Tuesday, May 18, 1999

Break-even beckoned the major proxies at the close of a tentative trading day.
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Markets

Investors didn't do much in cautious trading while the

Federal Open Market Committee

was meeting in Washington today. And they didn't do much after the committee

announced that the

Fed

was adopting a tightening bias (see below). After going into a moderate selloff on the largely-expected news, major proxies spent the remainder of the afternoon heading back toward break-even like

monkeys to a monolith.

The

Dow Jones Industrial Average

lost 16.52 to 10,836.95; the

Nasdaq Composite Index

shed 3.49 to 2558.35; the

S&P 500

fell 6.17 to 1333.32; the smallish-cap

Russell 2000

eked out a gain of 1.10 to 442.45; and

TheStreet.com Internet Sector

index sank 1.92 to 639.36. Volume was light.

The big European indices finished higher, with the Paris

CAC

faring best, up about 1.5%. Asian markets were mixed overnight, as Hong Kong's

Hang Seng

added 38.5 to 12,627.1 and Tokyo's

Nikkei

slipped 42.4 to 16,373.62.

For more markets action and news, click

here.

Companies

Industrial parts maker

Amsted Industries

is set to start an unsolicited cash tender offer for rail-industry supplier

Varlen

(VRLN)

. Varlen, which has a poison pill plan in place, urged its shareholders not to act until its board has reviewed the offer. But investors had lately bid the stock up 10 3/16, or 39.5%, to 26 1/16.

Cleveland-based

Charter One Financial

(COFI)

is buying Chicago-based

St. Paul Bancorp

(SPBC)

in a $1.2 billion stock swap.

GTE

(GTE) - Get Report

is auctioning off its defense electronics operations for an expected price of more than $1.3 billion, according to

The Wall Street Journal

, which cited executives familiar with the deal. The paper wrote that leading bidders include

General Dynamics

(GD) - Get Report

,

Level 3 Communications

(LVLT)

and

Raytheon

(RTNB)

.

General Dynamics

(GD) - Get Report

, which yesterday agreed to buy

Gulfstream Aerospace

, plans to spend $3 billion more on acquisitions during the next few years, the

Journal

wrote, citing unnamed company officials.

J.C. Penney

(JCP) - Get Report

is planning to outsource its credit card business and issue a tracking stock for its

Eckerd

drugstore. J.C. Penney will distribute 80% of the Eckerd tracking stock to shareholders and sell the remaining 20% in an IPO.

PaineWebber

raised the department store chain to buy from attractive on the news.

Kmart

(KM)

set plans to buy back as much as $1 billion of its common stock. The company also said it expects to grow at a rate of 30 to 50 new stores a year.

Starwood Hotels & Resorts

(HOT)

is finally out of the gambling industry. The lodging giant has agreed to sell its

Desert Inn

hotel and casino to

Sun International Hotels

(SIH)

for $275 million in cash. Last month Starwood sold its

Caesars World

properties to

Park Place Entertainment

(PPE)

for about $3 billion.

For more news on companies and stocks, click

here.

Tech

Amazon.com

(AMZN) - Get Report

keeps branching out. The online retailer today bought a 35% stake in closely held

HomeGrocer.com

for $42.5 million.

Hewlett-Packard

(HWP)

last night reported second-quarter earnings of 88 cents a share, 8 cents higher than the 20-analyst

First Call

outlook and above the year-ago 65 cents. The PC maker also said it expects low double-digit sales growth during the second half of the fiscal year.

TSC

summarized the report in

a story last night.

Internet banking services firm

Security First Technologies

(SONE)

is buying its two most formidable competitors, Brussels-based banking software company

FICS

and customer service software firm

Edify

(EDFY)

, in two separate transactions valued at about $1.39 billion. The resulting entity will be called

S1

. Separately, personal finance software maker

Intuit

(INTU) - Get Report

is paying $50 million for a 2.5% stake in Security First.

For more tech news and commentary, click

here.

General News

The Fed's monetary policy committee met in Washington today. As expected, it made no change to short-term interest rates. But, also as expected, the committee announced that it was adopting a tightening bias.

TSC

covered the FOMC announcement in

a story today.

NATO

jets continued to pound Yugoslav targets, hitting an industrial area, a major highway and a military airport, according to Serbian media. Meanwhile, U.S. authorities released two Serb soldiers held as prisoners of war to be turned over to Yugoslav officials at the border today.

International

The speculation over which U.K. company

Warren Buffett

has bought into is over. A filing at Britain's

Allied Domecq's

headquarters showed Buffett holding 22.8 million shares, or 2.2%, of the U.K. distilling giant as of April 19. The stake is worth about $196.3 million based on yesterday's closing price.

Philips Electronics

(PHG) - Get Report

is paying $1.6 billion for 50% of the flat-panel display business of South Korea's

LG Group

.

For more international news and commentary, click

here.

Elsewhere

If you like

Ally McBeal

, then you'll love

Ally McBeal

. Leaving absolutely nothing to chance,

News Corp.

(NWS) - Get Report

unit

Fox Entertainment

(FOX) - Get Report

is preparing a sitcom spinoff of its popular one-hour dramedy. Same cast. Same characters. Some of the same footage. Seriously.

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