With Triple-Witching Looming, Stocks Set to Move Up
Stocks are poised to show some strength this morning, helped along by a break in the yen's strength against the dollar.
At 9:05 a.m. EDT, the
S&P 500
futures were up 8, about 8 points above fair value and indicating a positive open. The 30-year Treasury was rallying after yesterday's Floyd-shortened session, up 12/32 to an even 101, its yield falling to 6.052%.
First, triple-witching. Today marks the quarterly expirations of stocks options, index options and index futures, a phenomenon that should have any Xtreme traders out there juiced in hopes of some primo volatility. Button-down types may find it a bit disconcerting, though, since it's tough to predict what sort of directional effect expiration has on stocks.
Leaning toward a positive expiration bias was Paul Rich, a trader at
BT Brokerage
: "I'm calling for an upside witching. I've just got a funny feeling."
Rich also said that
Adobe's
(ADBE) - Get Adobe Inc. Report
strong earnings report last night could help the broader market. Adobe was lately up 7 1/8 to 105 in premarket trading, up from 97 7/8.
Meanwhile,
Fed
Chairman
Alan Greenspan's
TheStreet Recommends
speech this morning at the
Year 2000 Summit
in Washington doesn't seem to be causing any negative ripples. No wonder, since Greenspan claimed that "enough of our critical infrastructure has been judged Y2K-compliant to view the probability of any systemic breakdown as negligible."
It's safe to say that any oversold bounce we get this morning -- and there has been more than a little selling over the past couple sessions -- will be aided by the overnight slide in the yen.
In Tokyo, the market's growing apprehension of a coordinated U.S.-Japan foreign exchange intervention helped the dollar retrace some of its recent losses against the Japanese currency. Fears were bolstered when Finance Minister
Kiichi Miyazawa
told reporters that
Bank of Japan
Governor
Masaru Hayami
had talked on the telephone with William McDonough, president of the
New York Fed
.
That, coupled with a couple reports in the
Nihon Keizai Shimbun
, has got some in the market concluding that coordinated intervention is imminent. The paper cited a senior
International Monetary Fund
official as saying that the G7 will likely discuss currency intervention at its Sept. 25 meeting, and that the
Bank of Japan's
interventions would be more effective if they were "unsterilized" -- that is, if the government would stop using open market operations to remove the yen it sells for dollars from the money markets.
Without citing sources, the paper also wrote that the BOJ is expected to hammer out details for an unsterilized intervention plan when it meets next week.
All this helped send the dollar clear through the 106-yen level, up from 105.16 yen late Thursday in London. In early New York trading, the greenback was lately quoted at 106.60 yen.
The remission in yen strength helped staunch selling in Tokyo stocks. The
Nikkei
added 55.68, or 0.3%, to 17,342.27.
Hong Kong stocks, which Typhoon York kept from trading yesterday, also reacted positively to the dollar's bounce. The benchmark
Hang Seng
picked up 54.24, or 0.4%, to 13,484.84.
The major European markets had backed up a bit from their early advances around midday. The Paris
CAC
was up a modest 2.96 to 4643.51, while Frankfurt's
Xetra Dax
was up 8.82 to 5313.24. London's
FTSE
was up 28.6 to 6043.2.
Friday's Wake-Up Watchlist
By
Eileen Kinsella
and
Brian Louis
Staff Reporters
eBay
can expect some serious competition in its online auction site business. High-tech behemoths including
Microsoft
(MSFT) - Get Microsoft Corporation Report
,
Lycos
undefined
and
Excite@Home
(ATHM) - Get Autohome Inc. American Depositary Shares each representing four class A. Report
have agreed to get together to create a new auction network, according to published reports. The news was reported in
The New York Times
and
The Wall Street Journal
.
Earnings/Revenue Reports and Previews
(Earnings estimates are from
First Call/Thomson Financial
.)
Adobe Systems
(ADBE) - Get Adobe Inc. Report
last night set a 2-for-1 stock split. The company also posted third-quarter earnings of 80 cents a share, ahead of the 11-analyst estimate of 74 cents.
Advest
upgraded Adobe to strong buy from market perform.
Fort James
undefined
said earnings per share could be up to 20% below year-ago levels in the second half and 25% lower in the third quarter. Fort James attributed the earnings drop to significant systems and workflow changes as it merged two predecessor companies, and increased costs for distribution and warehousing.
Nike
after the close posted first-quarter earnings of 70 cents a share, better than the 15-analyst estimate, and up from 56 cents a year ago. The company said a cost-cutting plan improved its bottom line despite only a small change in revenue.
TheStreet.com
wrote about Nike's earnings in a
story yesterday.
Ogden
(OG)
said it plans to "pursue the sale or other dispositions" of its aviation and entertainment concerns and warned that it expects earnings for the third quarter will be "substantially below" expectations. The two-analyst estimate calls for the company to earn 64 cents a share.
Analyst Actions
PaineWebber
upgraded
Aflac
(AFL) - Get AFLAC Incorporated Report
to buy from attractive.
Lehman Brothers
cut
Blue-Square Israel
undefined
to neutral from buy, citing flat sales in a tough economic climate.
HSBC
upgraded
Diageo
to hold from sell, following its annual profit results.
Warburg Dillon Read
raised
Electro Scientific
(ESIO) - Get Electro Scientific Industries, Inc. Report
to strong buy from buy.
Warburg Dillon Read upgraded
First Industrial Realty
(FR) - Get First Industrial Realty Trust Inc. Report
to strong buy from buy.
PaineWebber upgraded
Gateway
undefined
to buy from attractive.
Warburg Dillon Read downgraded
ICN Pharmaceuticals
(ICN)
to buy from strong buy.
Credit Suisse First Boston
started coverage of
KLM Royal Dutch Airlines
undefined
with a hold rating, saying the airline cycle had peaked and North American yields remain depressed, while fuel and operating costs have risen.
Warburg Dillon Read downgraded
Mylan Laboratories
(MYL) - Get Viatris, Inc. Report
to hold from strong buy.
CSFB started
Research in Motion
(RIMM)
with a hold rating.
Miscellany
Investors who bought stocks 18 months ago in companies that fix Y2K problems have gotten pounded and would've been better off shorting those stocks, the Heard on the Street column in
The Wall Street Journal
said. The column mentions a bunch of stocks that money managers and analysts like as Y2K plays, among them:
Whittman-Hart
(WHIT)
,
Siebel Systems
undefined
,
Oracle
(ORCL) - Get Oracle Corporation Report
,
EMC
(EMC)
,
Infinity Broadcasting
(INF) - Get Brookfield Global Listed Infrastructure Income Fund Inc. Report
,
Clear Channel Communications
(CCU) - Get Compania Cervecerias Unidas S.A. Report
and
Micron Technology
(MU) - Get Micron Technology Inc. Report
.
The Inside Wall Street column in
Business Week
, penned by Gene Marcial, is all about takeover talk. Companies mentioned as buyout targets in the column this week are
ZDNet
undefined
,
Chiron
(CHIR) - Get Global X MSCI China Real Estate ETF Report
and
Rite Aid
(RAD) - Get Rite Aid Corporation Report
.
