By LISA SINGHANIA
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.
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