THE DAY AHEAD: Market Preview

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Techs should settle down Thursday following the buoyant response to the better-than-expected consumer price index report. Look for stocks to hold their breath for interest rate hints from the Fed. Asia and Europe gained, but the Dow is set to slip.


Expect the market to cool off as investors await clues to the Federal Reserve's prerogative when Alan Greenspan's testifies before the Joint Economic Committee on monetary policy and the economy Thursday.

Though the CPI data weakened speculation that the Federal Reserve will raise interest rates, economists predict the Fed is still on track to raise rates one-quarter of a percentage point at its two-day policy meeting at the end of the month.

"This will certainly heat up the debate at central bank," said Anthony Chan, chief economist at Banc One Investment Advisors, of the CPI's suggestion that the 0.7 percent jump in April was an aberration. "It absolutely makes Greenspan's announcement as anticipated as the next Star Wars movie," he said yesterday in a conference call.

But the Fed is predicted to act on the possibility of future inflation, not current inflation, economists agreed.

On Wednesday, the Dow Jones industrial average stormed up 190 points to 10.784.95 while the Nasdaq shot up 103 points to close at 2,517.85. The Inter@ctive Week @Net Index rose 22.2 to 284.

Among techs, expect Adobe Systems Inc.(Nasdaq: ADBE), Autobytel.com Inc.(Nasdaq: ABTL), Qwest (Nasdaq: QWST) and Micron Technology Inc.(NYSE: MU) to be Thursday's active issues.

Look out below for shares of Compaq Computer Corp. (NYSE: CPQ), Western Digital (NYSE: WDC) and Exabyte (Nasdaq: EXBT). All three issued profit warnings.

At the Bell

The Dow Jones industrial average is set to open 28 points lower. The Standard & Poor's 500 index for June futures contracts was down 3.5 points to 1339 at 7:45 a.m. EST in 24-hour electronic trading.


Trading in Asia followed the U.S. upswing. The Nikkei 225 jumped 1.51 percent at 17,470. Singapore's Strait Times index rose 0.66 percent to 2,057 and Hong Kong's Hang Seng climbed 1.92 percent to 13408.


European markets were also on the rise.

London's FTSE 100 jumped 0.83 percent to 6,504 the CAC 40 in Paris gained 1.44 percent to 4,481 and the Xetra DAX in Frankfurt was up 0.72 percent to 5,381 at 6:45 a.m. EST.

Reuters contributed to this report.