--DJIA up 16; Nasdaq 6; S&P; 500 up 3 --Chip stocks higher; financial shrs slip

By Rebecca Byrne, U.S. stocks hovered around unchanged levels in midday trade, with little economic or earnings news to inspire investors. A trio of mergers in the media, semiconductor and biotech arenas sparked some selective buying, however. The Nasdaq was last up 6, or 0.18%, to 3796 and the Dow Jones industrial average was up 16, or 0.14% to 11,042. The S&P; 500 was up 3, or 0.24%, to 1475.

* * * "We're deep into the August vacation season; it's just very quiet," said Brian Conroy, trader at J.P. Morgan. "Mondays and Tuesdays have been quiet recently, but this week they'll be even more so in anticipation of the (consumer price index)." The CPI--the last major economic report before the Fed meets Aug. 22--is due Wednesday. On the Dow, Hewlett-Packard (HWP), Home Depot (HD) and Eastman Kodak (EK) led the gainers. Home Depot, which rose 3% to 57 3/4, will release earnings Tuesday; H-P, which added 1% to 111 7/8, will report on Wednesday. A total of 25 S&P; 500 companies will release earnings this week, including 14 retailers. 3M (MMM), J.P. Morgan (JPM) and IBM (IBM) led on the downside. "The break through the 10,850 level last week gives the DJIA a minimum projected target of 11,400 and will likely even be higher to the all-time high level of 11,750," said Robert Dickey , chief technical manager at Dain Rauscher. But Dickey said the Nasdaq needs to rally beyond 4100 to trigger the same bullish signal. Volume on the NYSE hit 381 million shares with advances beating declines by 1,438 to 1,214. Despite the thin volume and general lethargy in the market, shares of Chris-Craft Industries Inc. (CCN) rose 27% to 78 13/16 after News Corp. (NWS) said it would acquire the company and its two main units, BHC Communications Inc. and United Television Inc., in a $5.35 billion deal. News Corp. fell 1% to 49. Broadcom Corp. (BRCM) rose 3% to 233 3/8 after agreeing to buy optical communications chip maker NewPort Communications Inc. in a stock deal worth $1.24 billion. PathoGenesis Corp. (PGNS) rose 16% to 37 31/32 after Chiron Corp. (CHIR) said it would acquire the company for $38.50 per share in cash, or about $700 million. Chiron fell 8% to 44 3/4. In addition, semiconductor stocks were mostly higher Monday, with shares of Micron Technology (MU) up 5% to 79 7/8 after Salomon Smith Barney reiterated its buy rating on the stock. Still, the major averages were unable to make any serious headway, and weakness in computer hardware stocks weighed on the Nasdaq Composite index for a second straight session. Dell Computer (DELL) fell another 2% to 36 13/16 after a 10% drop Friday. "The stock market is currently bugged about a 'profit air pocket,' but we think the concern is overdone," said Jeffrey Applegate, market analyst at Lehman Brothers. "Double-digit earnings growth this year and next seems likely; we think the Fed will help foster this by letting the economy grow at potential." Volume on the Nasdaq hit 591 million shares, with declines beating advances by 1,928 to 1,769. In the bond market, the 30-year Treasury fell 7/32, pushing its yield up to 5.720%.

CORPORATE NEWS Peco Energy Co. (PE) and Sithe Energies Inc. formed a definitive pact under which Peco Energy Co. will acquire 49.9% of Sithe North America. Peco rose 2% to 48 3/4. Toys R Us (TOY) posted a second-quarter profit of 1 cent per share, beating First Call's breakeven view. Shares rose 5% to 18 1/4. Lowe's (LOW) reported a second quarter profit of 73 cents per share, meeting First Call estimates. Shares added 4% to 45 3/4. Thousands of technicians and operators for Verizon Communications (VZ) entered their second week on strike, leaving consumers in the Northeast and Mid-Atlantic U.S. states saddled with more delays in telephone repairs and installations. Verizon rose 1/8 to 41 5/8.

ECONOMIC NEWS U.S. business inventories rose for the 18th consecutive month in June, climbing 0.9%. The rise in inventories at factories, wholesalers and retailers was above the consensus estimate for a 0.6% gain. Inventories at auto dealers surged 2.7%. Business sales also

rose 0.9%, leaving the inventory-to-sales ratio at 1.32 in June. End ---------------------------------------------------------------------

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US CREDIT REVIEW: BONDS UP 5/32 AFTER RETRACING EARLY LOSSES
Long-term Treasury prices managed to close slightly higher Monday after the bond market spent most of the session erasing the losses posted overseas and in early U.S. trading. In spite of the comeback, traders were generally somewhat bearish. Full Story

UK STOCKS REVIEW: UP AS TECH, TELECOMS, INSURANCE ISSUES FIRM
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GERMAN STOCKS PM: DAX AT INTRADAY LOWS, FOLLOWING NASDAQ DOWN
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WHOLESALE INVENTORIES ROSE 0.9 PERCENT
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US DEBT FUTURES ALERT: SEP BONDS STEADY BUT RANGE-BOUND
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