Investor confidence boosts market

Stocks pushed higher today, as investors' confidence grew following news that many of the problems facing the global economy are being addressed.

The Dow Jones Industrial Average soared 123.06 points or 1.47 percent, to 8,495.03 while the Nasdaq Composite Index jumped 19.84 points or 1.14 percent to 1,757.19.

Arun Kumar, senior U.S. equities strategist at Lehman Brothers, noted that positive steps have been taken both in the U.S. and abroad to try to revive the sagging markets. He cited two interest rate cuts by the U.S. Federal Reserve in the past month, as well as Congress's funding of the International Monetary Fund.

Kumar also pointed to the agreement between the Japanese government and its opposition parties for a banking bill to salvage that country's ailing financial system. Separately, Brazil's austere fiscal plan, which was announced yesterday, may allow it to avoid devaluing its currency.

Japan's Nikkei Index climbed 1.13 percent or 152.65 points to 13,668.72 while Germany's DAX climbed 12.99 points to 4,549.33.

Some analysts say that strong earnings reports from many companies this quarter have also helped to steady the market. Nearly all major companies have now announced their earnings--with many posting better-than-expected results, especially in the technology and telecommunications sectors. Some financial services firms, however, have been hit hard by failed investments in Russia and Asia.

Kumar, however, noted that the next earnings season may not have as much good news.

"Expectations were so negative that when earnings came out, they were more positive surprises," Kumar said. "You are going to have negative growth and it's going to be flat for the fourth quarter."

Nonetheless, most analysts are optimistic about the market heading higher in the coming months.

"Our view is that the market is going to take its cue from what the Fed does," Kumar said. "We are expecting the Fed to act to aggressively to take the Fed fund rate down to 3 percent by the third quarter of 1999.

"That is going to result in the price-earnings multiples for the market expanding," he concluded.

Shares of Ciena soared as much as 35 percent today before closing up 26.02 percent at 15.44 on renewed hope that the battered telephone network equipment maker may be a possible takeover target, traders said.

The stock was also pushed higher because of an indication that at least one large company was buying more of Ciena's equipment, one analyst said. Ciena was the most actively traded stock on the Nasdaq today, with more than 31 million shares traded.

Reuters contributed to this report.