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Wall Street Holds Onto Solid Gains as Fed Decision Nears

Bonds are modestly lower, but the major equity indices are in the green ahead of the much-watched rate decision.

While the waiting may indeed be the hardest part, the stock market chose to forge ahead in active trading ahead of this afternoon's

Federal Open Market Committee

meeting.

Traders said the tone of the stock market was fairly bullish this morning as most of the focus seems to be on the ramifications of the $115 billion merger between

MCI WorldCom

(WCOM)

and

Sprint

undefined

.

Market participants said this morning that business had been fairly brisk ahead of the FOMC meeting.

"It seems as if the market has fully discounted that the

Fed

will leave rates alone," said Jim Herrick, managing director of trading at

Robert W. Baird

in Milwaukee. "We've seen a pretty nice bounce-back in the techs and the semis today."

TheStreet Recommends

To wit,

TheStreet.com Internet Sector

index was up 13, or 2%, to 669 and the

Philadelphia Stock Exchange Semiconductor Index

was soaring 3.5%.

While most of the bets are on the side of the Fed sitting on its hands in respect to interest rates, Herrick said the word on the Street is that the Fed will choose to move to a tightening bias. If the Fed chooses to leave unchanged its neutral policy directive for future moves, the stock market could be poised for a run up.

"We are expecting that the Fed will move to a tightening bias," he said. "If they choose to leave the bias as-is, the market could definitely be helped." Whatever the Fed decides, its announcement will hit the wires -- and

TheStreet.com

-- around 2:15 p.m. EDT.

Herrick also said that the overall tenor of the market was improved today following the MCI WorldCom-Sprint deal. He said that even the somewhat negative comments made this morning by

Federal Communications Commission

Chairman William Kennard on Reuters did not throw any cold water on the mood of the market.

While both WorldCom and Sprint were lower this early afternoon (WCOM was down 3 1/4, or 4.5%, to 68 3/8, and FON was off 11/16, or 1.1%, to 60 3/16), other names in the sector had improved. For example,

AT&T

(T) - Get AT&T Inc. Report

was recently quoted up 1 1/8 points, or 2.6%, to 44 7/8.

In other market news,

Trigon Healthcare

(TGH) - Get Textainer Group Holdings Limited Report

shares were up 4 1/16, or 17.7%, to 27 1/16, after the stock was upgraded this morning to buy from outperform by

Salomon Smith Barney

.

This morning, Trigon, a health-care services company, announced that it would exit the health insurance market in the rural Southeast by closing its

Mid-South Insurance

unit in April 2000 -- a move the company said would result in improved earnings for the rest of this year and into 2000, after a $49 million to $52 million after-tax charge during the third quarter.

The

Dow Jones Industrial Average

was lately up 62, or 0.6%, to 10,463 while the

S&P 500

was up 6, or 0.5%, to 1311.

The

Nasdaq Composite Index

was up 25, or 0.9%, to 2821 and the

Nasdaq 100

had risen 1.1%.

In

New York Stock Exchange

trading, 500 million shares had been exchanged while declining issues were edging advancers 1,491 to 1,310. In

Nasdaq Stock Market

action, 630 million shares traded while gainers led 1,863 to 1,738.

Bonds were modestly lower ahead of the Fed decision. The bellwether 30-year Treasury was off 5/32 to 100 9/32, its yield rising to 6.10%. (For more on the fixed-income market, see today's early

Bond Focus.)

Tuesday's Midday Watchlist

By Eileen Kinsella
Staff Reporter

(

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

)

Sprint slipped 11/16 to 60 3/16 after trading at a record 63, following news that MCI WorldCom forged a $115 billion deal to acquire the No. 3 long-distance carrier in the largest corporate buyout ever. MCI WorldCom upped its offer to rival

BellSouth's

(BLS)

higher bid. Shares of MCI WorldCom dropped 3 1/4 to 68 3/8, while BellSouth slipped 1/4 to 42 3/16. According to the agreement, MCI WorldCom said it would pay $76 in stock for each Sprint share, while each share of

Sprint PCS

(PCS)

would be exchanged for 1 new

WorldCom PCS

tracking share. After the merger, MCI WorldCom said Sprint CEO William Esprey would serve as chairman, while MCI WorldCom CEO Bernard Ebbers has been tapped as president and CEO.

