Stocks extend rally after Fed decision
NEW YORK » An already soaring Wall Street extended its advance yesterday after the Federal Reserve left interest rates unchanged and assuaged some of the market's fears about the economy. The Dow Jones industrial average shot up more than 330 points, and all the major indexes had gains approaching 3 percent.
The market was enjoying a big rally before the Fed meeting as investors responded to a report that services sector activity fell less than expected last month and to another drop in oil prices that took crude as low as $118 a barrel.
The oil market also helped soothe some of Wall Street's worries -- crude fell as low as $118 a barrel before settling at $119.17, down $2.24 on the New York Mercantile Exchange. Oil has now fallen $28 from its July 11 high of $147.27 on widening expectations that the slumping U.S. economy will keep curbing consumer demand for gasoline and other petroleum products.
The Dow rose 331.62, or 2.94 percent, to 11,615.77.
Broader indexes also rose sharply. The Standard & Poor's 500 index added 35.87, or 2.87 percent, to 1,284.88, and the Nasdaq composite index rose 64.27, or 2.81 percent, to 2,349.83.
It was the Dow and S&P 500's biggest one-day gain since April 1, when the indexes kicked off the second quarter with a huge rally. This was also the Nasdaq's biggest point and percentage rise since mid-July.
The Russell 2000 index of smaller companies rose 16.90, or 2.40 percent, at 721.04.
Treasury bond prices fell after the Fed released its decision. The yield on the benchmark 10-year Treasury note, which moves opposite its prices, rose to 4.02 percent from 3.97 percent late Monday.
The dollar traded mostly higher against other major currencies, while gold prices fell.
Advancing issues led decliners by a 3 to 1 basis on the New York Stock Exchange, where consolidated volume came to 5.35 billion shares, up from 4.65 billion shares on Monday.
Early in the session, shares rose sharply after the Institute for Supply Management, the trade group of corporate purchasing executives, said its services sector index rose to 49.5 from 48.2 in June. Analysts surveyed by Thomson Financial/IFR predicted it would rise to 49.0.
Any reading below 50 signals contraction.
Cisco Systems Inc. reported late yesterday a 4.4 percent increase in net income for its latest quarter, beating analyst expectations by a penny a share. Shares closed up 66 cents, or 3 percent, at $22.65, then tacked on another 3 percent in after-hours trading.
Procter & Gamble Co. said its fiscal fourth-quarter profit jumped 33 percent, boosted by price increases, overseas sales and tax benefits. Shares rose $2.09, or 3.2 percent, to $67.91.
Archer Daniels Midland Co. reported a 61 percent plunge in fourth-quarter profit, but said revenues soared amid higher prices for commodities like wheat and corn. The stock fell $1.53, or 6 percent, at $25.87.