NEW YORK (CBS.MW) - U.S. stocks look set to post modest gains Monday, but any rise is likely to face the headwinds of an expected change in the Fed's interest rate outlook, as well as uncertainty about tomorrow's big Hewlett Packard/Compaq merger vote.
U.S. big caps were bid higher in speculative pre-open trading Monday as gains in Europe's tech and telecom sectors lent support to the bulls.
Nasdaq futures stood almost 1 percent higher at 1,517, while S&P futures rose a more modest 0.2 percent to 1,169.
Markets see Fed bias shifting to neutral
Investors and economists will be scrutinizing every word of the statement that will be released at about 2:15 p.m. Tuesday from the latest Federal Open Market Committee meeting for any hints about what the Fed will do next.
Most market watchers are expecting the Fed to change its risk assessment to a more neutral reading as a prelude to rate hikes later this spring or summer.
Lehman Bros. (TICKER: LEH ) says it is still too early to reposition equity portfolios to accommodate interest rate hikes by the Federal Reserve, and is therefore leaving its weighting of cyclical stocks at 39 percent, above the benchmark 28 percent.
Data watch and H-P watch
This week's economic calendar includes releases across a broad swath of segments.
Among the numbers on the agenda: the January trade numbers, February housing starts and building permits, the February consumer price index, weekly initial claims, February leading economic indicators and the March Philly Fed Index.
Aside from the Fed meeting, next Tuesday will see the pivotal shareholder vote that'll determine whether Hewlett-Packard will snare Compaq Computer in what would be the largest technology merger in history. The votes will be hand-counted and the outcome is still too close to call.
Stocks moving before the open
Hewlett-Packard ( HWP : news , chart , profile ) and Compaq Computer ( CPQ : news , chart , profile ) were each up some 20 cents in euro trading of U.S. shares as the market awaits the "too close to call" shareholder vote on the $20.5 billion deal.
Among the few news-triggered moves, shares of Micron Technology were up close to $1 at $34.33 in Germany, according to data from Nasdaq-Live. The U.S. company, once again, has been seen as nearing completion of a deal to purchase assets from rival Hynix Semiconductor in South Korea. See more from weekend press reports.
JP Morgan Securities lowered its estimates on the telecom equipment sector amid concerns that capital spending by customers is lower than anticipated.
In the news
A drug-coated stent developed by Johnson & Johnson (NYSE: JNJ - news) continues to prevent arteries from becoming reclogged after one year, researchers said Sunday. Shares of Johnson & Johnson rose 22 cents to $64.60 on Friday.
Qwest Communications (NYSE: Q - news) said it has amended its $4 billion credit facility, and now believes it has enough cash and borrowings available to fund its capital and operating expenditures and pay its debt maturing in the next twelve months. The broadband company added that it continues to target being cash flow positive in the second quarter of 2002.
The Dow Jones Industrial Average ascended 90.09 points, or 0.9 percent Friday, to 10,607.23.
The Nasdaq Composite sprinted 14.16 points, or 0.8 percent, to 1,868.30 while the Nasdaq 100 Index rose 18.22 points, or 1.2 percent, to 1,495.41.
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