waiting for the fed statement

U.S. Stocks Rise Before Fed Meeting; Shares of Merck Decline
Dec. 12 (Bloomberg) --

When the Fed's policy makers meet tomorrow, they may stop saying rates are low enough to stimulate the economy, according to more than half of the Wall Street firms trading directly with the central bank. The Fed will raise its benchmark rate for the 13th time in a row, according to the firms.

``The Fed will be done in another couple of months with the interest-rate increases,'' said Richard Drake, who manages the $1.3 billion ABN Amro Growth Fund in Chicago. ``We're still looking pretty positive for 2006.''

Energy stocks rallied as crude oil climbed to a five-week high. Burlington Resources Inc., a natural-gas producer, soared on a report that ConocoPhillips will acquire the company for $30 billion.

The Standard & Poor's 500 Index added 1.06, or 0.1 percent, to 1260.43. The Nasdaq Composite Index gained 4.22, or 0.2 percent, to 2260.95.

Merck fell, weighing on the Dow Jones Industrial Average, after a federal judge declared a mistrial in the third case involving its Vioxx painkiller. The Dow lost 10.81, or 0.1 percent, to 10,767.77.

Interest Rates

Tomorrow, the Federal Open Market Committee will vote to lift the overnight bank lending rate a quarter point to 4.25 percent, the highest since April 2001, according to all 98 economists surveyed by Bloomberg News. The FOMC has boosted rates at each meeting since June 2004.

Twelve of the 22 primary dealers of U.S. government securities expect the Fed to stop saying interest rates provide ``accommodation,'' meaning they are low enough to spur economic growth. Fifteen also forecast that the central bank will say rates are going to keep rising at a ``measured'' pace.

``What the market's concerned about is what's going to happen tomorrow with the Federal Reserve and what kind of language we're going to hear coming out of the Open Market Committee,'' said Giles Knight, who helps manage $81 billion at Gartmore Global Investments in West Conshohocken, Pennsylvania.

U.S. Treasuries fell, pushing yields higher, amid the speculation about further increases. The yield on the benchmark 10-year note rose 3 basis points, or 0.03 percentage point, to 4.55 percent, according to bond broker Cantor Fitzgerald LP.

A gauge of financial stocks declined 0.3 percent and was the biggest drag on the S&P 500 among 10 industry groups. The group accounts for 21 percent of the stock index. Citigroup Inc., the biggest U.S. financial-services company, slid 23 cents to $48.68.

`Linchpin'

``You really need to get some of the major sectors moving to get the market moving'' besides energy, said Les Satlow, who helps manage $325 million at Cabot Money Management in Salem, Massachusetts. ``Financials are the linchpin for whether the market can really make another leg up.''

Five stocks rose for every four that fell on the New York Stock Exchange. About 1.41 billion shares changed hands on the Big Board, 15 percent less than the three-month daily average.

Crude oil for January delivery surged 3.2 percent to $61.30 a barrel in New York on signs colder weather in the U.S. will increase heating-oil demand and as OPEC hinted at a meeting in Kuwait that it may cut oil production in 2006.

Burlington Resources

Burlington Resources jumped $6.41, or 8.4 percent, to $82.50 for the top gain in the S&P 500 after the Wall Street Journal said ConocoPhillips may acquire the natural-gas producer for more than $30 billion. With Burlington, ConocoPhillips would become the No. 2 U.S. gas producer behind London-based BP Plc., up from sixth. The paper cited people familiar with the matter. ConocoPhillips lost $1.82 to $61.25.

Burlington spokesman James Bartlett and ConocoPhillips spokesman Sam Falcona declined to comment.

A gauge of energy companies rose 1 percent for the best performance among 10 S&P 500 industry groups.

Williams Cos. added 91 cents to $23.65. The largest U.S. natural-gas pipeline owner was recommended by CNBC host Jim Cramer on his ``Mad Money'' show after Williams received permission to drill more wells on one of their prime sites in Colorado. That gives the company a chance to expand its field and boost its probable reserves, Cramer said.

Merck

Merck slumped 72 cents, or 2.5 percent, to $28.41 for the worst performance in the Dow average. Merck was coming off its first win of a Vioxx lawsuit after a New Jersey jury found last month that the drug didn't cause a postal carrier's heart attack. A second victory would have bolstered Merck's argument that the drug didn't harm short-term users and reduced pressure on the company to settle nearly 7,000 Vioxx suits.

Apple Computer Inc., the maker of Macintosh personal computers, gained 58 cents to $74.91. Apple may present a Macintosh version with Intel Corp. chips in January, six months earlier than planned. Seven analysts surveyed by Bloomberg expect Chief Executive Officer Steve Jobs to do so at Macworld Expo next month, instead of waiting until June.

Analysts at Credit Suisse First Boston lifted their share- price forecast by 46 percent to $82, citing potential sales growth from Apple's introduction of computers using Intel chips.

Shares of Intel increased 54 cents to $26.62.

Google

Google Inc., the most-used Internet search engine, rose $3.41 to $412.61. CSFB boosted its 12-month share-price estimate by 19 percent to $475, saying ``momentum behind the online advertising market is accelerating'' and will lift Google's revenue.

Separately, Google is among 12 stocks that will be added to the Nasdaq-100 Index. The rebalance will require funds that track the index to buy the additions. A total of $121 billion is linked to the Nasdaq-100, according to Nasdaq Stock Market Inc.

Wal-Mart Stores Inc., the world's largest retailer, climbed 60 cents to $48.68. December U.S. same-store sales are rising within its forecast, the company said on Dec. 10. Wal-Mart has predicted a December gain of 2 percent to 4 percent from a year earlier at its U.S. stores open at least 22 months.

Not all drug stocks declined. Pfizer Inc., the world's No. 1 drugmaker, reversed earlier losses to add 34 cents to $20.94. The company said it is raising its quarterly dividend 26 percent to 24 cents a share, citing ``strong cash flow,'' and plans to buy back more stock next year.