TheStreet.com

wrote about what BellSouth's next move might be in a

story last night.

Separately,

Deutsche Telecom

(DT) - Get Dynatrace, Inc. Report

gained 7/16 to 42 1/2 after saying it would not enter a rival bid for Sprint and said it would sell its 10% interest in the company. Deutsche said it would rake in a $9.8 billion profit from the sale, revised upward from an earlier estimate.

Mergers, acquisitions and joint ventures

Ashland

(ASH) - Get Ashland Global Holdings, Inc. Report

added 1/4 to 34 after it said it is considering strategic options for its

Arch Coal

(ACI) - Get Albertsons Cos. Inc. Report

division, also up 1/4, to 12 3/8. The company said that a tax-free spinoff of the unit appears to be the most viable alternative, but it is in talks with a special committee of Arch Coal board members to discuss other solutions.

DTE Energy

(DTE) - Get DTE Energy Company Report

dropped 3 3/16,or 8.6%, to 33 13/16, a trading low for the year, after it unveiled plans to buy

MCN Energy

(MCN) - Get Madison Covered Call & Equity Strategy Fund Report

which was jolted 5 13/16, or 32.9%, to 23 1/2, in a cash-and-stock deal valued at $2.6 billion. The agreement calls for DTE to pay $28.50 for each share of MCN. DTE said, including MCN's debt, the acquisition is worth roughly $4.6 billion.

Boeing

(BA) - Get Boeing Company Report

inched up 1/8 to 43 13/16 after

The Wall Street Journal

reported that it inked a $2 billion agreement with

DHL

to change 44 jets into freighters, while providing ongoing maintenance for the international delivery service.

British Airways

(BAB) - Get Invesco Taxable Municipal Bond ETF Report

slipped 3/4 to 57 after saying it would provide 34 of the 44 Boeing 757-200 aircraft used in the deal.

Intel

(INTC) - Get Intel Corporation (INTC) Report

climbed 11/16 to 77 11/16 after saying it plans to acquire

IPivot

for $500 million.

iXL

(IIXL)

gained 3/8 to32 after saying it inked a $120 million stock deal to buy

Tessera Enterprises

.

Texas billionaire

Ross Perot's

Perot Systems

(PER) - Get Sandridge Permian Trust Report

lost 1/4 to 18 9/16 after saying it signed a $700 million, 10-year computer services agreement with

Harvard Pilgrim Health Care

. Perot Systems will help Harvard implement and manage computer systems, restructure its claims department and improve its technology infrastructure.

Pulitzer

(PTZ)

fell 1/2 to 45 1/4 after saying it would pay $180 million for the

Pantagraph

, a central Illinois daily newspaper, and a group of seven community newspapers known as the

Illinois Valley Press

.

Earnings/revenue reports and previews

Foundry Networks

undefined

soared 14 3/8, or 10.6%, to 150 3/4 after saying it expects to post third-quarter revenue between $36 million to $38 million, beating internal expectations. The company made its trading debut Sept. 28 at $25 a share.

Invacare

(IVC) - Get Invacare Corporation Report

moved up 2 1/8, or 11.4%, to 20 3/4 after it said it expects to meet analyst estimates for the third quarter, due to strong sales growth in Europe, Asia and Australia.

Micron Technology

(MU) - Get Micron Technology, Inc. (MU) Report

climbed 2 5/16 to 78 11/16 after last night posting a fourth-quarter loss of 7 cents a share, which included $600,000 from an issuance of unit stock and an income-tax benefit of $7.4 million. The loss was less than the 21-analyst estimate of an 18-cent loss and the year-ago loss of 43 cents.

