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Stimulus plan rallies markets
©New York Times
© St. Petersburg Times, NEW YORK -- Stocks marched higher in a broad rally Wednesday as investors' sentiments were buoyed by President Bush's hefty plan to revive the nation's economy, which appeared headed toward recession after the terrorist attacks last month. Technology stocks -- helped in large measure by heartening words from the top executive of Cisco Systems -- led the market's rise, with the Nasdaq Composite Index surging nearly 6 percent, its biggest gain in more than five months. Other broad market indicators had retraced some of their losses in recent days, but the Nasdaq had been the laggard before closing some of that gap Wednesday. The Nasdaq Composite Index jumped 88.48 points, or 5.93 percent, to 1,580.81. That was the biggest gain since April 18, when it rose 8.12 percent. The Dow Jones Industrial Average gained 173.19 points, or 1.93 percent, to 9,123.78. The broader Standard & Poor's 500 stock index rose 20.95 points, or 1.99 percent, to 1,072.28. The president said he would ask Congress to approve an economic stimulus plan of $60-billion to $75-billion for 2002, on top of the $40-billion in emergency spending and $15-billion in airline assistance already authorized. The plan would include tax cuts for businesses and individuals and investment tax credits, as well as additional spending. "It's helping resolve some issues," said Steve Massocca, president and head of Trading Pacific Growth Equities. "It's pointing to something that will probably lead people to believe that it's going to be helpful to corporate profits, which is a concern. People are looking to that and seeing a hopeful sign." Investors' hopes were also raised by the Federal Reserve, which cut its benchmark interest rate by half a percentage point Tuesday afternoon, for the ninth reduction this year. The central bank has now cut the target rate on short-term loans between banks by 4 percentage points this year to 2.5 percent, its lowest level since the Kennedy administration. At the front of the market rally Wednesday, Cisco surged $2.47, or 21.5 percent, to $13.95, after John Chambers, the company's chief executive, said he was comfortable with analysts' estimates for the company's first-quarter sales and earnings per share. "Basically, it was Cisco," said Peter Cardillo, chief strategist and director of research at Westfalia Investments. "That basically set the stage for the tech stocks to rally in the strong way. It's good news. Feeling comfortable with those analysts' estimates means that things are not getting worse but are perhaps beginning to stabilize." Software companies also posted significant gains Wednesday. Microsoft rose $3.18, to $56.23; PeopleSoft jumped $3.14, to $23.68; Siebel System rose $2.55, to $17.61; Veritas Software rose $3.59, to $23.49, and Check Point Software, which makes Internet security programs, gained $3.14, to $25.99. Other technology issues rose as well. IBM rose $3.18, to $96.95; Maxim Integrated climbed $4.67, to $38.07; Flextronics International gained $2.33, to $18.28, and Dell Computer rose $2.10, to $20.64. Semiconductor stocks surged, with Linear Technology up $3.97, to $34.07; Xilinx up $3.92, to $26.72, and Intel up $1.71 to $21.23. This week, companies are in the heart of preannouncement season, when they disclose whether they expect to meet forecasts for their financial results. Companies ranging from clothing retailers to hotel companies said Wednesday that they would not meet Wall Street's estimates for profits. Stocks at first fell Wednesday morning after Nortel Networks and Eli Lilly said they would miss their previous earnings forecasts. But lifted in part by the market's rally, Nortel Networks edged up 25 cents, to $5.54. Late Tuesday, the company said it would trim its work force by 20,000 and post a third-quarter loss of $3.6-billion because of a decrease in sales. But Eli Lilly fell $3.62, to $79.25, after it warned Wednesday morning that it would fall short of Wall Streets expectations for the fourth quarter. The company said a decrease in domestic sales of Prozac, an anti-depressant, was responsible for its shortfall. Among retailers, Tiffany said it would also miss profit forecasts for the remainder of the year because of a decrease in sales. But the company's stock jumped $2.82, to $23.58. Despite previously admitting weakness, other retailers showed strength as well. Williams-Sonoma rose $4.85, to $27.05; Abercrombie & Fitch rose $2.50, to $20.50, and Ethan Allan rose $3.79, to $31.04.
 © 2006 • All Rights Reserved • St. Petersburg Times
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From the Times Business report
From the AP
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