Nasdaq, Dow soar on hopes for rate cut

By LISA SINGHANIA

Associated Press

NEW YORK – Wall Street had its first rush of euphoria in months today, with the Nasdaq composite index posting its biggest one-day advance ever amid optimism that the Federal Reserve will cut interest rates. Blue chip stocks also soared, carrying the Dow Jones industrials up more than 338 points.

Some market analysts interpreted the buying spree as a signal that Wall Street might actually have reached a bottom after months of earnings-driven selling.

Shortly after regular stock trading ended, Apple Computer warned that it will have disappointing first-quarter results. The announcement was reminiscent of recent warnings from high-tech companies that led to huge selloffs in subsequent sessions, but analysts doubted there would be a repeat on Wednesday.

“It’s going to be a problem for Apple, not a problem for the overall market. It may have some spillover effect to other PC makers and dampen enthusiasm for the computer chip market, but the overriding news is going to be the Fed,” said Barry Hyman, chief investment strategist at Weatherly Securities.

“It’s a much better picture than we’ve had. The Fed is on our side, and that’s an important development.”

The Nasdaq rose 274.05 to 2,889.80, or 10.5 percent, for its highest one-day percentage and point gains ever.

The Dow picked up 3.2 percent, rising 338.62 to 10,898.72, its third-largest one-day point gain. The advance, however, was nowhere near a record in percentage terms.

The Standard &Poor’s 500 index rose 51.57 to 1,376.54, a 3.9 percent increase.

“This was kind of a crazy trading day,” said Ayako Tsuboya, a trader at Daiwa Securities in New York. “Everybody’s been pretty negative the last couple of weeks, but today everybody was buying … going into the high-tech sectors, like chip makers. This is the busiest it’s been in weeks.”

Much of the day’s gains occurred after Federal Reserve Chairman Alan Greenspan indicated at a banking conference that he was concerned about the nation’s slowing economic growth.

But investors had already begun the day optimistic that the presidential deadlock was close to being resolved and pleased with news that Nokia expects strong sales and revenues next year.

Nokia’s announcement gave investors further reason to buy following months of selling based on bad earnings reports. Nokia rose $7 to $51.38.

Tech stocks, which have been among the most battered in recent weeks, benefited from Nokia’s news. Microsoft rose $3.44 to $59.88, and Sun Microsystems climbed $12.88 to $91.75, a 16 percent gain.

Investors were still selling stocks that warned of disappointing earnings, but it was clear they were not inclined to punish the entire high-tech sector. Shares of 3Com tumbled $3.34 to $10.03, a 25 percent drop, after the supplier of broadband equipment warned of soft quarterly results.

It did not appear in after-hours trading that Apple’s announcement was having much of an impact on other tech stocks or the market in general. Apple fell $3.13 to $13.88 after the market closed, after gaining 31 cents in regular trading, but other high-tech issues fell only modestly.

Stocks really surged after Greenspan expressed concern about the effects higher energy costs and tightening credit are having on businesses and consumers’ willingness to spend.

Analysts said the chairman’s statement makes it very likely the Fed will relax its stance against cutting rates when it meets Dec. 19. That raises the possibility of an interest rate cut early next year. The Fed boosted rates half a dozen times between summer 1999 and summer 2000 because of concerns the economy was growing too rapidly and becoming vulnerable to inflation.

“When you have a market that’s been as repressed as this, you set up this kind of coil-spring syndrome. You get some good news and that’s all it takes,” said Larry Wachtel, a market analyst with Prudential Securities. “You got clarification on the president, you had Mr. Greenspan making his speech, and that’s all you needed to snap back.”

Indeed, after weeks of selling off stocks on earnings worries compounded by the election limbo, investors were buying with gusto today.

Banker J.P. Morgan boosted blue chips, rising $13.13 to $151.63. Shares of Minnesota Mining &Manufacturing were up $11.50 at $116.50, an 11 percent gain, after announcing it had named W. James McNerney Jr., the head of General Electric Co.’s aircraft engines division who was passed over for GE’s top job, to be its next chairman and chief executive.

