Rate hike fails
to jar market

NEW YORK » Lower-than-expected sales at Cisco Systems Inc. sent tech stocks tumbling yesterday while the overall market was little changed after the Federal Reserve announced a widely expected interest rate hike.

A jump in oil prices contributed to mild profit-taking.

The Fed's Open Market Committee nudged interest rates up a quarter point, bringing the federal funds rate -- the interest banks charge each other on overnight loans -- to 2 percent.

The market had little reaction to the rate hike, though investors closely read the Fed's policy statement for hints about what lies ahead. Analysts took it as a good sign that the language in the statement was largely unchanged.

"This gives a very positive tone to their outlook on the U.S. economy, despite higher energy prices," said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co. "There's nothing to fear on the inflation front from where they sit, and they see flexibility in the labor market, which suggests they will allow faster job growth to show itself without having to move any quicker on rate changes."

The Dow Jones industrial average was down 0.89, or 0.01 percent, at 10,385.48.

The broader gauges were narrowly mixed. The Standard & Poor's 500 index added 1.17, or 0.10 percent, to 1,162.91. The Nasdaq composite index fell 8.77, or 0.43 percent, to 2,034.56, reflecting investors' disappointment with Cisco Systems.

Cisco shed $1.31, or 6.6 percent, to $18.44, after issuing results that met profit expectations but missed sales forecasts. Growth at the world's leading maker of routers and switches that move data over computer networks remains strong despite cautious spending by its corporate customers, but management warned that it could face increased competition, particularly from Asia-based rivals.

Despite relatively good economic news, overall trading was tepid, particularly in the face of volatile oil prices. The government's weekly report on petroleum inventories showed another decline in the nation's supply of distillate fuels, which include heating oil.

Separately, the International Energy Agency, the energy adviser to 26 industrialized nations, indicated worries over a global heating oil supply crunch were easing. Light, sweet crude for December delivery settled up $1.49 at $48.86, pressuring equities.

Still, traders noted that the stock market was holding up extremely well, particularly after several weeks of strong gains.