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Strategies & Market Trends : the Women of SI -- Ignore unavailable to you. Want to Upgrade?

To: Rainy_Day_Woman who wrote (972)	5/16/2000 8:30:00 AM
From: Rainy_Day_Woman	Read Replies (1) \| Respond to of 1691

NEW YORK, May 16 (Reuters) - U.S. stocks were seen taking their cues on Tuesday from a report on inflation at the consumer level, which is the last economic report the Federal Reserve may look at before meeting on interest rates later in the session. April's Consumer Price Index data is due for release at 8:30 a.m. EDT (1230 GMT) with economists polled by Reuters expecting a 0.1 percent increase in the overall index. The core CPI, with volatile food and energy prices stripped out, is expected to rise 0.2 percent. ``The opening will be influenced by the CPI,'' said Larry Wachtel of Prudential Securities. ``Then there will be just watchful waiting ahead of the Fed meeting. If the CPI is stronger than expected, that will be taken negatively.'' The Standard & Poor's 500 index futures for June gained 4.10 points to 1,461.80 while the Nasdaq 100 index futures advanced 43.50 points to 3,603. Fed Chairman Alan Greenspan is widely expected to raise interest rates by an aggressive 50 basis points, which has been factored into market prices, analysts said. Analysts believe a half percentage point hike could set off a rally as investors would reckon the central bank is staying ahead of the curve in its fight against inflation. But a 25-basis point increase, which would be consistent with the five gradual boosts the Fed has made since last June, could have the opposite effect. ``We are on Fed watch,'' said Peter Cardillo, director of research at Westfalia Investments. ``The market has discounted a half percentage point hike. If we don't get a half percentage point hike, that will be a negative for the market. The real thing to look for is the language the Fed may use going forward.'' Although not as important as the CPI, figures on new home construction in April will also be looked at by Wall Street for signs of whether the Fed's previous rate increases have slowed down the economy. Housing starts are expected to have risen to an annualized rate of 1.645 million in April compared with 1.604 million in March, according to economists polled by Reuters. On Monday, the Dow Jones industrial average (^DJI - news) rose 198.41 points, or 1.87 percent, to 10,807.78 on the strength of its financial and industrial components. News of mergers and speculation about more of the same also drove the 30-stock index higher. Technology stocks swung into positive territory in the last hour of trading, with the Nasdaq composite (^IXIC - news) ending up 78.59 points, or 2.23 percent, at 3,607.65. Broader measures of the market all finished higher ahead of the much-anticipated Fed meeting. The Standard & Poor's 500 index (^SPX - news) rose 31.40 points, or 2.21 percent, to 1,452.36. The small-cap Russell 2000 (^RUT - news) gained 6.87 points, or 1.40 percent, to 497.81 and the Wilshire 5000 (^TMW - news) gained 286.53 points, or 2.18 percent, to 13,437.65. Bond prices pushed higher in early trading, with the 10-year U.S. Treasury note up 5/32, pushing the yield down to 6.43 percent from Monday's close of 6.45 percent. The 30-year bond rose 6/32, with the yield down to 6.14 percent from Monday's close of 6.16 percent. Among the stocks to watch on Tuesday, the chairman of Unilever Plc (quote from Yahoo! UK & Ireland: ULVR.L) said on Monday the Dutch-Anglo consumer products company does not now plan to launch a hostile bid for Bestfoods (NYSE:BFO - news), which earlier this month rejected its $18.4 billion takeover offer. Bestfoods closed at 64-1/8 on Monday. Drkoop.com Inc. (NasdaqNM:KOOP - news) on Monday posted a first-quarter loss that was slightly smaller than Wall Street's diminished expectations as the online provider of health-related information and services drew more visitors to its Web site. Drkoop.com closed at 2-7/16. America Online Inc. (NYSE:AOL - news) later this week is expected to launch a free version of its online service aimed at schools, a move that could boost usage of AOL during daytime hours, according to the Wall Street Journal. AOL closed at 58-10/16. Brocade Communications Systems Inc. (NasdaqNM:BRCD - news), a maker of switches and software for so-called storage area networks, on Monday posted better-than-expected profits for the latest quarter. Brocade closed at 114-15/16.