Equity Market Eyes Bond Market as All Await Jobs Report

Tech stocks are storming higher, but the rest of the market is noncommittal ahead of tomorrow's November jobs report.
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Things seemed pretty mellow at midsession as investors waited to see what's in store for tomorrow's November

employment report

. Anticipation of the figure, which is closely watched by the

Fed

, kept a lid on the tech rage and left other sectors simmering as insiders kept all eyes on the bond market.

"We're seeing chopping, drifting trading, with commitment from neither the bulls nor the bears, said James Maguire Jr.,

New York Stock Exchange

specialist for

Henderson Brothers

. "The market is marking time ahead of tomorrow's employment numbers."

Wall Street analyst consensus numbers are forecasting nonfarm payroll numbers to come in at 226,000 and the unemployment rate is seen at 4.1%, while average hourly earnings are seen rising 0.3%.

With the growing anticipation of tomorrow's numbers, the major indices were holding steady in positive territory. According to Allan Gillespie, director of research for

Gotham Capital Management

, the jobs report is keeping the bond market in the spotlight.

"There is not that much difference between the two-year note, which is at 6.04% and the 30-year, which is at 6.30%," Gillespie said. "Historically, that spread has been wider, so we're waiting to see the

jobs numbers." He added, "If the spread tightens, the potential for inversion is very high. If not, then the long bond will have to sell off."

Lately on the bond front, the benchmark 30-year Treasury was down 9/32 to 97 14/32, with its yield rising to 6.32%. (For more on the fixed-income market, see today's early

Bond Focus.)

"I think the numbers will be significant in the context of analyzing possible future Fed moves," said Gillespie's colleague Ronny Kraft, CEO of Gotham Capital. "It is clear, however, that

the Fed won't do anything for at least the next three months."

Kraft said the bond market is not the only factor causing him concern. According to Kraft, the dollar's continued weakness against the yen is a another potential problem on the horizon. "If the dollar continues to get weak against the yen, in essence people are not just selling cash, they're selling stocks and bonds," he said. "The

Bank of Japan

has intervened twice, but the market does seem to be convinced that the Japan's intervention has put a bottom on the dollar/yen."

Kraft also was quick to note how a weakening dollar could lead to a turn toward inflationary woes. "Another problem with dollar weakness is the fact that the benefit of a strong dollar was the importation of deflation," he said. "Hence, the reversal of that condition to a weaker dollar would be the importation of inflation, assuming that the trade deficit numbers maintain their current direction."

Lately, the dollar was quoted at 102.65 yen, up 0.44.

The

Nasdaq Composite Index

was advancing 54, or 1.6%, to 3407 behind strength in its largest components.

The

TheStreet.com Internet Sector

index was having a nice run, jumping 34, or 3.7%, to 960, with

BroadVision

(BVSN) - Get Report

and

Excite@Home

(ATHM) - Get Report

leading the way.

The Dow Jones Industrial Average

was up a more modest 35, or 0.3%, to 11,034, with

Hewlett-Packard

(HWP)

up 2 7/8, or 3%, to 99 3/8 and

IBM

(IBM) - Get Report

bouncing 1 181/256, or 1.6%, to 105 3/16.

Other major indices were also in the green, with the broad

S&P 500

up 5, or 0.4%, to 1403, while the small-cap

Russell 2000

was gaining 4, or 0.9%, to 458.

On the

New York Stock Exchange

, decliners were edging advancers 1,490 to 1,405 on 513 million shares, while on the

Nasdaq Stock Market

, leaders were ahead of laggards 1,979 to 1,830 on 821 million shares. New 52-week lows were topping new lows on the NYSE, 156 to 35, while on the Nasdaq, highs were beating out lows 137 to 44.

Thursday's Midday Watchlist

By Eileen Kinsella
Staff Reporter

America Online

(AOL)

climbed 2 3/4 to 78 7/8 after it agreed to a three-year deal with

Net2Phone

(NTOP)

to offer

AOL Instant Messenger

users phone service over the Internet. Net2Phone rose 3 1/8, or 5.6%, to 58 5/8.

