What began as a good day on Wall Street turned into a memorable one after the Federal Reserve announced an unexpected half-point interest rate cut late Wednesday morning.
Stocks surged after the news broke just before 11 a.m., pulling back only slightly from their dramatic gains by the time the closing bell rang.
In making the cut — its fourth this year — the Fed cited concerns about lingering weakness in the economy. The rate reduction was the second this year to come between the Fed’s scheduled meetings.
Internet and tech stocks were the biggest beneficiaries of the rate-cut rally, as internet.com’s Internet Stock Index, or ISDEX, soared 22.78, or 10.3%, to 243.70. Forty-seven of the 50 ISDEX member stocks posted gains, with 24 of those reaching double-digits.
The Nasdaq climbed 156.22, or 8.1%, to smash through the 2000 barrier, finishing at 2079.44. It was the Nasdaq’s fourth-best single-day percentage gain ever. The Dow Jones rose 399.1, or 3.9%, to 10615.83, while the S&P 500 ended up 46.38, or 3.9%, to 1238.19.
All 13 Internet sectors tracked by Internet Stock Report and WSRN had more gainers than losers, with several nearly sweeping the board with winners. In three categories — Search/Portals, Speed/Bandwidth and Wireless — there were a combined 52 stocks advancing, with only three decliners. For full sector breakdowns, visit WSRN’s Internet sectors page.
The most heavily traded tech stock Wednesday was Intel , which zoomed up 20.1% to $31.28 after the chip maker said Q1 sales had topped lowered estimates and that it believes the microprocessor market will bottom out this quarter.
AOL Time Warner shot up 11.6% to $49 after once again beating street forecasts with a strong first quarter highlighted by a 17% revenue increase from its America Online division, thanks to robust subscriber growth. The company also said it still plans to meet its financial performance goals for the entire year.
(For earnings reports, visit our earnings calendar and our reported-earnings page.
For after-hours quotes and news, visit After Hours Trading.)
Here are some of Wednesday’s other major ‘Net and tech gainers:
Company $ Close % Gain Sun Microsystems 18.69 16.5% Broadcom 34.01 15.7% JDS Uniphase 23.28 14.6% Amazon.com 16.54 12.2% Oracle 18.03 11.2% Cisco Systems 18.16 9.0%
Now for some technical analysis, courtesy of Paul Shread:
April 18, 4 p.m.: A nice surprise from the Fed, and with the futures up
strongly again tonight, the indexes might not be ready to pull back yet.
The indexes might not have needed the Fed’s help; the Dow had already
negated its bearish rising wedge before the Fed cut rates a few minutes
before 11 a.m. (first chart). The Dow needs to get above 10,859 to take
out the level where its sharp decline began. The S&P 500 (second chart)
is just below 1254, its January bottom; the whole 1250-1300 range could
provide resistance. The Nasdaq (third chart) set a higher high today,
and could head as high as 2250-2300 before running into substantial
resistance.
