Positive Bias Holds as FOMC Meeting Nears End
Stocks were higher this afternoon, continuing their tight trading range ahead of the results of today's
Federal Open Market Committee
meeting.
While most market participants expect the Fed to stand pat on interest rates, there is uncertainty over whether or not the Fed will adopt a tightening bias. Results of the FOMC's gathering are expected around 2:15 p.m. EDT.
The
Dow Jones Industrial Average
was up 58 to 10,911. The
S&P 500
was up 5 to 1345. The
Nasdaq Composite Index
was up 10 to 2572, while the
Russell 2000
was up 2 to 444.
TheStreet.com Internet Sector
index was down 1 to 640.
The 30-year Treasury bond was up 17/32 to 91 16/32, yielding 5.86%.
On the
New York Stock Exchange
, advancers were leading decliners 1,489 to 1,336 on 409 million shares. On the
Nasdaq Stock Market
, winners were leading losers 1,936 to 1,758 on 507 million shares.
On the NYSE, 28 issues had set new 52-week highs while 24 had touched new lows. On the Nasdaq, 58 issues had set new highs while new lows totaled 23.
On the Big Board,
America Online
(AOL)
was most active, with 11 million shares changing hands. It was up 3/8 to 136 1/2.
On the Nasdaq,
Microsoft
(MSFT) - Get Report
was most active, with 20 million shares changing hands. It was up 13/16 to 79 15/16.
Sector Focus: Retail
Retail stocks were all over the news today as issues in the sector for the most part gained solidly.
Among one of the most prominent in the news was
J.C. Penney
(JCP) - Get Report
. The company posted first-quarter earnings of 60 cents a share, excluding a 1-cent pretax gain, beating the 15-analyst estimate of 53 cents, but down from the year-ago 64 cents.
In addition, the company said it will outsource management of its JCPenney credit card operation to a third-party credit card provider and will sell the provider its credit card receivables portfolio. Also, the company said it will issue a tracking stock for its
Eckerd Drugstore
business.
J.C. Penney was up 6 1/8, or 13%, to 51 13/16.
Kmart
(KM)
, meanwhile, said its board authorized it to repurchase up to $1 billion of its common stock. The company also unveiled growth plans. Kmart was up 1 1/16, or 7%, to 17 7/16.
Meanwhile, a host of retailers posted solid quarterly results and helped bolster the sector. The S&P Retail Index was up 2%.
1:12 p.m.: Midday Musings: Market Holds Still, Getting Ready for the Fed
12:12 p.m.: Stocks Modestly Higher in Thin Trading
Jamie Farr: "The sun. Godot. A girl like you." $20,000 Pyramid contestant: "Pass." Dick Clark (to contestant): "How about, the outcome of the Federal Open Market Committee meeting?" Contestant: "Things that you wait for?" Farr (to contestant): "Duh. I'm sorry, that was so obvious.
"
Although traders are again mainly biding their time ahead of the expected 2:15 p.m. EDT report of the results of the FOMC meeting, a solidly positive tenor of trading has developed this morning. Much of whatever optimism that exited this morning in stocks was credited to the bond market's gain.
The price of the 30-year Treasury bond was lately up 15/32 to 91 14/32, its yield falling to 5.86%. Given the fixed-income market is more directly impacted by the
Fed 's
decree today -- whatever that may be -- equity traders were taking solace in the bond's positivism.
The
Dow Jones Industrial Average
was lately up 62 to 10,915, thanks as well to a huge boost from
Hewlett-Packard
(HWP)
.
H-P was up 7% after last night reporting second-quarter earnings of 88 cents a share, 8 cents ahead of expectations and up 34% from the prior year. Additionally, and perhaps more importantly, executives of the PC giant made bullish comments in the aftermath of the earnings report, as
TheStreet.com
reported in a
story last night.
Today,
Morgan Stanley Dean Witter
upped its price target on H-P while
Merrill Lynch
and
Credit Suisse First Boston
separately raised earnings estimates.
"H-P finally had a quarter where revenue, expenses, and orders lined up positively. Momentum is building," Merrill analyst Steve Milunovich wrote in a research note this morning. "Revenue growth of 3% wasn't terrific, but order growth of 10% was impressive. We are raising our EPS estimates by a nickel to $3.50 in
fiscal year 1999 and by a dime to $4.00 in
fiscal 2000."
