With Triple-Witching Looming, Stocks Set to Move Up

Aided by an overnight slide in the yen, stocks look poised to show strength at the open.

Author:: Thomas Lepri
Publish date:: Sep 17, 1999 9:27 AM EDT

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 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

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

Eileen Kinsella

and

Brian Louis

Staff Reporters

eBay

(EBAY) - Get Report

can expect some serious competition in its online auction site business. High-tech behemoths including

Microsoft

(MSFT) - Get Report

Lycos

(LCOS)

and

Excite@Home

(ATHM) - Get 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 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

(FJ)

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

(NKE) - Get Report

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 Report

to buy from attractive.

Lehman Brothers

cut

Blue-Square Israel

(BSI)

to neutral from buy, citing flat sales in a tough economic climate.

HSBC

upgraded

Diageo

(DEO) - Get Report

to hold from sell, following its annual profit results.

Warburg Dillon Read

raised

Electro Scientific

(ESIO) - Get Report

to strong buy from buy.

Warburg Dillon Read upgraded

First Industrial Realty

(FR) - Get Report

to strong buy from buy.

PaineWebber upgraded

Gateway

(GTW)

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

(KLM)

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 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

(SEBL)

Oracle

(ORCL) - Get Report

EMC

(EMC)

Infinity Broadcasting

(INF) - Get Report