Closing Market Report
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Wall Street advances after oil prices drop
By Tim Paradis
Associated Press
NEW YORK » Wall Street logged another winning day yesterday as a drop in oil prices and a better-than-expected profit report from technology bellwether
Cisco Systems Inc. helped corral the market's worries about the financial sector.
Oil extended its slide into a third day. Light, sweet crude settled down 59 cents at $118.58 a barrel on the New York Mercantile Exchange after the government reported a jump in domestic inventories; oil is now down about $30 from its record high of $147.27 reached July 11.
Cisco rose more than 5 percent after the networking equipment company late Tuesday posted earnings that narrowly topped Wall Street's forecast. The report helped buoy sentiment and lifted the technology-laden Nasdaq composite index.
The well-being of Freddie Mac and sister company Fannie Mae is a big concern on Wall Street as the government-chartered companies hold or back nearly half of all U.S. mortgage debt.
Lincoln Anderson, chief investment officer and chief economist at LPL Financial in Boston, said that while the troubles in the financial sector aren't over, investors are somewhat emboldened by the slide in oil and signs of strength in the dollar.
"I think we're getting into better territory. I've been very much focused on the fall in oil prices as a necessary ingredient to avoid recession. To the extent that we're getting that that's just great," he said.
The Dow Jones industrial average rose 40.30, or 0.35 percent, to 11,656.07, after having been down nearly 100 points early in the session. The gain brought the Dow's two-day advance to about 370 points. The blue chips soared Tuesday on the drop in oil, and also in response to a reassuring economic statement from the Federal Reserve.
Broader stock indicators also advanced again yesterday. The Standard & Poor's 500 index rose 4.31, or 0.34 percent, to 1,289.19, and the Nasdaq rose 28.54, or 1.21 percent, to 2,378.37.
Bonds slipped as more investors left the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 4.05 percent from 4.02 percent late Tuesday.
Advancing issues outnumbered decliners by about 9 to 7 on the New York Stock Exchange, where consolidated volume came to a relatively light 4.77 billion shares, compared with 5.35 billion Tuesday.
The Russell 2000 index of smaller companies rose 4.86, or 0.67 percent, to 725.90.
The dollar rose to eight-week highs against the euro and seven-month highs against the yen, while gold prices fell.
Cisco rose $1.28, or 5.7 percent, to $23.93 after its report. Microsoft Corp., one of the 30 stocks that make up the Dow, rose 81 cents, or 3.1 percent, to $27.02.
But financials remained a weak spot. Freddie Mac fell $1.55, or 19 percent, to $6.49, while Fannie Mae fell $2, or 15 percent, to $11.60.