Interest rate cuts boost market
The Dow soars after the Federal Reserve lowers short-term interest rates by a quarter percent.
The blue chip index rocketed nearly 380 points before closing up 330.58 points or 4.15 percent, at 8,299.36. The technology-heavy Nasdaq Composite Index had an even greater percentage gain, up 4.55 percent or 70.08 points to 1,611.05.
The biggest gain in the Dow's history came last month when it shot up 380.53 points on September 8. The index registered its second-largest gain on October 28, 1997, when it rose 337.17 points.
Earlier in the day, the Dow fell as much as 48.66 points and then posted sharp gains, hovering around a 100-point gain on the strength of positive earnings news.
The Fed's Board of Governors approved a reduction in the discount rate by quarter percent to 4.75 percent from 5 percent, in a surprise move coming between its regularly scheduled meetings.
It expects the federal funds rate to fall a quarter percent to around 5 percent from its current 5.25 percent.
The discount rate is the interest rate that is charged depository institutions when they borrow from their district Federal Reserve Banks.
Technology stocks rose on the news, with Dell Computer, Cisco Systems, Intel, and Microsoft posting strong gains as some of the most actively traded stocks on the Nasdaq market.
Dell rose 10.07 percent to 58.312, and was the most actively traded stock. Cisco and Intel, the second- and third-most active, rose 9.23 percent and 2.42 percent, respectively. Microsoft was the fifth-most active stock, gaining 5.24 percent or 5.25 points, to 105.438.
Web portal Excite was the tenth-most active stock, but lost 5.42 percent to 32.75 as investors waited for the company to release its earnings report after the market's close. Excite reported earnings of 2 cents per share, excluding charges, on revenues of $44 million.
Rival Yahoo, which surpassed Wall Street earnings estimates for its third quarter, was the eighth-most active stock, rising 7.26 percent to 120.
Other big Internet gainers were America Online, rising 9.80 percent to 105, and Preview Travel, which posted a whopping 18.09 percent gain.
Personal computer makers were higher, with the exception of Apple Computer, which fell 2.01 percent despite its positive earnings news yesterday. Compaq Computer, the second-most active stock on the New York Stock Exchange, climbed 5.39 percent to 26.875.