Economic report,
Cisco outlook lift stocks

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By Lisa Singhania
Associated Press

NEW YORK >> Wall Street sent stocks higher again today, encouraged by a better-than-expected regional Federal Reserve report and growing anticipation of an interest rate cut next week.

The gains faded as the session wore on, though. Analysts attributed the pullback to the fact that many companies, particularly in the tech sector, still can't say when their business will improve.

"Nothing fundamental has changed. This is more or less bargain hunting," said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum.

The Dow Jones industrial average closed up 68.10 at 10,715.43, falling back from a gain of as much as 112 points. The advance extended a 50-point gain yesterday.

Broader stock indicators were higher for a third straight session. The Nasdaq composite index rose 27.50 to 2,058.74, while the Standard & Poor's 500 index gained 13.90 to 1,237.04.

Advancers led decliners 8 to 7 on the New York Stock Exchange, with 1,736 up, 1,359 down and 192 unchanged. Volume was 1.47 billion shares vs. 1.17 billion yesterday.

The NYSE composite index rose 5.56 to 631.08, the American Stock Exchange composite index fell 6.69 to 906.97 and the Russell 2000 index rose 1.96 to 497.82.

The Treasury's 10-year note rose 6/32 to 98 21/32; its yield fell 3 basis points to 5.18 percent. The 30-year bond jumped 15/32 to 96 11/32; its yield fell 3 basis points to 5.63 percent.

The Fed survey found that business outlooks are improving in the Philadelphia area, although orders and employment levels remain weak.

While the news wasn't enough to ease all of investors' doubts, it provided an incentive to buy in a market that has been under pressure for weeks.

"Perhaps the broader economy is not as weak as we've thought," said Todd Clark, co-head of trading at WR Hambrecht. "Perhaps it's a sign the bleeding has stopped."

The resulting rally was broad, with especially strong gains in financial stocks, including Dow components American Express, which rose 94 cents to $40.40, and banker J.P. Morgan Chase, up $1.52 at $47.12.

The sector usually benefits from an interest rate cut, and today's advances reflected the growing consensus that the Fed will trim rates next week for the sixth time this year.

Technology issues were also popular.

One of the biggest winners: Cisco Systems, which rose $1.28 to $17.68 after a senior executive told Dow Jones Newswires the company's quarterly revenue will be in line with previously reduced expectations. The comment reassured investors, who have been worrying that Cisco would warn of lower-than-expected results.

The afternoon gains followed an uneven morning session in which stocks struggled to advance. Among the casualites was chipmaker Transmeta, which fell $7.24 to $5.36 after warning of disappointing revenues.