Buying frenzy
on Wall Street

The Dow surges
399 points and the
Nasdaq rockets 157

By Amy Baldwin
Associated Press

NEW YORK >> An unexpected interest-rate cut and a stream of positive earnings news sent stock prices soaring today, with the Dow Jones industrials leaping nearly 400 points and the Nasdaq composite barreling back above 2,000.

Better-than-expected first-quarter profits already had sent stocks sharply higher in mid- morning trading when the Federal Reserve announced it was lowering interest rates by 0.5 percentage point. The cut, the fourth this year, gave investors hope that the economy and earnings will rebound by the end of 2001.

The Dow Jones industrials soared 399.10, or 3.9 percent, to 10,615.83, the average's third-largest daily point gain. The blue chips gained as much as 470 points before settling back before the close.

The Nasdaq rose 156.22, or 8.1 percent, to 2,079.44, reaching the 2,000 level for the first time since March 15 and posting its fourth-best daily percentage gain.

The market's broadest measure, the Standard & Poor's 500, advanced 46.35, or 3.9 percent, to 1,238.16.

Advancers nearly doubled decliners on the New York Stock Exchange, with 2,060 up, 1,053 down and 191 unchanged. Volume was 2.2 billion shares.

The NYSE composite index jumped 17.24 to 626.02, the American Stock Exchange composite index rose 0.78 to 900.58 and the Russell 2000 index gained 10.93 to 466.51.

The Treasury's 10-year note rose 21/32 to 98 30/32; its yield fell 9 basis points to 5.14 percent. The 30-year bond rose 1/4 to 96 1/8; its yield fell 2 basis points to 5.64 percent.

The market's early, earnings-inspired gains were not a surprise -- stocks have been moving higher this month, including the Nasdaq's four-day winning streak last week, its first such advance since early September. Wall Street has been encouraged by the market's recent ability to move higher despite poor earnings reports, such as a profit warnings this week from Cisco Systems and Hewlett-Packard.

Investors also expected stocks to recover somewhat after the major indexes suffered their worst first quarter in decades, when even the Dow industrials -- considered the safest havens on Wall Street -- slipped briefly into bear market territory.

However, the rate cut was quite unexpected. Analysts said the market was pleased by the Fed's move because it was bigger and sooner than expected, coming ahead of the Fed's mid-May meeting.

"It energized the market right on the spot," said Alan Ackerman, executive vice president for Fahnestock & Co.

"The market was really waiting for a catalyst, and this Fed move appears to have been just that."

But analysts cautioned that the market remains vulnerable after months of losses and volatility and that it was too soon to tell if today's momentum would last.

"You have to take a wait-and-see attitude," said Ricky Harrington, a technical analyst for Wachovia Securities.

The Fed's move came shortly after the Conference Board reported that its Index of Leading Economic Indicators, used as a forecasting tool, fell during March, signaling continued weakness in the economy.

Intel rose $5.24 to $31.28. The No. 1 chipmaker reported first-quarter sales yesterday that beat reduced forecasts and said second-quarter sales will be better than some analysts expected as business from personal-computer makers picked up in March.

IBM, the No. 1 computer maker, rose $6.53 to $106.23. After exchanges closed, IBM said first-quarter profit rose to 98 cents a share from 83 cents a year earlier, which met analysts' estimates.