Big Board Bliss

Stocks soared Wednesday as Wall Street cheered bellwether Cisco Systems Inc.'s upbeat profit report and bullish comments about the future as a much-awaited reason to jump back into stocks.

The Dow Jones industrials soared more than 300 points but the biggest gains came in the technology-focused Nasdaq composite index, which shot up over 120 points.

"What a difference a day makes. This certainly was the type of news the market was looking for after some very dismal markets," said Harry Michas, a stock index futures trader at manmarketmonitor.com.

It was Wall Street's biggest rally in about eight months. But analysts cautioned against reading too much into the advance, attributing it more to a rebound from recent selling, than any improvement in sentiment or business. They also noted that the market has developed a habit of rallying unsustainably.

"Investors have been waiting for a reason to buy. The catalyst today was Cisco," said Jack Francis, managing director at UBS Warburg. "But this is just a snapback rally. Nothing fundamental has changed in corporate America and I don't think this is a turnaround."

"Stocks were extremely oversold, especially tech stocks and pessimism was rampant. So the market was primed for a rally and Cisco's news was clearly the impetus," added Stephen Massocca, president of Pacific Growth Equities. "But as far as a change in sentiment, I don't think that's happened. I think investors are still extremely pessimistic about corporate profits."

The Dow closed up 305.28, or 3.1 percent, at 10,141.83, according to preliminary calculations. It was the biggest point and percentage gain since Sept. 24, when the average advanced 368.05 and 4.5 percent.

Broader stock indicators fared even better. The Nasdaq rose 122.45, or 7.8 percent, to 1,696.27, its biggest point gain since April 18, 2001, when the index advanced 156.22. It was the eighth largest percentage gain ever.

The Standard & Poor's 500 index was up 39.35, or 3.8 percent, at 1,088.84, its biggest point increase since April 18, 2001 and biggest percentage gain since Sept. 24.

Cisco soared more than 24 percent after reporting higher-than-expected third-quarter profits late Tuesday. The networking giant said it expected little growth in the coming quarter, but that didn't curb Wall Street's buying.

Cisco rival Juniper Networks rose $1.19, or 14.1 percent, to $9.62, while software giant Microsoft jumped $5.50 to $54.97, helped by a surge in European sales of its Xbox video game systems.

The trading was among the best the market has seen in weeks, but it was hard to know whether they represented the beginning of any longer-term improvement or merely bargain hunting.

Stocks have been moving lower for weeks on mediocre earnings reports from companies that have said it's too soon to predict a business turnaround. Wall Street has fallen into a pattern of mounting sharp, but ultimately unsustainable, rallies. Analysts say investors, fed up with the market's volatility, are using the advances to collect profits rather than invest on expectations higher market levels are ahead.

As a result, the major stock indexes have been trading at levels not seen in months. The Nasdaq and S&P 500 have been trading at levels last seen in October, while the Dow has struggled to stay above 10,000.

Wednesday's enthusiasm had limits, however. Dynegy tumbled $1.11, or 9.1 percent, to $11.15 after the energy trader said the Securities and Exchange Commission intends to upgrade its probe of a natural gas contract into a formal investigation.