Market Players Buy Boldly Ahead of FOMC Meeting

The Fed's policy meeting tomorrow might seem likely to produce some reticence, but Wall Streeters are shrugging it off.
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Sure the market's oversold. But is that any reason to load up the truck the day before

Federal Open Market Committee

meets?

It's an odd day to see a rally. Though even the most hawkish economists ascribe no more than an outside chance of the

Fed

raising its target rate tomorrow, there is some uncertainty over whether the Fed will stick to a neutral policy directive, or bias. About half the economists out there think the Fed will move to a tightening bias. That would keep Wall Street on rate watch for another month, and could throw a damper on stocks.

The move in stocks has got traders scratching their collective heads.

"I guess the one argument is that sentiment was so negative coming into October," said Ned Collins, vice president of equity trading at

Daiwa Securities America

. "Maybe it really did get overdone, and this is the rally that I thought we were going to get last week."

Collins was by no means alone in thinking stocks would see an oversold bounce last week -- it was a mantra that technically minded and fundamental folk alike were intoning pretty loudly. Reality got in the way, though. A rally in gold sparked stories of hedge funds caught short, and hardly was that done with before the market got to chattering about how Japan's

tankan

would come in strong today, and how that would in turn send the dollar skittering lower.

The tankan -- a measure of business sentiment -- did come in above consensus, but it was nothing like the blowout report Tokyo traders were talking about. The dollar put on a pretty good move against the yen, and that set the tone early on for a good morning in the U.S.

The

Dow Jones Industrial Average

was lately up 110, or 1.1%, to 10,383. The

S&P 500

was up 13 to 1296.

The

Nasdaq Composite

was up 30, or 1.1%, to 2767.

The Street.com Internet Sector

index was up 6, or 1%, to 654.

The small-cap

Russell 2000

was up 2, or 0.5%, to 426.

Breadth, on modest volume, was pretty good. On the

New York Stock Exchange

, advancers were outpacing decliners 1,697 to 1,155 on 441 million shares. There were 33 new 52-week highs and 94 new lows. On the

Nasdaq Stock Market

, advancers were leading decliners 1,901 to 1,692 with 501 million shares changing hands. There were 57 new highs and 73 new lows.

Though tomorrow could sour things for stocks, John Manley, equity strategist at

Salomon Smith Barney

, doubts that there's much downside left in stocks.

"There's a lot of fear built into the market at this point -- we've had a bear market in almost two-thirds of stocks," he said. "There's too much fear in there right now to make the case that it's going to be a disaster." While he's not sure whether the next 5% move in stocks will be up or down, "if you ask me '10% up or down,' I'd go with up."

The economists at Salomon are among those that think the Fed may hike in November, but Manley's pretty sanguine on what that might mean for stocks. "I actually think the rate hike in November, if it comes, won't be a big deal," he said. The real issue for Manley is whether the Fed does anything beyond that. One more rate hike, and the Fed is just taking back the cuts from last year. More than one, and it gets harder to figure out where it stops.

"The difference between zero and one is nothing," said Manley. "The difference between one and two is enormous."

Monday's Midday Watchlist

By Eileen Kinsella
Staff Reporter

(

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

)

BellSouth

(BLS)

fell 2 11/16, or 5.9%, to 42 3/4 after offering to buy

Sprint

(FON)

, with a bid that surpasses the buyout offer Sprint received from

MCI WorldCom

(WCOM)

, according to reports in

The Wall Street Journal

and

The New York Times

. Shares of Sprint rose 2 3/4 to 59 3/4, after hitting a trading high of 61, while MCI lifted 1 1/4 to 71 3/4.

Preview Travel

(PTVL)

was up 6 3/16, or 35.1%, to 23 13/16 after agreeing to be acquired by

Sabre Holdings

(TSG) - Get Report

, which plans to combine it with its

Travelocity.com

unit. Terms weren't disclosed, but the new, publicly traded Travelocity is expected to have more than 17 million members and more than $1 billion in sales. Sabre, up 4 7/8, or 11.2%, to 48 1/4, also said it agreed on terms with

Yahoo!

(YHOO)

for an extension of their existing contract. Yahoo! lost 1 1/2 to 174.

Separately,

America Online

(AOL)

set a multiyear content and commerce pact with Travelocity.com, valued at up to $200 million. Under the deal, Travelocity.com will become the exclusive reservations engine integrated into the AOL service,

AOL.com

,

CompuServe

,

Digital City

and

Netscape

when the Preview-Travelocity merger is completed.

In other AOL news, the company's

ICQ

unit reached a deal with

Net2Phone

(NTOP)

to offer a prepaid virtual calling card that will route calls over Net2Phone's Internet protocol network. Net2Phone gained 2 3/8 to 54 15/16. The announcement is the first in a series of initiatives under a four-year agreement between Net2Phone and ICQ.

Mergers, acquisitions and joint ventures

Clear Channel Communications

(CCU) - Get Report

fell 1 3/8 to 79 after it said it was buying

AMFM

(AFM)

, lately up 3 5/16, or 5.3%, to 67 1/4. Under terms of the deal, AMFM shareholders will receive 0.94 of a Clear Channel share for each AMFM share they hold on the record date of the deal, which is expected to be in the second half of 2000.

