Monday: Wall Street Cheers BT-Alex. Brown Merger, Looks for Next Deal

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By Dave Kansas
Staff Reporter

Nuptial niceties have investors grinning at lunch time.

Bankers Trust

(BT)

is going to purchase

Alex. Brown

(AB) - Get Report

in a stock deal valued at about $1.7 billion. That news has cheered traders, contributing to the most optimistic morning of trading since the vernal equinox.

And, of course, lost in all the glee is rampant fishiness that surrounds the Alex. Brown acquisition. Though the deal wasn't announced until Sunday, Alex. Brown shot sharply higher on Thursday and Friday on intense volume. Once again, it seems, Main Street is the last to find out about a Wall Street deal.

Meantime, as investors sort through the deal's ramifications (Oh my goodness! That Depression-era law is being violated! It's 1929 all over again!), stock indices are moving higher. The technology-stuffed

Nasdaq Composite Index

is leading strongly for the second straight session, which is further bolstering the nascent good spirits among traders.

But back to the brokerage stocks. In recent days rising interest rates have spanked the financial services group. With stock prices off their highs, the deal-makers have started moving with full force. Analysts like Perrin Long, an independent watcher of the industry, believe that more deals are likely as banks seek to build a presence in the securities industry. And at midday it looks like traders think

every

regional investment house will get snapped up shortly.

Hambrecht & Quist

(HMQ)

,

Raymond James

(RJF) - Get Report

,

A.G. Edwards

(AGE) - Get Report

,

Piper Jaffray

(PJC) - Get Report

and

Legg Mason

(LM) - Get Report

were all up about 10% as investors sifted for the next potential takeover candidate. Traders also whispered about potential takeovers involving three larger firms,

Lehman Brothers

(LEH)

,

Donaldson Lufkin

(DLJ)

and

Salomon Brothers

(SB) - Get Report

.

Long says that those firms seeking stronger retail outlets will likely grab for Legg Mason or A.G. Edwards. DLJ, Lehman Brothers and Salomon Brothers would be more likely candidates for large banks looking to get into the underwriting game.

Also on tap today: the first trickle of corporate earnings reports.

Motorola

(MOT)

is expected to report earnings of 45 cents a share, according to

First Call

. That would be below last year's number of 63 cents a share.

Advanced Micro Devices

(AMD) - Get Report

is expected to report a loss of 2 cents a share, according to First Call, compared with earnings of 18 cents a share last year.