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Traders are preparing this morning for a lengthy

Fed Watch

.

On the heels of yesterday's late-session rebound, the mood on Wall Street heading into a likely short-term rate hike is fairly upbeat. The benchmark 30-year bond is trading modestly higher (its yield close to 6.90%), with some bond desks indicating that longer-term bond investors would welcome a rate hike from the Fed today. The short end has all but priced in a 25 percentage point move already.

The

S&P 500

futures, off at around 7 a.m., have moved back to hold modestly lower positions at the open. Few expect intense action ahead of the Fed's

Federal Open Market Committee

meeting. The FOMC meeting is expected to generate an announcement shortly after 2 p.m. EST.

In other pre-opening tidbits:

Morgan Stanley

upped ratings on some drug stocks, including

Baxter

(BAX) - Get Baxter International Inc. Report

and

TheStreet Recommends

Warner-Lambert

(WLA)

. The brokerage house increased its ratings on the two stocks to strong buy from outperform.

Montgomery Securities

said it sold its asset management business to

Commerzbank

of Germany. Montgomery said the business has about $8 billion under management. Terms weren't disclosed.

Frederick's of Hollywood

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reported earnings of 31 cents a share for the most recent quarter, up from 14 cents a share in the year-earlier period.

PaineWebber

cut its investment rating on

Mobil

(MOB)

to attractive from buy.

Network Peripherals

(NPIX)

said it would report weaker-than-expected first quarter earnings. Could be another "forced" stock split, traders say.

Good luck out there.

By Dave Kansas

dkansas@thestreet.com