Wall Street also shunned pharmaceutical and energy-related stocks, which had been viewed as safe havens during the market’s volatility. Drug maker Merck fell $2 to $90; Exelon fell $2.28 to $63.01.

Advancing issues outnumbered decliners more than 2-to-1 on the New York Stock Exchange. Consolidated volume came to 1.7 billion shares, well ahead of the 1.1 billion reported at the same point Monday.

The Russell 2000 index rose 20.78 to 471.17.

Overseas, Japan’s Nikkei stock average fell 1.7 percent. Germany’s DAX index rose 3.6 percent, Britain’s FT-SE 100 was up 2.3 percent, and France’s CAC-40 climbed 3.5 percent.

Copyright ©2000 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

Olivia Vanni / The Herald 
The Mukilteo Lighthouse. Built in 1906, it’s one of the most iconic landmarks in Snohomish County.
The Mukilteo Lighthouse. Built in 1906, it’s one of the most iconic landmarks in Snohomish County. (Olivia Vanni / The Herald)
Mukilteo mayor vetoes council-approved sales tax

The tax would have helped pay for transportation infrastructure, but was also set to give Mukilteo the highest sales tax rate in the state.

Marysville Mayor Jon Nehring gives the state of the city address at the Marysville Civic Center on Wednesday, Jan. 31, 2024, in Marysville, Washington. (Ryan Berry / The Herald)
Marysville council approves interim middle housing law

The council passed the regulations to prevent a state model code from taking effect by default. It expects to approve final rules by October.

x
State audit takes issue with Edmonds COVID grant monitoring

The audit report covered 2023 and is the third since 2020 that found similar issues with COVID-19 recovery grant documentation.

Bothell
Bothell man pleads guilty to sexual abuse of Marysville middle schoolers

The man allegedly sexually assaulted three students in exchange for vapes and edibles in 2022. His sentencing is set for Aug. 29.

Larsen talks proposed Medicaid cuts during Compass Health stop in Everett

Compass Health plans to open its new behavioral health center in August. Nearly all of the nonprofit’s patients rely on Medicaid.

District 2 candidates differ in public safety approach

Incumbent Paula Rhyne is facing challenger Ryan Crowther. The third candidate, Jonathan Shapiro, is no longer seeking the seat.

From left to right, Edmonds City Council Position 3 candidates Joseph Ademofe, Alex Newman and Erika Barnett.
Amid budget crisis, Edmonds City Council candidates talk revenue, affordability

Three newcomers are facing off for Position 3 on the council, currently held by council President Neil Tibbott.

Community members gather for the dedication of the Oso Landslide Memorial following the ten-year remembrance of the slide on Friday, March 22, 2024, at the Oso Landslide Memorial in Oso, Washington. (Ryan Berry / The Herald)
The Daily Herald garners 6 awards from regional journalism competition

The awards recognize the best in journalism from media outlets across Alaska, Idaho, Montana, Oregon and Washington.

Everett
Everett approves new fines for non-emergency lifts

The fire department will only issue fines for non-emergency lift assists at licensed care facilities, not for individuals at home calling 911.

Guns for sale at Caso’s Gun-A-Rama in Jersey City, New Jersey, which has been open since 1967. (Photo by Aristide Economopoulos/New Jersey Monitor)
After suing, WA gets carveout from Trump administration plan to return gun conversion devices

The Trump administration has agreed to not distribute devices that turn semi-automatic… Continue reading

The Wild Horse Wind and Solar Facility about 16 miles east of Ellensburg in central Washington is part of Puget Sound Energy’s clean energy portfolio. (Courtesy of Puget Sound Energy)
Megabill’s elimination of tax credits for clean energy projects could cost WA $8.7 billion

Washington households could see electricity costs increase $115 per year by 2029; 21,800 workers could lose their jobs by 2030, analysts say.

Everett mayor candidates focus on affordability, city budget in costly race

As incumbent Cassie Franklin seeks a third term in office, three candidates are looking to unseat her.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.