It is pretty much a given on Wall Street that January will bring another flood of cash into funds, setting the stage for another liquidity-fueled rally. It is also pretty much a given that the rally that began in the middle of this month is getting tired, and were it not for tax concerns, many investors would have booked profits.
For the few who will trade today, the job is to reconcile these messages. Perhaps whatever happens in the market today is about what the market is going to do next year.
There are few clues on what direction stocks will take. All the other major stock markets, save Hong Kong, were closed. And the
futures, down 0.5 at 8:10 a.m. EST, slightly below fair value, are giving no real indication on the open.
"You flip a coin and tell me if the market is up or down," said Bill Allyn, head of block trading at
. "That's about how I feel about it. We've had a lackluster week here, and I don't see any reason for it to be any different today. There could be a little position-squaring, but not much."
That said, stocks generally perform well on the last day of the year, so all things being equal it's a decent bet that they'll close out the day on a positive note.
Higher-than-expected weekly jobless claims are not usually the kind of thing that moves the Treasury market, but trading is thin enough today that they did. The 30-year Treasury bond was up 5/32 to 102 19/32, dropping the yield to 5.08%. Earlier, the long bond was soft on more dollar weakness.
The dollar slipped 1.21 yen to 113.9, with currency traders still fretful over the recent selloff in Japanese government bonds. So far, only longer-term JGBs have sold off, but there's a worry that shorter-term paper will fall.
"The big issue is, does the front end of that curve sell off?" said Mike Cloherty, senior economist at
Credit Suisse First Boston
. Should that happen, it would force investors who borrowed yen to buy other issues in the so-called carry trade to unwind positions. "Right now it's been mainly at the back end," said Cloherty. "You're still not at a point where you get a lot of repatriation."
As it is, the JGB selloff will make it harder for Japanese companies to borrow, making it even harder for Japan's economy to recover.
finance ministers announced conversion rates for member currencies into the euro, set for launch with the new year. The rates fell pretty much in line with expectations and had a minimal effect on the market.
Hong Kong stocks closed out the year on a down note. The
dropped 72.86 to 10,048.58. It was a choppy year for Hong Kong -- the Hang Seng rode as high as 11,810 and as low as 6660.42.
Thursday's Wake-Up Watchlist
- BankAmerica (BAC) - Get Report is expected to post a loss in the fourth quarter totaling as much as $190 million from its trading relationship with
The Wall Street Journal reported. Also, BankAmerica next week plans to disclose how many executives chose to take advantage of severance benefits triggered by the merger of the old BankAmerica and
NationsBank, the newspaper said. Since April, when the merger was announced, at least 14 of the 45 highest-ranking executives at the old BankAmerica have resigned or departed, the newspaper said.
Lowe's (LOW) - Get Report and
Eagle Hardware & Garden (EAGL) are providing additional information to the
Federal Trade Commission in connection with a review of their proposed merger. The companies expect the merger to be completed late in the first quarter.
Lycos (LCOS) , an Internet hub, and the
National Football League have jointly designed and built the official Super Bowl Web site. The site, superbowl.com, is -- hold your breath -- now available. Lycos will sell advertising on the site and will share that revenue with the NFL.
Medtronic (MDT) - Get Report garners mention in today's Heard on the Street column in the
Journal. Though "it is hard to find anyone who isn't a fan of Medtronic these days," a few analysts, along with short-sellers, are betting on a decline in the stock.
St. John Knits (SJK) said its chairman and chief executive extended to Jan. 15 from Dec. 31 the expiry of his $28-a-share cash bid to take the company private.
Now for a quick look at the take-it-with-a-grain-of-salt Inside Wall Street column in the latest edition of
The column this week also offers up a bullish item on
Spacehab (SPAB) - Get Report.
- Fore Systems (FORE) nets positive mention as Steve Dalton, who heads
First Capital Group, a unit of
First Union National Bank of Philadelphia, believes the stock is headed higher, to the upper 20s in six to 12 months. One reason cited by Dalton is that Fore, which closed yesterday at 16 11/16, "is an indirect way to play the strong Internet tide." Megan Graham-Hackett of
S&P also thinks Fore is "well positioned for the Internet."
Fore makes networking products based on asynchronous transfer mode technology. Dalton is quoted as saying that "demand for faster Internet access is prompting upgrades of switches and equipment among telecom companies."
Data Broadcasting's (DBCC) stock has surged from 5 3/4 on Nov. 11 to 15 on Dec. 29 and is headed even higher, according to some stock pros. The reason? The prospect of a steamy initial public offering from
MarketWatch.com, a joint venture between Data Broadcasting and the broadcasting arm of
CBS (CBS) - Get Report, the column said.