U.S. Stocks Play Waiting Game as Europe Catches Up

The recent rally looks to stall this morning as the action has centered on the Continent.
Author:
Publish date:

After yesterday's big move, stocks are set for some more ruminative action this morning.

This doesn't come as a surprise: Many investors had planned to stick to the sidelines this week, waiting for earnings season to kick off next Monday. Even yesterday, when a

jobs report

-related rally sent the major indices into record territory, volume was paltry.

Today looks like it will be marked by hand-sitting. At 9 a.m. EDT, the

S&P 500

futures were off 2.6, fractionally below fair value. "It looks like a little pause here," said Bill Meehan, market analyst at

Cantor Fitzgerald

. "I expect to see some weakness."

The biggest reason for that is

Gillette's

(G) - Get Report

warning

last night that it will not hit first-quarter earnings estimates. "I think Gillette's announcement is maybe leading some to be a little concerned on the final, final period of preannouncement season," said Meehan.

Yet a potential deal in telecom is helping ease investor fears.

The Wall Street Journal

is reporting that

MCI WorldCom

(WCOM)

is in talks to buy

Nextel

(NXTL)

. The multibillion-dollar deal, which would give WorldCom the wireless business it lacks, would substantially change the contours of the telecom landscape and should spark some interesting, who's-next activity today.

The 30-year Treasury was up 15/32 to 95 18/32, dropping the yield to 5.56%.

Late-day buying in banking, tech and telecom stocks helped lift Tokyo stocks to their highest close since July. The

Nikkei

added 144.93 to 16,479.71.

Hong Kong's market remained closed for the Easter holiday.

European bourses, closed yesterday for Easter Monday, were playing a little catch-up today. In Frankfurt, the

Dax

was up 57.43, or 1.2%, to 4972.02. In Paris, the

CAC

was up 61.97, or 1.5%, to 4291.82. And in London, the

FTSE

was up 106, or 1.7%, to 6436.

Tuesday's Wake-Up Watchlist

By

Brian Louis

Staff Reporter

  • MCI WorldCom is holding preliminary talks about buying Nextel Communications, though the companies have yet to reach agreements on key terms and a deal may never be reached, the Journal reported, citing people familiar with the matter. The Journal report said some people involved in the talks put the odds of a deal at no more than 50% due to a variety of factors, the biggest being price.
  • Gillette warned it expects to post a mid-single-digit percentage increase in first-quarter earnings, leaving it about a penny below Wall Street's estimate. The 16-analyst First Call outlook calls for earnings of 25 cents a share, compared with the year-ago 23 cents. The company said greater-than-anticipated softness in the Braun business and in Latin America will hurt results. Morgan Stanley Dean Witter downgraded Gillette to neutral from outperform. Donaldson Lufkin & Jenrette downgraded Gillette to market perform from top pick. In other news (Earnings estimates are from First Call):
  • Century Business Services (CBIZ) is exploring alternatives for divesting itself of its specialty insurance segment, including the sale of the unit in whole or part, the spinoff of the division to shareholders or other similar transactions.
  • Circuit City Stores (CC) - Get Report posted fourth-quarter earnings of 86 cents a share, a penny better than the 15-analyst estimate and up from the year-ago 58 cents.
  • E*Trade (EGRP) and Reuters (RTRSY) announced that Reuters will be the primary provider of financial news and market data to E*Trade.
  • In public, Sir Richard Sykes, Glaxo Wellcome's (GLX) chairman, downplays Glaxo's need of a merger partner, but behind closed doors, several European pharmaceutical execs say, Sykes has lauded the marketing and research advantages that come with a company with a worldwide market share of 10%, the Heard on the Street column in the Journal says.
  • IBM (IBM) - Get Report introduced a 64-bit, four-way Web server, which is designed to provide e-business customers and Internet service providers with unparalleled speed, performance and high availability.
  • Micron Electronics (MUEI) announced three pacts with Internet and networking companies -- EarthLink (ELNK) , Yahoo! (YHOO) and 3Com (COMS) -- and concurrently launched its Mconnect technology initiative for rapid-growth, small businesses.
  • News Corp. (NWS) - Get Report is buying Liberty Media's 50% stake in Fox/Liberty Networks in exchange for 51.8 million nonvoting News Corp. ADRs. News Corp. said it also plans to repurchase 56.2 million of its nonvoting ADRs from MCI WorldCom for $1.4 billion. Liberty, a division of AT&T (T) - Get Report, will buy 29.1 million of those ADRs for the same price.
  • Silicon Valley Group (SVGI) , a semiconductor equipment maker, warned that revenue for its fiscal 1999 second quarter will be about 30% below the $85.5 million in revenue reported for the first quarter.