Hey

Alan -- hurry it up already!

Tumbleweeds rolled through a chilly Wall Street as all eyes stay on the

Federal Reserve and few fingers stay on the trading trigger. Volume was pretty light as investors await the results of today's

Federal Open Market Committee meeting.

Today could be a monumental day for the slowing American economy. For the first time in a long time, the outcome of this meeting is subject to a wild array of speculation. Usually, the Fed's release of meeting results at 2:15 p.m. EST is anticlimactic -- an affirmation of Wall Street expectations. Many are predicting that the Fed will adopt a neutral bias today, which means that it feels the risk of inflation is balanced with the risk of recession, meaning that

a Fed cut is as likely as a Fed hike. Currently, the Fed has a tightening bias -- meaning it's more likely to hike rates because inflation is seen as a risk, as it has six straight times.

But others are predicting an even more dramatic move, that the Fed will slash rates now -- right now -- without changing the bias and waiting a month to hike rates in its January meeting. Over the past few days, people have tried to get a handle on the situation, with the

Wall Street Journal

and the

Washington Post

butting heads, each pimping contradictory stories about the Fed's next action.

This has muddied the speculative waters a whole lot, and investors seemed most content to wait and see what will happen.

And so, the

Dow Jones Industrial Average was just in the green after spending some of the morning in losses, while the

Nasdaq Composite Index traded higher on the back of rallying semiconductors. Still, both gains were rather slight, with the Comp getting the better percentage move.

The Dow rose 36 points to 10,681. Old-technology, a soda pop producer and paper were all the biggest gainers, helping to offset the nasty, terrible, awful, putrid day in

SBC Communications

(SBC)

.

The holy trinity of

Hewlett-Packard

(HWP)

,

IBM

(IBM) - Get Report

and

Intel

(INTC) - Get Report

pulled out a solid performance, adding a combined 48 points to the Dow's good side. These guys have been sent to hell lately as those technology-related warnings sent all three to 52-week-lows. Investors were pinning angel wings to the old-technology triumvirate for the second straight day.

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International Paper

(IP) - Get Report

and

Coca-Cola

(KO) - Get Report

were another pair of stocks that logged gains. IP's move came despite last night's earnings warning from

Mead

, maker of the

Trapper Keeper

,

the

elementary school supply to own in the late 1980s.

Lehman Brothers

helped raise the sector's profile in a positive way, initiating coverage on a handful of paper companies, starting them all at buy. In its recommendation to investors, it wrote: "Shares of paper companies have endured the worst bear markets versus the

S&P 500 since the Great Depression." Lehman recommended an overweight position in

Georgia-Pacific

(GP)

,

Louisiana-Pacific

(LPX) - Get Report

, Mead,

Sappi Limited

(SPP)

and

Weyerhaeuser

(WY) - Get Report

.

As a result, the

Philadelphia Stock Exchange Forest & Paper Products Index

rose 1%.

So, yeah. Okay. Fine. Eighteen of the 30 blue-chips were on the plus side, with three old-tech stocks rebounding again, while paper and pop crept higher. That's the good news, but the bad news was named SBC Communications, and it was very bad.

SBC Communications became the latest company to warn today, announcing that its earnings per share would grow between 11% and 14% next year, which is just south of the 14.5% growth picked by the folks at

First Call/Thomson Financial

. The second-largest local phone company also said that revenue would shrink as well, coming in with growth of 8% and 9%, lower than the 10% expected by analysts. And the fourth quarter is also looking a little sad, with earnings coming in between 56 cents and 58 cents a share, at the low end of the 58-cent analyst call.

SBC should probably stand for "sad, battered company." It fell 13.1% and added 45 points to the Dow's downside, easily the worst blue-chip.

The Comp stayed pretty strong, rallying after five straight days of losses. Semiconductors, one area hit hardest by all this preannouncing and talk of an economic slowdown, were rallying today despite a note from

Credit Suisse First Boston

that none-too-subtly-suggests that now is not the time to buy.

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The

Philadelphia Stock Exchange Semiconductor Index

, which tracks the chipmakers, rose 7.3%. This move lifts the SOX, as the chipmaker index is known, from 52-week-lows touched after a veritable who's who of the industry warned in recent weeks, including giants Intel and

Advanced Micro Devices

(AMD) - Get Report

. In fact, AMD was one of the major catalysts behind today's rally, announcing that its three-year supply contract with

Cisco

(CSCO) - Get Report

would be doubling its output. (AMD rose 7%.)

But some are still advising caution. Like CSFB analyst John Pitzer, who made some notes about the semiconductor equipment industry, telling investors that now is not the time to snap up those battered semiconductors. In a note to investors this morning, the analyst wrote, in all capital letters, no less: "We continue to believe that a better buying opportunity will present itself in

the first quarter of 2001."

Don't get much clearer than that, do you?

