Tired Market Rolling Lower Despite Goodyear's Good News

Stocks appear poised for further profit-taking.
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The only good thing to say about the stock market this morning is that you won't hear any more references to Groundhog Day, or chatter about how rainy weather in New York is a perfect metaphor for what's going on in the market.

Outside of that, the outlook isn't so good. Overseas markets have come under pressure again, and it looks like yesterday's losses will carry over into this morning.

"There's no fundamental reason for the market to have a swoon," said Bill Allyn, head of block trading for

Jefferies

. "We got a little overextended. The breadth has been lousy for a week or so. Even when the indexes advanced, the breadth was narrow."

There is some disappointment over

Cisco

(CSCO) - Get Report

-- not because its

earnings last night were bad (they beat estimates by a penny), and maybe not even because of the cautionary things CEO John Chambers had to say about business going forward. The real disappointment is that the stock didn't

split. Like that has anything to do with how many routers you sell.

While techs stand to suffer, the

Dow Jones Industrial Average

may put in a better performance than the broader market on news that component

Goodyear

(GT) - Get Report

set an alliance with Japan's

Sumitomo Rubber Industries

.

At 9 a.m. EST, the

S&P 500

futures were off 5.7, nearly 8 below fair value and indicating a negative open.

Bonds were again under pressure. The 30-year was off 11/32 to 99 27/32, lifting the yield to 5.26%. Worries about the Japanese government bond market continue to plague Treasury traders, and there's also some concern that the

Federal Open Market Committee

will move to a tightening bias at its meeting today -- not that we'll know about it until the minutes get released ahead of the next meeting, or until some helpful Fed official leaks the news to a reporter.

As for the FOMC moving on rates at the end of its two-day meeting this afternoon, economists say there's nary a chance.

Things might not have been nearly as bad for Tokyo shares had the stock market stayed open a little longer. If it had, a late-day recovery in government bonds and the dollar might have helped it get back near the flat line. That's not the way it works, though. The

Nikkei

dropped 188.52, or 1.3%, to 14,161.31 in a broad-based decline. Sumitomo Rubber Industries was one of the few stocks to buck the trend. It gained 7.9% on expectation of its alliance with Goodyear.

If yesterday's earnings announcement by

Bank of East Asia

is anything to go by, Hong Kong banks had a pretty abysmal year. That, at least, was the interpretation Hong Kong traders chose to take. Particularly worrying was HK$1.51 billion that the company took to cover bad debts -- confirmation that Chinese loans have hurt Hong Kong's financial sector very badly. The

Hang Seng

slipped 82.87 to 9419.85.

European bourses were all lower. In Frankfurt, the

Dax

was off 94.86, or 1.8%, to 5072.01. In Paris, the

CAC

was down 54.44, or 1.3%, to 4189.13. In London, the

FTSE

was down 73, or 1.2%, to 5940.

Wednesday's Wake-Up Watchlist

By

Brian Louis
Staff Reporter

    Under the Goodyear deal with Sumitomo Rubber Industries, Goodyear plans to acquire a 10% stake in Sumitomo. The companies will form four joint-venture operating companies, with one based in North America, one in Europe and two in Japan. The ventures in North America and Europe will be 75% owned by Goodyear and 25% owned by Sumitomo, while the ventures in Japan will be 75% owned by Sumitomo and 25% owned by Goodyear.

    Separately, Goodyear posted fourth-quarter earnings of 74 cents a share, excluding a gain, in line with the five-analyst

    First Call

    view. Worldwide sales fell to $3.2 billion from $3.3 billion a year earlier.

    Hilton Hotels

    (HLT) - Get Report

    is in preliminary talks to pay as much as $1 billion to buy hotels from

    Patriot American Hospitality

    (PAH) - Get Report

    and inject about $350 million of equity into the hotel real-estate investment trust,

    The Wall Street Journal

    reported, citing people familiar with the negotiations. The

    Journal

    said a possible deal with Hilton is as much as two weeks off.

    In other news (earnings estimates are from First Call):

    America Online

    (AOL)

    and

    Bank One's

    (ONE) - Get Report

    First USA

    unit, the nation's largest issuer of Visa credit cards, set a five-year agreement that the companies say represents the Internet's largest advertising and marketing partnership to date. The agreement makes First USA the exclusive marketer of credit-card products and services on AOL in the U.S. and Canada.

    PC maker

    Gateway

    (GTW)

    and Internet services giant

    Yahoo!

    (YHOO)

    will launch a co-branded service Friday. Under the deal, select Gateway systems will be sold with the

    Gateway My Yahoo!

    start page established as the default home page for

    gateway.net

    subscribers. The Gateway My Yahoo! start page will also include a customized service area for Gateway technical support, gateway.com, gateway.net account information and an Internet tutorial.

    ImmunoGen

    (IMGN) - Get Report

    announced it has executed an agreement with

    SmithKline Beecham

    (SBH) - Get Report

    to develop and commercialize ImmunoGen's lead tumor activated prodrug,

    huC242-DM1

    . Under terms of the agreement, in addition to royalties, ImmunoGen could receive upfront cash and milestone payments totaling more than $40 million. Additionally, at ImmunoGen's option, SmithKline will purchase up to $5 million of ImmunoGen common stock over the next two years, subject to certain conditions.

    Intimate Brands

    (IBI)

    projects its fourth-quarter earnings to come in at 98 cents a share, two cents above the current 24-analyst First Call view. For full-year 1998 results, the company expects earnings to be $1.59 a share, three cents ahead of the current 24-analyst view. The company's same-store sales increased 11% in January.

    Qwest

    (QWST)

    posted fourth-quarter earnings, before charges, of 3 cents a share, beating the 17-analyst estimate by a penny but down from the year-ago 6 cents.

    Time Warner

    (TWX)

    posted a loss of 17 cents a share in the fourth quarter, better than the loss of 19 cents projected by the 18-analyst view but down from the year-ago earnings of 11 cents a share.