubts be put to rest.
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With markets overseas doing well and futures cruising, stocks are cued to head up in a hurry this morning. But the big question is whether they'll stay up. Only if investors resist the temptation to sell into the rally can we talk about the recent troubles in the market being over.

It's difficult to figure out if that can happen. There's still a great deal of nervousness about what the

Federal Open Market Committee

will do at its meeting Aug. 24, and there are few fresh incentives out there. Moreover, although the recent downturn has dealt some heavy damage to the major indices, there has been nothing of the capitulative action that usually marks the end of a selloff.

On the other hand, it's important to not read too much into what stocks do in the latter half of the summer, when traders head for the beach and volume thins.

"Right now, there's a lot of apathy in the market," explained Bill Allyn, head of block trading at

Jefferies

. "The markets are going to go where the orders go. If there's a sell order, there aren't going to be any bids to catch it. If there's a buy order, there's nothing to keep it from going up."

At 9 a.m. EDT, the

S&P 500

futures were up 10.2, about 9 above fair value and indicating a jump at the open.

The 30-year Treasury was up 3/32 to 89 10/32, putting the yield at 6.03%.

A rebound in Seoul is helping to remove some tension from Wall Street's shoulders this morning. The

Kospi

added 55.91, or 6.4%, to 928.85, spurred by the South Korean government's commitment to resolving debt problems at

Daewoo

.

That's welcome news. Because the U.S. stock market's profile this year is so similar to last year's, people have had an eye out for any catalyst that might whack shares like last summer's troubles did. The danger was that investors would have seen that catalyst in Daewoo -- something that could have blown the trouble out of proportion and sparked a run for the exits, first in South Korea, then in other markets.

With investors still fretting about the yen's strength, Japanese stocks saw a bit of selling. Tokyo's

Nikkei

dropped 28.62 to 17,462.72.

A strong first-half profit report by

Bank of East Asia

and the rally in South Korea helped lift Hong Kong stocks. The

Hang Seng

added 208.57, or 1.6%, to 13,075.09.

Europe's major stock markets were solidly higher.

In Frankfurt, the

Xetra Dax

was up 43.58 to 5250.02.

Volkswagen

was a major contributor, up 1.1% on the back of good first-half earnings.

In Paris, the

CAC

was up 30.29 to 4426.2.

London stocks were higher, spurred on a by a spate of deals. The

FTSE

was up 111.3, or 1.8%, to 6280.4.

Reckitt & Colman's

merger with Dutch rival

Benckiser

was the big story of the day. The household products group was lately up 12%.

Barclays

(BCS) - Get Report

was another big mover, gaining 4.5% after announcing that Matthew Barrett would be its CEO. The bank hasn't had anyone at the tiller since last year.

Tuesday's Wake-Up Watchlist

By

Brian Louis

Staff Reporter

Mergers, acquisitions and joint ventures

Cox Communications

(COX)

plans to acquire the cable TV assets of

Gannett

(GCI) - Get Report

for $2.7 billion,

The Wall Street Journal

reported.

Sinclair Broadcast

(SBGI) - Get Report

is selling 43 radio stations in nine markets to

Entercom Communications

(ETM) - Get Report

for $821.5 million in cash.

PaineWebber

analyst Lee Westerfield downgraded Sinclair to attractive from buy.

Morgan Stanley Dean Witter

upgraded Entercom to strong buy from outperform.

Earnings/revenue reports and previews

(Earnings estimates are from

First Call

.)

Bowater

(BOW)

posted a second-quarter operating loss of 30 cents a share, worse than the 13-analyst estimate of a loss of 16 cents.

Chubb

(CB) - Get Report

posted second-quarter operating earnings of $1.00 a share, 4 cents shy of the 16-analyst estimate and up from the year-ago 90 cents.

Columbia/HCA Healthcare

(COL)

posted second-quarter earnings from continuing operations of 31 cents a share, a penny ahead of the 17-analyst estimate.

Online auctioneer

eBay

(EBAY) - Get Report

after the close reported second-quarter earnings of 4 cents a share, excluding charges, in line with the 15-analyst estimate and ahead of the year-ago 2 cents. Results are on a pro forma basis, excluding one-time charges, merger-related costs and the financial results of recent acquisitions Butterfield & Butterfield, Kruse International, Billpoint and Alando. The company also said that since last quarter, its registered users jumped 46% to 5.6 million.

Elan

(ELN)

posted second-quarter earnings of 29 cents a share, in line with the 13-analyst estimate and up from the year-ago ago 24 cents.

Monsanto

(MTC) - Get Report

reported second-quarter earnings from continuing operations of 50 cents a share, beating the 14-analyst estimate of 45 cents.

Phillips Petroleum

(P)

posted second-quarter operating earnings of 46 cents a share, beating the 22-analyst estimate of 41 cents and down from the year-ago 58 cents.

Tenneco

(TEN) - Get Report

posted second-quarter earnings from continuing operations of 50 cents a share, a penny shy of the six-analyst estimate and down from the year-ago earnings from continuing operations of 67 cents in the year-ago period.

Miscellany

The San Francisco Board of Supervisors voted against requiring -- for now --

AT&T

(T) - Get Report

to open its high-speed Internet service to competitors.

Analyst actions

PaineWebber analyst Andrew Cash upgraded

Dow Chemical

(DOW) - Get Report

to neutral from unattractive.

Cash also upgraded

Union Carbide

(UK)

to attractive from neutral.

As originally published this story contained an error. Please see

Corrections and Clarifications.