Looking ahead to an expected announcement today by H-P about its e-service business, Milunovich wrote: "Putting meat on the Internet strategy bones is needed to take the story to the next level."
While H-P raced ahead and
IBM
(IBM) - Get Report
was up as well, tech stocks in general were trading without much oomph. The
Nasdaq Composite Index
was up 4 to 2566 while
TheStreet.com Internet Sector
index was up fractionally at 642.
The
S&P 500
, however, was up 5 to 1344 enjoying a boost from retailers and financials along with the aforementioned tech giants.
Among retailers,
KMart
(KM)
was up 7% after announcing plans to buy back up to $1 billion of its outstanding common stock. Also,
J.C. Penny
(JCP) - Get Report
was up 14% after posting first-quarter profits of 61 cents a share, down from 64 cents a year ago but well ahead of the 16-analyst estimate of 53 cents.
PaineWebber
upped its rating on the retailer to buy from attractive. The
S&P Retailing Index
was up 2%.
Energy stocks were a big drag on the S&P 500, falling along with crude prices, lately down 52 cents to $17.42 a barrel. The
American Stock Exchange Oil & Gas Index
was down 1% while the
Philadelphia Stock Exchange Oil Service Index
was off 2%.
The Russell 2000 was up 2 to 443 as the majority of stocks were winners thus far, but the dominate feature of trading continues to be the absence of trading (volume, that is).
In
New York Stock Exchange
trading, advancers were leading declining stocks 1,460 to 1,214 on 260 million shares. In
Nasdaq Stock Market
activity, gainers were leading 1,773 to 1,556 on 334 million shares.
--
Aaron L. Task
10:58 a.m.: Stocks Cling to Positive Bias
Despite its
FOMC
jitters, the market kept up its firm tone through midmorning trading.
Volume, however, was incredible light. Though they probably won't get a chance to do a thing from 2:15 p.m. EDT, when the Fed meeting ends, to the close, traders had plenty of time to get up and stretch their legs.
"We're seeing some strength in tech issues and some weakness in oil services," said Jim Herrick, managing director of trading at
Robert W. Baird
. "But other than that, everybody is just waiting for what comes out of the Fed meeting."
And even that strength in tech, and that weakness in oil services, was pretty muted. The
Morgan Stanley High Tech 35
was up only 7 to 1052. The
Philadelphia Stock Exchange Oil Services Index
was down only 1 to 71.
The
Dow Jones Industrial Average
was up 73 to 10,926.
Hewlett-Packard
, up 6, or 7%, to 94 3/4, accounted for 41 of those Dow points. The
S&P 500
was up 4 to 1344 and the
Nasdaq Composite
was down fractionally at 2561.
TheStreet.com Internet Index
was down 6 to 635, and the
Russell 2000
was up 2 to 444.
--
Justin Lahart
9:54 a.m.: FOMC Meeting Puts Damper on Stock Trading
Major market indices were a touch higher as the market awaits the results of today's
Federal Open Market Committee
meeting.
While the vast majority of analysts expect the Fed to leave short-term interest rates unchanged, there is uncertainty over whether or not the Fed will adopt a tightening bias.
The
Dow Jones Industrial Average
was up 30 to 10,884.
The
S&P 500
was up 1 to 1340. The
Nasdaq Composite Index
was up 3 to 2565. The
Russell 2000
was up 1 to 443.
TheStreet.com Internet Sector
index was down 3 to 638.
The 30-year Treasury bond was up 11/32 to 91 11/32, yielding 5.87%.
Most Up at Open -- NYSE
Charles Schwab (SCH) , up 2 13/16 to 116 3/4
: Schwab said it will go ahead with its 2-for-1 stock split after obtaining approval from shareholders.
Most Up at Open -- Nasdaq
Varlen (VRLN) , up 9 5/16 to 35 1/4
: Privately held
Amsted Industries
, a rail, truck and auto parts maker, launched a hostile bid for Varlen.
Most Down at Open -- NYSE
Royal Dutch Petroleum (RD) , down 1 7/16 to 55
.
Most Down at Open -- Nasdaq
Com21 (CMTO) , down 5 3/16 to 25 1/16
.
--
Brian Louis
