Market Holds Still, Getting Ready for the Fed

The index moves have been modest this session ahead of the all-important FOMC decision about two hours away.
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The market is biding its time, waiting for the results of today's

Federal Open Market Committee

meeting, which for the first time in a while contains a bit of drama.

The level of drama doesn't center on whether or not the Fed will raise interest rates, of course -- the vast majority of analysts don't expect that -- but the question bouncing around the brains of many is whether or not the Fed will adopt a tightening bias.

Ahead of the results of the FOMC meeting -- which are expected around 2:15 p.m. EDT -- the major market averages were slightly higher after spending the morning trading in a relatively narrow range.

Jay Suskind, head of institutional equity trading at

Ryan Beck

, said that even if the Fed adopts a tightening bias, he thinks that after an initial knee-jerk reaction by the market -- although he said he didn't know which direction that initial reaction would be -- the market will close up on the day.

The

Dow Jones Industrial Average

was up 37 to 10,890, led by earnings-estimate beater

Hewlett-Packard

(HWP)

. H-P was up 6.6%.

The

S&P 500

was up 4 to 1343. The

Russell 2000

was up 2 to 443.

The

Nasdaq Composite Index

was up 6 to 2568.

PC makers were sporting solid gains. The

Philadelphia Stock Exchange Computer Box Maker Index

was up 2.1%.

While the FOMC get-together has most of the market's attention, Suskind also said people were also awaiting the release of

Dell's

(DELL) - Get Report

earnings report, expected after the close.

Dell was up 5/8 to 43 13/16 and was most active on the

Nasdaq Stock Market

with 16.9 million shares changing hands. The 31-analyst

First Call

consensus estimate calls for Dell to earn 16 cents a share in the first quarter.

The

Philadelphia Stock Exchange Semiconductor Index

was up 0.4%. The

Morgan Stanley High-Tech 35

was up 0.8%. The

Nasdaq 100

was down 0.2%.

TheStreet.com Internet Sector

index was down 0.4%.

Retailers were sporting sizable gains. The

S&P Retail Index

was up 2.3%.

Suskind noted volume was light again today, as it has been the last few days.

On the

New York Stock Exchange

, advancers were outpacing decliners 1,507 to 1,299 on 379 million shares. On the Nasdaq, winners were beating losers 1,895 to 1,732 on 464 million shares.

On the NYSE, 26 issues had set new 52-week highs while 23 had touched new lows. On the Nasdaq, 54 issues had set new highs while new lows totaled 22.

On the Big Board,

America Online

(AOL)

was most active, with 10.5 million shares changing hands. It was down 5/8 to 135 1/2.

As for the Treasury market, the 30-year Treasury bond was lately up 15/32 to 91 14/32, yielding 5.86%. (For more on the fixed-income market, see today's early

Bond Focus.)

Stephen Shobin, chief technical analyst at Lehman Brothers, said he thinks supply might be the bogeyman of the bond market, not the inflation fears that have pounded bonds lately. Shobin noted that acquirers have issued debt to pay for their purchases in the feverish M&A activity of the last couple of months -- a situation that is likely to continue for a while and that will keep pressure on bonds.

He sees a maximum yield on the long bond of 6.10%. Ultimately, he said, Treasury yields will drop as the supply pressure eases.

Meanwhile, among the other indices, the

Dow Jones Utility Average

was off a fraction. The

American Stock Exchange Composite Index

was up 0.2%. The

Dow Jones Transportation Average

was down 0.5%.

Tuesday's Midday Movers

By Heather Moore
Staff Reporter

Hewlett-Packard was climbing 5 7/8, or 6.6%, to 94 9/16 after last night reporting second-quarter earnings of 88 cents a share, 8 cents above the 20-analyst estimate and higher than the year-ago 65 cents.

TheStreet.com

took a look at H-P's report in a story

last night. This morning,

Morgan Stanley Dean Witter

raised its price target for the stock to 110 from 90.

Credit Suisse First Boston

increased its 1999 earnings estimate for H-P to $3.45 from $3.35 a share, and

Merrill Lynch

lifted its 1999 view to $3.50 from $3.45 and its 2000 view to $4 from $3.90.

In other news:

Broadcom

(BRCM)

was up 7 11/16, or 8.5%, to 98 1/2 after Morgan Stanley Dean Witter raised its price target to 120 from 95.

Methode Electronics

(METHA)

was up 2 11/16, or 16.3%, to 18 3/4 after Merrill Lynch upgraded the stock to a near-term buy, naming it the firm's Focus One stock of the week.

PanAmSat

(SPOT) - Get Report

was down 3 3/4, or 11%, to 30 3/8 after late yesterday warning that its 1999 results will be hurt by a delay in the launch of several satellites. The company said it needs to correct defects in parts supplied by vendors. The 13-analyst view called for annual earnings of $1.17 a share vs. the year-ago 83 cents.

Charles Schwab

(SCH)

was up 3 7/8 to 118 1/16 after saying it will go ahead with its 2-for-1 stock split after obtaining approval from shareholders.

St. Paul Bancorp

(SPBC)

was up 1 11/16, or 6.8%, to 26 3/8 after

Charter One Financial

(COFI)

announced last yesterday it was buying the company for $1.2 billion in stock. Charter One will swap 0.95 of a share for each share of St. Paul. Charter One was down 1 3/4, or 5.7%, to 29.

Teleglobe

(TGO)

was up 2 1/4, or 7.9%, to 30 7/8 after

BT Alex. Brown

started coverage with a buy.

Varlen

(VRLN)

was up 10 3/16, or 39.5%, to 36 1/16 after privately held

Amsted Industries

, a rail, truck and auto parts maker, launched a $35-a-share hostile bid for the company. Varlen said it will review the offer.

Earnings/revenue movers

Chindex

(CHDX)

was up 3 3/8, or 46.6%, to 10 15/16 after posting first-quarter earnings of 39 cents a share vs. the year-ago loss of $1.78. The company also said it plans to announce major new relationships in capital equipment and distribution services this year.

Donaldson

(DCI) - Get Report

was up 1 1/4, or 5.7%, to 23 3/16 after last night reporting third-quarter earnings of 37 cents a share, topping the six-analyst prediction of 33 cents and the year-ago 32 cents.

Home Depot

(HD) - Get Report

was up 2 to 60 7/16 after recording first-quarter earnings of 32 cents a share, topping the 22-analyst estimate of 28 cents and moving up from the year-ago 22 cents.

J.C. Penney

(JCP) - Get Report

was up 6 5/16, or 13.8%, to 52 after posting first-quarter earnings of 60 cents a share, beating the 15-analyst estimate by 7 cents but falling below the year-ago 64 cents.

Recoton

(RCOT)

was down 2 9/16, or 16.3%, to 13 1/8 after last night missing first-quarter estimates for earnings of 21 cents a share with a loss of 6 cents.