Looking for Follow-thru

Morning News of Note:

• Rate Hikes Ending: Fed Suggests It's Close to Ending Run of Rate Rises New Manufacturing Data Underpin Officials' View Of Waning Inflation Risk...Federal Reserve officials are less worried about inflation and thus may raise interest rates just one or two more times in the next few months, minutes of their December meeting suggest. "The number of additional [rate increases] required probably would not be large," according to a summary of the Dec. 13 meeting, released yesterday, with the customary three-week lag. (Text of the minutes) More clearly than the statement issued just after the meeting, the minutes signal that the Fed is nearing the end of a campaign that has raised the target for the federal-funds rate -- charged on overnight loans between banks -- to 4.25% from a 46-year low of 1% in June 2004, in 13 quarter-percentage-point steps. (Full Story) WSJ
• TRID GNSS TXN MU INTC: Low Inventories, High Capacity Bode Well for Chip Makers in '06...Investors in semiconductor companies had a rocky ride last year. Fears of the companies' having too much inventory gave way to talk of rampant demand. Now, investors see low inventory and high plant capacity. Consumers in the U.S. and abroad are snapping up personal computers, cellphones, digital cameras, digital television sets and MP3 players. India, China, Russia and the nations of Eastern Europe, among other emerging areas, have a particular appetite for electronics. This means analysts and investors are readying themselves for a strong 2006 in the semiconductor sector. The Semiconductor Industry Association, a San Jose, Calif., trade group, expects 2006 chip sales to rise by 7.9% to $245.5 billion. They were up 6.8% to $227.6 billion last year. (Full Story) WSJ
• Capital Spending Spree?: Capital-Spending Plays May Finally Pay Off...After a long lull, there are signs that companies are set to boost spending faster this year. The change could benefit many corporations, including Oracle Corp., Halliburton Co., Schlumberger Ltd. and Washington Group International Inc. Capital expenditures, which include all kinds of spending that enhance a business's long-term prospects, such as buying or upgrading buildings or equipment, have been growing at a rate of about 11% in the U.S. for more than a year, though that has been edging up a bit lately. (Full Story) WSJ
• FDC: Parent Weighs Abandoning Credit Card Processing Unit ...THE recent consolidation among issuers of credit cards has produced winners and losers. First Data might be in the latter camp. One of the two major processors of credit card accounts for banks, First Data has in recent years lost some prominent customers to its chief rival, Total System Services. First Data will announce by the end of the month whether it will sell its money-losing card-processing business, a sale that is expected to reap more than $3 billion. The company, based in Greenwood Village, Colo., would hold on to its profitable Western Union money-transfer business and its merchant-processing unit, which handles credit card transactions for retailers. (Full Story) NY Times
• GOOG: Google and Wal-Mart deny plans for low-priced Google PC -- Light Reading (435.23 ) Light Reading reports that GOOG and WMT are both denying reports that the two are planning to market low-priced, Google PCs via Wal-Mart stores, as first reported by the LA Times on Monday. "We have many PC partners who serve their markets exceedingly well and we see no need to enter that market," a GOOG spokeswoman told the publication. Story does note the possibility that GOOG may partner to buid some type of GOOG home device, but not a full-blown personal computer product.

Market Comments: After putting in a very strong showing yesterday, investors should now be on the lookout for some follow-thru. This would consist of additional high-volume rallies sometime late this week to early next week.

Retailers are still under pressure this morning (ugh), while tech and healthcare (biotech) are strong. Oil is down a bit to just below $63, and 10-year yields are flat at 4.37%. GOOG got another upgrade this morning ($550 target), and FFIV extends its breakout.

long FDC