Deutsche Banc Alex. Brown

and

Gruntal

raised their 2000 earnings estimates on the stock.

Selective Insurance

(SIGI) - Get Selective Insurance Group, Inc. Report

lost 1/4 to 18 9/16 after saying it would report third-quarter earnings between 8 cents and 14 cents a share, greatly missing the four-analyst estimate of 45 cents a share and the year-ago 43 cents.

Talbots

(TLB)

climbed 3 7/8, or 7.5%, to a record 49 9/16 after saying it expects to post third-quarter earnings between 56 cents and 60 cents a share, beating both the 14-analyst estimate of 51 cents and the year-ago 40 cents.

Offerings and stock actions

Partner Communications

, one of Israel's largest cellular telephone operators, said its board approved plans for an IPO in the U.S. and Europe.

Analyst actions

Goldman Sachs

initiated coverage on four automotive industry companies.

Ford

(F) - Get Ford Motor Company Report

added 1 1/8 to 52 3/8 after being placed on the recommended list.

General Motors

(GM) - Get General Motors Company (GM) Report

climbed 2 to 66 3/16,

Delphi Automotive Systems

(DPH)

gained 5/16 to 15 3/4 and

Magna International

(MGA) - Get Magna International Inc. Report

lost 7/8 to 49 1/4 after all three were rated market outperformers.

A.H. Belo

(BLC)

lost 1/16 to 18 3/4 despite

PaineWebber's

initiation of coverage with an attractive rating.

Computer Sciences

(CSC)

dropped 6 3/4, or 9.8%, to 62 after

Lehman Brothers

cut its rating to outperform from buy. Lehman said it is slightly more cautious in its revenue estimate because of a delay in an outsourcing deal with

Raytheon

(RTNA)

.

Electronics For Imaging

(EFII) - Get Electronics For Imaging, Inc. Report

added 3 3/4, or 7%, to 57 1/16 after

Morgan Stanley Dean Witter

upped its rating to strong buy from outperform.

Juniper Networks

(JNPR) - Get Juniper Networks, Inc. (JNPR) Report

jumped 5 3/16 to 187 5/8 after

Warburg Dillon Read

began coverage with a buy rating.

Medicis Pharmaceutical

(MRX)

was unchanged at 27 15/16 after PaineWebber started coverage with an attractive rating.

SunGard Data

(SDS) - Get ProShares UltraShort S&P500 Report

lost 3/16 to 19 15/16 after Morgan Stanley sliced its rating to neutral from strong buy. Meanwhile

BancBoston Robertson Stephens

, citing a low P/E multiple, raised its rating on the stock to buy from long-term attractive, despite SunGard's warning that third-quarter earnings will fall short of expectations.

Tribune

(TRB)

gained 7/16 to 51 1/8 after PaineWebber initiated coverage with a buy rating.

TV Guide

(TVGIA)

lost 1 9/16 to 44 1/16 after PaineWebber sliced its rating to attractive from buy.

Miscellany

American Express

(AXP) - Get American Express Company Report

added 4 9/16 to 142 1/8 after saying it plans to introduce an online trading and financial advisory service called

American Express Brokerage

this fall.

Ametek

(AME) - Get AMETEK, Inc. Report

climbed 1/16 to 20 3/16 after it announced plans to divide its electronic instruments division into two subunits. The division will be split into an aerospace and heavy vehicles unit and a process and industrial products group.

Wal-Mart

(WMT) - Get Walmart Inc. Report

climbed 1 3/8 to 51 11/16 after saying it plans to launch an aggressive expansion, including opening 40 new discount stores and 160 to 165 new supercenters. Separately, the company posted an October same-store sales increase of 7.2%, down from the year-ago 9.5% increase, while total sales were $15.7 billion, beating the year-ago $12.4 billion.

As originally published this story contained an error. Please see

Corrections and Clarifications.