Separately,

TMP Worldwide

(TMPW)

soared 34 9/16, or 36.8%, to 129 after its

Monster.com

unit entered into a four-year $100 million pact with America Online, in which Monster.com will exclusively supply AOL with job-hunting information.

PaineWebber

started coverage of TMP Worldwide with a buy rating and set a price target of 145.

Mergers, acquisitions and joint ventures

AstraZeneca

(AZN) - Get Report

lost 1 11/16 to 43 9/26 after

The Wall Street Journal

reported that it and

Novartis

(NVTSY)

will soon unveil a spinoff of their agricultural chemical business, citing people familiar with the matter said. The article reported that the combined spinoff, which would be traded separately from its parent companies, would rank as the world's largest agrochemical business with sales of $8 billion and a possible stock market value of $15 billion to $20 billion.

BP Amoco

(BPA)

fell 1 15/16 to 59 9/16 after saying it would offer greater concessions to federal antitrust enforcers in an attempt to save its uncertain $33.23 billion acquisition of

Atlantic Richfield

(ARC) - Get Report

, according to

The Wall Street Journal

. Shares of Arco dropped 4 5/16 to 87 3/4.

Deutsche Banc Alex. Brown

downgraded shares of Arco to market perform from buy saying it believes the deal with BP Amoco could fall through.

Ben & Jerry's Homemade

(BJICA)

jumped 6 3/8, or 31.5%, to 26 5/8, after it said it received indications of interest to buy the company. Though potential bidders were not identified, Ben & Jerry's said they would offer significantly more than yesterday's closing share price of 21, and that it was considering the interest.

Carnival

(CCL) - Get Report

rose 5/16 to 45 3/16 after it announced yesterday a surprise $1.7 billion cash tender offer for

NCL Holding

(NRW)

, the parent of

Norwegian Cruise Line

. But NCL quickly responded that the so-far-unofficial offer was "inadequate." Shares of NCL gained 1/2 to 16.

Carnival told

Reuters

it moved to make the tender offer, which expires Dec. 22, after NCL rebuffed an approach from Carnival earlier Wednesday.

Carnival said the deal would not be expected to dilute its 2000 earnings and that it could add to earnings in 2001. Earlier today, DLJ cut NCL Holding to a market perform from a buy. Check out additional

coverage from

TheStreet.com/NYTimes.com

joint newsroom.

Lycos

(LCOS)

gained 2 9/16 to 60 5/8 after saying it agreed to a deal with

Ericsson

(ERICY)

to supply Web content to wireless products. Shares of Ericsson rose 1 3/16 to 51 3/8.

PaineWebber

(PWJ)

fell 1/8 to 38 3/8 after it acquired

DSI International Management

, which manages $5 billion in assets. DSI will operate as a wholly owned subsidiary of the newly formed

PaineWebber Asset Management

.

Sweden-based construction company

Skanska

said

RCN

(RCNC)

has agreed to spend $3 billion to help Skanska build a fiber optic network. Shares of RCN slipped 1/4 to 45.

SmithKline Beecham

(SBH) - Get Report

rose 3 13/16, or 5.7%, to 70 13/16 after it said CEO Jan Leschly would retire in April 2000, opening the door to possible merger negotiations with

Glaxo Wellcome

(GLX)

.

Tosco

(TOS)

rose 11/16 to 28 3/16 after it reached an agreement to buy 1,740

Exxon Mobil

(XOM) - Get Report

gas stations in the Northeast and Mid-Atlantic states. Tosco said it would pay about $860 million for Exxon's system from New York through Maine, and Mobil's system from New Jersey through Virginia as well as the rights to buy undeveloped sites and Mobil's Virginia distribution terminal.

Separately,

Warburg Dillon Read

started coverage of Exxon Mobil with a buy rating and set a price target of 95. Earlier today, the company said savings from the merger are likely to top its initial annual estimate of $2.8 billion. Shares of Exxon Mobil slipped 3/8 to 82 1/16 despite the news.

Earnings/revenue reports and previews

(

Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified.

