Mega-Merger on the Way

Author:
Publish date:

Market mavens are dealing with the coalescing possibility of the biggest bank merger ever, just in time for a nice, calm start to the holiday break.

Bringing yesterday's rumors closer to becoming today's surprising reality,

Barnett Banks

(BBI) - Get Report

and

NationsBank

(NB)

plan to announce soon a "potential merger" that's been estimated to value Barnett at $12 billion to $14 billion. That would beat last year's $11 billion merger of

Wells Fargo

(WFC) - Get Report

and

First Interstate

and 1995's $10 billion combo of

Chase

(CMB)

and

Chemical

.

"Barnett and NationsBank both have asked the

New York Stock Exchange

to halt trading pending an announcement later today concerning their potential merger," a NationsBank spokesman was quoted as saying this morning. Those stocks remain halted at midday, but Barnett already enjoyed a nice run yesterday as chatter swelled up about a possible deal. It was up 2 3/8 to 54 13/16.

Other regional banks are pumping higher as investors play the "who's next?" guessing game.

Crestar

(CF) - Get Report

gained 1 1/16 to 43 9/16,

SunTrust Banks

(STI) - Get Report

rose 1/2 to 61 3/4 and

Summit Bancorp

(SUB) - Get Report

added 1/2 to 58 3/8. (Summit's prospects as a takeover target were the subject of an

Aug. 7 story in

TheStreet.com

.)

*****

Away from the banking talk, stocks are easing into the long Labor Day weekend with a mixed midday performance. Blue-chips have been knocked around by economic data while techs mount a decent rally.

The 10 a.m. EDT release of the

Purchasing Management Association of Chicago

business activity index and the

University of Michigan

consumer sentiment survey, both posting stronger-than-expected rises, delivered a one-two punch that sent the

Dow Jones Industrial Average

reeling. The Dow swiftly dropped more than 87 points to 7607 as bonds plummeted, but both markets quickly reversed course. Around noon, the Dow was off 29 to 7665.

All the action is coming on unsurprisingly low volume, with about 179 million shares changing hands on the Big Board by noon. Decliners led advancers by 1,379 to 1,091.

"We'll probably see some swings because of the thinness, but there wasn't a lot for sale when the market sold off after that Chicago number," one trader noted. He said there's absolutely no clear tone to the day's trading, making it tough to say whether the market's Friday curse (declared dead

last week by our James J. Cramer) will pull a

Dracula

or follow the lead of

Generalissimo Francisco Franco

.

In techland, upswings in such big names as

Microsoft

(MSFT) - Get Report

,

Intel

(INTC) - Get Report

,

Dell

(DELL) - Get Report

and

Cisco

(CSCO) - Get Report

are helping the

Nasdaq Composite Index

to a 0.4% gain at midday. Nasdaq volume also remains anemic at 237 million shares, with advancers leading decliners by a 9-to-8.5 margin.