Medscape

(MSCP)

added 1 5/8, or 16.2%, to 11 11/16 and

CBS

(CBS) - Get Report

slipped 1/16 to 47 13/16 after the companies unveiled plans to start a consumer health Web site.

RCN

(RCNC)

climbed 5 1/16, or 13.3%, to 43 1/8 after Paul Allen's

Vulcan Ventures

said it would make a $1.65 billion investment in the telecommunications company. Allen is a co-founder of

Microsoft

(MSFT) - Get Report

.

Summit Bancorp

(SUB) - Get Report

inched up 3 /8 to 32 9/16 after saying it would buy

NMBT

(NMBT)

for $69.4 million.

Temple Inland

(TIN)

edged up 3/4 to 59 7/8 after saying it plans to sell its bleached paperboard unit to

Westvaco

(W) - Get Report

for roughly $625 million, in an attempt to concentrate on its core corrugated packaging business. Shares of Westvaco moved up 1/4 to 25 7/8. The deal is expected to be completed by the end of the year.

Earnings/revenue reports and previews

Catalytica

(CTAL)

lost 1 3/16, or 8.1%, to 13 1/2 after the company said it expects third-quarter profits of 1 cent to 3 cents a share, after charges. Analysts had expected the company to report operating results of 11 cents a share.

Harleysville

(HGIC)

dropped 1 1/2, or 9.9%, to 14 after warning second-half results will fall well below analysts' estimates due in part to higher catastrophe losses resulting from Hurricane Floyd.

Mattel

(MAT) - Get Report

shed 4 1/16, or 24.1%, to 12 13/16 after saying it expects third-quarter earnings to fall well below analyst estimates as its

Learning Co.

educational software business takes larger-than-expected losses. The toy company said it expects to report earnings of 30 cents to 40 cents a share, well below the consensus estimate of 67 cents a share.

Offerings and stock actions

AT&T

(T) - Get Report

added 1 11/16 to 43 7/16, after the

Journal

reported it is considering issuing several tracking stocks in an effort to increase shareholders' return. Under one proposal, Ma Bell would issue three stocks that would track AT&T's wireless division, its cable and Net undertakings and its outsourcing unit for businesses.

iVillage

(IVIL)

fell 1 3/4, or 5.2%, to 32 1/8 after it filed with the

Securities and Exchange Commission

to offer 3 million shares of common stock.

King Pharmaceuticals

(KING)

added 1 7/8, or 5.3%, to 37 3/8 after it set a 3-for-2 stock split.

PCQuote.com

cut the size of its planned IPO to 5 million shares from 7.75 million and lowered the expected price range to $8 to $10 a share.

Analyst actions

AmSouth Bancorp

(ASO)

added 1/2 to 24 after

Merrill Lynch

reinstated coverage with an intermediate-term accumulate rating and long-term buy rating.

Commonwealth

(CMIN)

rose 1 1/8, or 9.9%, to 12 5/8 after

Morgan Stanley Dean Witter

upped its rating to outperform from neutral.

Compaq

(CPQ)

slipped 1/8 to 22 3/8 after

Credit Suisse First Boston

lowered its third-quarter earnings estimate to 5 cents a share from 9 cents and its fourth-quarter estimate to 22 cents from 34 cents. CSFB also cut its estimate for fiscal 2000 to $1 from $1.25.

Hospitality Properties Trust

(HPT)

lost 3/8 to 22 3/8 after Merrill Lynch sliced its rating to accumulate from buy.

Lamar Advertising

(LAMR) - Get Report

jumped 2 3/4, or 5.8%, to 50 3/8 after Morgan Stanley upped its rating to strong buy from outperform.

Lifepoint Hospitals

(LPNT)

inched up 1/2, or 6%, to 8 7/8 after

Warburg Dillon Read

rolled out coverage with a buy rating.

Revlon

(REV) - Get Report

lost 1 11/16, or 14.1%, to 10 5/16 after Warburg Dillon Read cut its rating to hold from buy.

Miscellany

Amazon.com

(AMZN) - Get Report

added 9/16 to 77 7/8 after saying it launched a wireless service that will enable customers to shop through Amazon using wireless access devices, including

3Com's

(COMS)

Palm VII. Shares of 3Com rose 9/16 to 29 11/16. Amazon said it also acquired privately held

Convergence

for $20 million, in connection with its wireless service plans. Convergence makes Internet access software.

Boeing

(BA) - Get Report

rose 1 1/16 to 43 15/16 after the

Journal

reported the company's plans to restructure its customer-finance division in order to enhance its jet-leasing service and increase its profits. The reorganization effort helps put Boeing in closer competition with leasing firms that purchase its planes, the newspaper reported.

H.J. Heinz

(HNZ)

climbed 1/4 to 43 7/8 after the company said it would combine all of its U.S. grocery and food service businesses into a single $5 billion "megacompany" with a base in Pittsburgh.