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Wall St. looks ahead to Fed
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June 28, 1999: 6:47 a.m. ET
Goldman Sachs, Planet Hollywood among stocks that could be on the move
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NEW YORK (CNNfn) - A cautious Wall Street goes back to work Monday with the Federal Reserve's highly anticipated meeting on interest rates later in the week taking center stage.
Early indications suggested that U.S. stocks were set to open higher. S&P futures on the Globex exchange system were up 3.50 points to 1,332.50. That's about 5 points above fair value for the S&P futures -- a formula that takes into account interest and dividend effects -- which was estimated by London traders at 1,327.42. Typically, one point of difference between the futures index and fair value equals eight points on the Dow Jones industrial average as trading begins.
On Friday, the Dow industrials edged up 17.73 points to end the week at 10,552.56. The technology-heavy Nasdaq composite index fell 1.34 points to 2,552.65. The S&P 500 index finished nearly unchanged, down 0.47 at 1,315.31.
Wall Street -- as well as markets abroad -- is anxiously awaiting the Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday. Many economists expect the committee to raise short-term interest rates by a quarter percentage point following comments by Fed Chairman Alan Greenspan earlier this month that hinted at a "preemptive" strike to curb inflation.
In Asia Monday, the larger exchanges closed higher. Japan's Nikkei 225 closed up 1 percent at 17,610.58, a rise of 174.06 points, while the Hang Seng index finished up 0.4 percent.
In morning trading in Europe, bourses were mixed as excitement over corporate news was offset by nervousness ahead of the Fed meeting. In London, the FTSE 100 was down 10 points, or 0.2 percent, at 6,425.8. Germany's Xetra Dax extended its gains to trade up 28 points at 5,328.77, a rise of 0.5 percent, buoyed by Deutsche Telekom as it priced a new offering of nearly 300 million shares.
In the Treasury market, the price of the 30-year U.S. bond was up 2/32 for a yield of 6.13 percent. In the currency markets, the dollar was down 0.18 at 121.22 Japanese yen. The dollar stood at $1.0392 against the euro.
Before U.S. markets open, the Commerce Department early Monday will release personal-income figures and consumer spending figures for May. Economists surveyed by Reuters expect personal income to have climbed 0.5 percent, unchanged from April, and consumer spending is predicted to have risen 0.6 percent, stronger than a 0.4 percent increase in April.
In the news, Goldman Sachs Group Inc. (GS), flush with cash from its recent public offering, is reportedly on the hunt for acquisitions. The investment bank is considering a $6.5 billion bid for Anglo-American fund manager Amvescap, Britain's Mail reported over the weekend.
Meanwhile, online brokerage Ameritrade Holding Corp. (AMTD) late Friday announced it plans to raise $250 million through a public offering of its Class A common shares. In a registration statement with the Securities and Exchange Commission, the company did not specify how many shares would be made public.
In the telecom sector, long-distance carrier Qwest Communications International Inc. (QWST) said Sunday that its unsolicited takeover bid for Baby Bell carrier US West Inc. (USW) and long-distance company Frontier Corp. (FRO) should receive regulatory approval more easily than the earlier bid for the two companies by Bermuda-based Global Crossing Ltd. (GBLX). Meanwhile, the board of Frontier is expected to meet later Monday to consider Qwest's rival bid.
In other news, Japan's NEC Corp said early Monday that it has agreed to form a pact with Hewlett-Packard Co. (HWP) on a next-generation network server. Under the deal, NEC will deliver carrier-grade Internet Protocol (IP) servers based on Hewlett-Packard's OpenCall system for computer-based intelligent voice services.
In the energy sector, Wisconsin Energy Corp. (WEC) reportedly plans to announce later Monday that it has agreed to acquire Wicor Inc. (WIC) for $1.27 billion in cash and stock, according to The Wall Street Journal.
Citing people familiar with the matter, the newspaper said that both boards met over the weekend to approve the deal. A merger between the two Milwaukee-based utilities would create a major energy force in the Midwest with a market capitalization of about $7.5 billion.
Other stocks to watch Monday include tobacco and food powerhouse Philip Morris Cos. (MO), which has scheduled a meeting with analysts in New York.
Another stock that could be active is beleaguered restaurant chain Planet Hollywood International Inc. (PHL). The company's president and chief operating officer, William Baumhauer, resigned late Friday after just one year on the job. In a brief statement, the struggling theme restaurant said Baumhauer left to pursue other interests. Last month, CNNfn.com reported Planet Hollywood failed to make a $15 million bond-interest payment, as well as a $12.5 million bank-loan payment.
On the earnings front, No. 1 drug-store chain Walgreen (WAG) is scheduled to release its profit report Monday. Analysts polled by the First Call Corp. are forecasting a profit of 15 cents per share for its fiscal third quarter, compared with earnings of 13 cents a share for the same period last year.
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