- The Washington Times - Wednesday, August 6, 2008

NEW YORK | An already soaring Wall Street extended its advance Tuesday after the Federal Reserve left interest rates unchanged and assuaged some of the market’s fears about the economy. The Dow Jones Industrial Average shot up more than 330 points, and all the major indexes had gains approaching 3 percent.

The market was experiencing a big rally before the Fed meeting as investors responded to a report that services sector activity fell less than expected last month and to another drop in oil prices that took crude as low as $118 a barrel.

Crude fell to $118 a barrel before settling at $119.17, down $2.24 on the New York Mercantile Exchange. Oil has now fallen $28 from its July 11 high of $147.27 on widening expectations that the slumping U.S. economy will keep curbing consumer demand for gasoline and other petroleum products.

Stocks had plunged in June and early July as oil reached new heights; the fear on Wall Street was that higher prices for fuel would curtail consumer spending, which accounts for more than two-thirds of the economy. With oil falling, and the Fed citing economic growth in its statement Tuesday, investors were allowing themselves to again feel a little more optimistic after a year of financial crises and soaring commodities costs that have pummeled stocks.

The Dow rose 331.62, or 2.94 percent, to 11,615.77. It was up about 225 points shortly before the Fed’s 2:15 p.m. announcement.

Broader indexes also rose sharply. The Standard & Poor’s 500 Index added 35.87, or 2.87 percent, to 1,284.88, and the Nasdaq Composite Index rose 64.27, or 2.81 percent, to 2,349.83.

It was the Dow and S&P; 500’s biggest one-day gain since April 1, when the indexes started the second quarter with a huge rally. This was also the Nasdaq’s biggest point and percentage rise since mid-July.

Earnings reports continued to stream in. Cisco Systems Inc. reported late Tuesday a 4.4 percent increase in net income for its latest quarter, beating analyst expectations by a penny per share. The world’s largest maker of computer networking gear said sales spiked almost 10 percent. Shares closed up 66 cents, or 3 percent, at $22.65, then tacked on another 3 percent in after-hours trading.

Procter & Gamble Co., maker of Tide detergent and Gillette razors, said its fourth-quarter profit jumped 33 percent, boosted by price increases, overseas sales and tax benefits. Shares rose $2.09, or 3.2 percent, to $67.91.

Archer Daniels Midland Co. reported a 61 percent plunge in fourth-quarter profit, but said revenue soared amid higher prices for commodities like wheat and corn. The stock fell $1.53, or 6 percent, at $25.87.

Advancing issues led decliners 3 to 1 on the New York Stock Exchange, where consolidated volume came to 5.35 billion shares, up from 4.65 billion shares Monday.

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