A rally in the futures market has mostly petered out in the wake of a miserable day in Japan and another sharp rise in U.S. bond yields.

At 9:04 a.m. EST, the

S&P 500

futures were up 0.90, a slightly positive indication for the open.

"It's going to be a mixed bag on light volume," said Jack Ablin, managing director at

Colonial Asset Management

. "The

3Ms

(MMM) - Get Report

,

Caterpillars

(CAT) - Get Report

and multinational players aren't really going to benefit, but some of the techs and domestic players should."

Ablin says he'll be keeping an eye on the Treasury market for clues. "If there's a pop in the front end" -- if short-term yields move lower -- "that's probably going to be a negative for stocks."

The

Federal Open Market Committee

is universally expected to leave the fed funds rate unchanged at 4.75% today. That's not what's bothering the bond market, where the benchmark 30-year Treasury bond was down 28/32 at 102, boosting its yield to 5.12%, its highest level since Nov. 27.

Rather, a huge selloff in Japanese government bonds is causing a wholesale repricing of government bonds around the world.

JGBs had their worst day ever today, on top of a pretty miserable day yesterday. The cause: Monday, the government announced plans to issue twice the volume of bonds next year that it did this year. Today, the Finance Ministry's

Trust Fund Bureau

, which invests public pension funds and holds a third of outstanding JGB issues, said that as of Jan. 1 it will cease outright purchases of them in the secondary market, according to

Bloomberg

. Finance Minister

Kiichi Miyazawa

aggravated the selloff by saying he has no plans to stop it.

The yield on the benchmark 10-year JGB soared 39 basis points to 1.90%. That sharp rise in the cost of money triggered a selloff in Japanese stocks. The

Nikkei

dropped 373.50, or 2.6%, to 13779.45.

The events are difficult to interpret,

Daiwa Securities

chief economist Michael Moran said. On the one hand, one shouldn't expect Japanese interest rates to continue to sit at near-record lows amid signs of improvement in the private sector and greatly increased government spending aimed at stimulating the economy. But the fall in stock prices suggests that many investors fear a run-up in interest rates puts the incipient recovery at risk.

Hong Kong stocks followed Tokyo lower. The

Hang Seng

lost 73.45 to 10,322.56. In Korea, investors took profits after a huge rally yesterday. The

Kospi

fell 17.52, or 3.1%, to 537.75.

European markets were mixed in light preholiday trading. London's

FTSE

was down 24 at 5852. The German

Dax

was up 52 at 4833 and the Paris

CAC

was up 5 at 3809.

Tuesday's Wake-Up Watchlist

By

Brian Louis
Staff Reporter

  • Apple's (AAPL) - Get Report iMac computer was the top-selling personal computer in November at both U.S. computer retail stores and through the mail, according to PC Data, a market research firm. The iMac accounted for 7.1% of all unit sales and 8.2% of total U.S. retail revenue in November.
  • Ameritrade Holding (AMTD) - Get Report announced that it expects earnings for the fiscal first quarter ending Dec. 31 to be above previous estimates due to strong transaction volumes. It now expects earnings to be in the range of 9 cents to 11 cents per share. The First Call six-analyst consensus estimate is for 6 cents a share, compared with a loss of 39 cents a share in the fiscal first quarter last year. The company guided down estimates to 6 cents to 7 cents a share early in December due to greater-than-expected technology and ad spending. The six-analyst consensus estimate before that had been 11 cents per share. Ameritrade expects to report more than 32,000 average daily trades and net revenue above $50 million. Ameritrade reported net revenue of $39.6 million in the previous quarter and $25.7 million in the fiscal first quarter last year. Trades per day averaged 24,328 in the previous quarter and 10,619 in the fiscal first quarter last year. The revenue growth will be offset by a one-time technology charge of $2 million and by trade-execution price adjustments of about $3 million, as the company announced previously. -- Amy Olmstead
  • ACT Networks (ANET) - Get Report named Martin Woll chief financial officer.
  • American Homepatient (AHOM) named Marilyn O'Hara chief financial officer.
  • Dean Foods (DF) - Get Report reported second-quarter earnings from continuing operations of 58 cents a share, 2 cents shy of the First Call 11-analyst consensus estimate of 60 cents a share, but up from the year-earlier 50 cents a share.
  • Dexter (DEX) - Get Report said it won't extend or raise its tender offer for shares of Life Technologies (LTEK) . Dexter's $39.125 a share tender offer for all of the shares it doesn't own is set to expire at midnight tonight.
  • A computer virus hit MCI Worldcom (WCOM) , The Wall Street Journal reported. A company spokesman said the virus, which was discovered Thursday, was contained and "had no impact on our customers or our operations," the newspaper said. But a spokesman for Network Associates (NETA) , a software security company, said the virus affected 10 MCI WorldCom networks. The virus forced security experts elsewhere to contain what they described as a dangerous invader.
  • The Justice Department closed its probe into alleged anticompetitive practices by PepsiCo's (PEP) - Get ReportFrito-Lay unit without taking any action, The Wall Street Journal reported.
  • United Auto Group (UAG) - Get Report said excluding an estimated charge, the company expects earnings per share to be in line with Wall Street expectations for the full year 1998. The First Call six-analyst consensus calls for earnings for 1998 to be $1.11. Also, the company said it will take a charge in the range of $13 million to $15 million in the fourth quarter of 1998.
  • United Rentals (URI) - Get Report agreed to sell $300 million of preferred stock, convertible into 12 million common shares at $25 each, to Apollo Management.
  • The federal Surface Transportation Board rejected a plan by a group of shippers to open Union Pacific's (UNP) - Get Report network to new competition.