U.S. MARKET AVERAGES

Since opening, stocks have been sitting near the flat line with the three major averages struggling to find a solid ground and a definite direction. The lack of real market-moving news and three weeks of broad-based gains led to profit-taking and light trading only, accompanied by anticipation of another three weeks of heavy economic calendar.

Today’s market drivers have been merger-and-acquisition news and upbeat earnings news from retailers Lowe’s Cos and Wal-Mart.

Wal-Mart Stores reported third-quarter net income rose 3.8% to $2.4 billion, or 57 cents a share, with revenue up 10% to $76.25 billion, met analyst estimates. The world''s largest retailer projected Q4 between 82 cents and 86 cents a share.

Lowe’s Cos reported third-quarter profit rise of 81 cents a share vs. 65 cents a year ago, beating estimates of 77 cents. Sales increased by 16.5% with same-store sales up 6.2%.

A few important merger and acquisition deals were announced today. Georgia Pacific (GP: chart) said privately-held Koch Industries has offered $48 a share for the maker of branded paper goods, or $13.2 billion in cash and $7.8 billion in assumed debt. The offer is a 38.5% premium to Friday''s close.

Knight Ridder (KRI: chart) announced that its board has decided to explore strategic alternatives, including the possible sale of the company. The media firm stated that Goldman Sachs, its long-time financial advisor, is helping with the process.

Most of the leading sectors in early going have come off their intraday highs. The leadership belongs to the Materials sector, up 1.1% on the merger of Georgia Pacific with Koch-Industries. The retail sector is currently posting a gain of less than 1%. The energy group is now sitting just above the unchanged mark. Within the group, the natural gas sector is showing a decline, offset by gains in the oil and oil service spaces.

The gold sector has been edging lower during the morning and is now showing a decline of just over 1%. Drug, bank and utility stocks are showing modest weakness as well.

Georgia Pacific (GP: chart) has reached a 52-week high on its deal to be acquired by privately-held Koch Industries. Enterasys (ETS: chart) has also hit a new peak on an agreement to be taken private. Ameritrade (AMTD: chart) is adding to Friday''s gains, extending its high. Genentech (DNA: chart) is edging above resistance levels to set a fresh peak.

EchoStar (DISH: chart) is extending its 52-week low. Competitor DIRECTV (DTV: chart) is also moving to a fresh low. Education Realty Trust (EDR: chart) has broken to a new nadir on quarterly results.

MOVERS AND SHAKERS

Wal-Mart Stores Inc. (WMT: chart) reported third-quarter results that came above analyst expectations, excluding costs of $40 million connected to Hurricanes Katrina, Rita and Wilma. The company also offered a fourth-quarter outlook equal to recent Wall Street expectations. Wal-Mart’s stock gained 6%.

The retailer Lowe''s Cos. Inc. (LOW: chart) also posted earnings that came in ahead of analyst forecasts. The company’s shares added 3.9%.

The maker of branded paper goods Georgia Pacific Corp. (GP: chart) said it has received an offer of $48 a share, or $13.2 billion in cash and $7.8 billion in assumed debt, from privately-held company Koch Industries. Georgia Pacific’s shares soared almost 40%.

Starwood Hotels & Resorts Worldwide (HOT: chart) agreed to sell 38 of its properties to Host Marriott Corp. (HMT: chart) for nearly $4 billion, including debt assumption. Host Marriott said it expects the acquisition to lift earnings in 2006. Starwood shares lost 0.3% while Host Marriott''s stock added 1.1% on Friday.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished the session mixed. The Nikkei advanced in the morning but reversed course in the afternoon to close down 0.3% largely due to losses in the financial sector which overweighed gains in tech stocks. South Korea’s Kospi rose 0.1% and hit a fresh peak of 1,257,63. Among other regional markets, Hong Kong’s Hang Seng lost 0.8%, while Australia’s All Ordinaries climbed 0.7%.

European markets closed little changed, supported by resource stocks and oil companies which gained on the back of higher oil prices. Investors also digested a lot of deal talk. The German DAX 30 gained 0. 03%, the French CAC 40 rose 0.3%, and London’s FTSE 100 added 0.09%.

OIL, METALS, CURRENCIES

Crude oil prices briefly crossed $58 a barrel on weather forecast, predicting a cold snap in the US. Light sweet crude December delivery rose 57 cents to $58.10 before slipping to $57.95, up 42 cents. Heating oil traded at $1.75 a gallon. Gasoline added a cent to $1.50. Natural gas gained 2 cents to $11.93 per 1,000 cubic feet. London Brent advanced 58 cents to $55.47.