Market Internals

Volume was moderate to slightly active, with the advancers and decliners mixed and split.

New York Stock Exchange: 1488 advancers, 1264 decliners, 617 million shares. 141 new 52-week highs, 67 new lows.

Nasdaq Stock Market: 1716 advancers, 2007 decliners, 1 billion shares. 59 new highs, 280 new lows.

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Most Active Stocks

NYSE Most Actives

  • SBC Communications (SBC) : 13.6 million shares.
  • Compaq (CPQ) : 10.3 million shares.
  • Pfizer (PFE) - Get Report: 9.9 million shares.

Nasdaq Most Actives

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Sector Watch

Overall, drillers and oil service stocks have had a pretty good year, trading well above where they closed 1999. But, since hitting a better-than-two-year high in September, these guys have fallen from grace. The

Philadelphia Stock Exchange Oil Service Index

, which closely tracks the industry, fell 31% from Sept. 12's peak to its close on Nov. 30.

In the past few weeks, the drillers have been rebounding mightily, and that trend continued today after a pair of

Lehman Brothers

analysts issued a bullish joint call on the sector. In a note to investors this morning, James Crandell and Angeline Sedita said that spending in exploration and production, which is conveniently shortened to E&P hereafter, is set to increase 19.1% in 2001 vs. the same period in 2000.

That's a good thing for the drillers and oil service companies, which depend on this spending for income.

"The strong increases budgeted in worldwide E&P expenditures in 2001 support our broad-based stance on oilfield service and drilling stocks," the dynamic duo wrote. "We believe that the sector is in the early stages of a multi-year recovery and that the stocks are significantly undervalued versus their earnings potential as well as what we see unfolding next year in E&P expenditures. Overall, we view the sector as highly attractive at these price levels and are encouraged to see major oils come back in force, as well as continued strong spending levels by the independents."

Lehman's top oil service picks include

Schlumberger

(SLB) - Get Report

,

Weatherford

(WFT) - Get Report

,

Grant Prideco

(GRP)

and

BJ Services

(BJS)

. The drillers:

Transocean Sedco Forex

(RIG) - Get Report

,

Ensco International

(ESV)

,

Nabors Industries

(NBR) - Get Report

,

Santa Fe International

(SDC) - Get Report

and

Rowan

(RDC)

.

The Philadelphia oil service index rose 2.4% on the good news.

Biotechnology names had a huge day, with the

American Stock Exchange Biotechnology Index

gaining 3.5%, as the heavy-hitters swung for the fences.

Biogen

, something of an industry bellwether, was one of the biggest gainers on the Nasdaq Stock Market, with a jump of 9.5%.

Amgen

(AMGN) - Get Report

and

Protein Design Labs

(PDLI) - Get Report

followed suit.

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Bonds/Economy

Treasury prices are down, due to some profit taking and diminished expectations that the

Fed will lower interest rates at its meeting today. The

Federal Open Market Committee is expected to adopt a more balanced approach toward interest rates. Rather than concentrating solely on reining in inflation, it is expected to look out for recession as well. Such a posture may lead to lower interest rates next year if the slowing economy stalls completely.

The benchmark 10-year

Treasury note lately was down 14 at 103 29/32, lifting its yield to 5.229%.

In economic news, the

international trade

(

definition |

chart |

source

) report showed that the trade deficit narrowed to $33.2 billion in October from $33.7 billion in September. Imports and exports both fell.

The

BTM-UBSW Weekly Chain Store Sales Index

(

definition |

chart ) fell 0.6%, its third consecutive decline. The

Redbook Retail Average

(

definition |

chart ) found December sales running 0.2% behind November after three weeks, widely missing the target of a 1% gain. These numbers indicate that consumer spending is slowing.

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International

European indices were looking fine toward the end of their trading day.

The just-closed

FTSE

gained 49 to 6295, largely supported by telecommunications stocks after

Goldman Sachs

said a whole lot of nice things about the sector, including that it's undervalued and investors should increase their holdings. On the Continent, where indices were still trading, the Paris

CAC

jumped 71 to 5959, while Germany's

Xetra Dax

rose 88 to 6478.

The euro's been pretty closely watched in the last half year, as the fledgling currency dipped to record lows in the past few months, before bouncing back. The comeback, which recently brought the euro up to 12-week highs, was postponed for another day. The euro last traded at $0.8903, still unable to stay past the 90-cent barrier.

Asian markets have been closely tied to the performance of America's

Nasdaq Composite Index. And as the Comp goes, ending in losses for each of the last five sessions, so goes the

Nikkei 225

. Japan's major economic index fell 351.53 to 14,132.37. Hong Kong's

Hang Seng

was a contrarian, gaining 163.51 15,188.04.

And the yen, well, it last traded at 112.49. The dollar's been gaining in strength over the past few weeks.

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