)

Best Buy

(BBY) - Get Report

dropped 5, or 7.5%, to 61 1/12 despite posting a 9.2% increase in third-quarter same-store sales.

BJ's Wholesale

(BJ) - Get Report

slipped 7/8 to 36 1/2 after it said November same-store sales rose 7%.

Costco

(COST) - Get Report

dropped 3 13/16 to 91 5/8 after it posted an 8% rise in November same-store sales.

J.C. Penney

(JCP) - Get Report

dropped 1 1/4, or 5.6%, to 21 3/16 after saying it saw an 8.7% hike in November same-store sales.

Kmart

(KM)

was unchanged at 9 3/4 after it said its November same-store sales, which rose only 1.4%, were hurt by continued warm weather.

Rex Stores

(RSC)

lost 1/4 to 38 7/16 after it posted third-quarter earnings of 27 cents a share, beating the eight-analyst estimate of 21 cents a share and up from the year-ago 10 cents a share.

Talbot's

(TLB)

dropped 1 1/16 to 49 7/8 after it posted a 7.9% rise in November same-store sales.

Wal-Mart

(WMT) - Get Report

fell 1 42/128 to 57 1/4 after it said November same-store sales were up 6.4%.

Offerings and stock actions

Freenet.de

, the Internet unit of Germany's number three wireless phone company,

MobilCom

, priced its initial public offering at 29 euros a share today. The more than 4 million shares, which will start trading tomorrow, will raise around $117 million for the company to fund further growth. The offering was more than 50 times oversubscribed and shares reportedly already have fetched over 50 euros in prelisting trading.

TheStreet.com

previewed the offering in a

story last week.

Triquint Semiconductor

(TQNT)

jumped 6 1/8, or 7.3%, to 90 after it set a 2-for-1 stock split.

United Healthcare Management

(UAM)

rose 7/8 to 19 3/8 after it said it added 8 million shares to its existing repurchasing program.

Analyst actions

Lehman Brothers

upped its price target on

Analog Devices

(ADI) - Get Report

to 91 from 60 and raised its 2000 estimates to $2.01 a share from $1.56. Analog gained 2 15/16 to 63 7/16.

Donaldson Lufkin & Jenrette

started coverage of

Agco

(AG) - Get Report

with a market performance rating. Agco gained 1/8 to 13 1/8.

Banc of America Securities

sliced its rating on

Arthocare

(ARTC)

to market performer from strong buy. Shares dropped 8 11/16, or 14.9%, to 49 5/8.

DLJ today starts coverage of

Caterpillar

(CAT) - Get Report

with a buy rating. Shares inched up 7/8 to 47 13/16.

DLJ initiated coverage of

CNH

(CNH)

with a market performance rating. CNH fell 1/4 to 13 1/2.

Credit Suisse First Boston

upped its rating on

Cadence Design Systems

(CDN)

to a buy from a hold. Cadence edged up 7/8 to 18 1/2.

Morgan Stanley Dean Witter

raised its rating on

Eastman Chemical

(EMN) - Get Report

to outperform from neutral. Eastman rose 1 1/2 to 40 5/16.

Credit Suisse First Boston analyst Tim Mahon upgraded shares of

Lattice Semiconductor

(LSCC) - Get Report

to strong buy from buy and its price target to 65 from 35. Lattice lifted 2 5/8, or 5.8%, to 48 1/18.

DLJ sliced its ratings on

Pepsi Bottling

(PBG)

and

Coca-Cola Enterprises

(CCE)

to market performance from buy. Pepsi Bottling dropped 1 1/8, or 6.1%, to 17 3/8, while Coca-Cola Enterprises slipped 3/4 to 20 5/16.

Lehman Brothers

raised its rating on

Reynolds Metals

(RLM) - Get Report

to buy from outperform. Reynolds gained 2 11/16 to 65 11/16.

Merrill Lynch

initiated coverage of

Scient

(SCNT)

and

Viant

(VIAN)

with intermediate-term accumulate and long-term buy ratings. Scient gained 4 3/4 to 146 5/8, while Viant rose 4 to 89 1/4.