Stocks Rocket on Rate Cut
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Stocks posted strong gains Wednesday after the Federal Reserve cut interest rates by a quarter point but suggested that it was done cutting rates for now.
The Fed gave the market the rate cut it expected, but in its accompanying policy statement, central bankers said that growth will likely slow because of the housing market crisis, but that "the upside risks to inflation roughly balance the downside risks to growth," a neutral statement that essentially warned traders not to expect any more rate cuts for now.
The move followed a Commerce Department report that said the economy grew at a stronger than expected 3.9% pace in the third quarter.
Google closed above $700 a share for the first time on reports that it plans a wireless venture with Verizon. With a $220.7 billion market cap, Google is now the fifth most highly valued U.S. company, behind AT&T, Microsoft, GE and Exxon Mobil. In recent days, the stock has passed Citigroup, Bank of America, Procter & Gamble and Cisco Systems.
Dell rose 2.7% after filing amended financial statements for four years, effectively ending the company's long accounting nightmare and paving the way to resume share buybacks.
Microsoft gained 3.5% to a fresh multiyear high on bullish comments from Sanford Bernstein, as the stock continued to benefit from last week's better than expected earnings report.
Most big technology names posted gains on the day, but Sun Microsystems and eBay traded lower.
SiRF Technology soared 28% after beating estimates, and MicroStrategy, Answerthink, Pericom Semi and CommVault were other earnings gainers.
First Consulting gained 27% on a takeover offer from Computer Sciences, while Garmin fell 10% on its results and an offer to acquire Tele Atlas N.V.
The Nasdaq surged 43 to a new multiyear high of 2859, the S&P gained 18 to 1549, and the Dow rose 137 to 13,930. Volume rose to 3.67 billion shares on the NYSE, and 2.57 billion on the Nasdaq. Advancers led by a 24-8 margin on the NYSE, and 20-10 on the Nasdaq. Upside volume was 79% on the NYSE, and 74% on the Nasdaq. New highs-new lows were 248-92 on the NYSE, and 159-139 on the Nasdaq.