U.S. Stocks Get Lift From Cisco, Fed In Early Trading

NEW YORK (MarketWatch) -- U.S. stocks were higher Wednesday morning, drawing strength from a higher revenue outlook from Cisco Systems Inc. as well as reassuring assessments about economic growth and the credit markets from the Federal Reserve.

The Dow Jones Industrial Average last was up 64 points at 13,568.

The S&P 500 and the Nasdaq Composite rose 11 points to 1,487 and 37 points to 2,599.

On Tuesday, stocks managed to close higher in a back-and-forth session, after investors eventually adopted a positive reaction to the Fed's decision to hold interest rates steady and retain a bias toward keeping the fight against inflation as its top priority. The statement also made prominent reference to the credit markets' recent turmoil.

Investors were still in an upbeat frame of mind on Wednesday.

"The fact that the Federal Reserve mentioned the credit markets' problems in its statement is reassuring to the market," said Art Hogan, chief market strategist at Jefferies & Co. "They acknowledged that the market's worries are on their minds."

Overnight, the Reserve Bank of Australia upped its key rate by a quarter of a percentage point, to 6.5%, and said credit-market developments "to date don't appear to have changed significantly the broader global outlook."

And the Bank of England, another central bank that has raised interest rates recently, said inflation may hit its target by the end of 2008.

The government reported that wholesale inventories rose 0.5% in June, marking the second monthly gain in a row. The rise was linked to stockpiles of petroleum.

U.S. petroleum inventories are due out at 10:30 a.m. Eastern.

Stocks on the move

Shares of Cisco rose 5% to $31.16 playing off the technology bellwether's upwardly revised outlook.

The networking giant late Tuesday reported a 25% jump in fourth-quarter profit. Bear Stearns upgraded the stock to outperform from peer perform on the back of the report.

Later in the day, Dow component General Motors Corp. will make a presentation to analysts. That stock gained 2.8% to $34.41.

McDonald's Corp. reported a 6.5% rise in same-store sales for last month. The stock last was 1% higher at $50.26.

Also in the headlines, Sprint Nextel reported a 95% drop in second-quarter net earnings as a result of higher costs and expenses and a lower contribution from operations, though underlying profit of 25 cents a share came in ahead of analysts' 22-cent average forecast.

The share was last 2% higher at $20.63.

Toll Brothers Inc. said its fiscal third-quarter home-building revenue fell 21% from a year earlier to $1.21 billion as the industry continues to struggle against a housing market further weakened by turmoil in mortgage markets.

The stock gained 3.7% to $23.84.

Other markets

The gains in the stock market dented interest in Treasurys. The benchmark 10-year note last was down 17/32 at 97-12/32 with a yield of 4.841%.

In currencies, the dollar was mixed in early dealings, after Tuesday's Fed action. The greenback lately was up 0.3% at 119.24 yen as the euro rose 0.3% to $1.38.

Commodities futures were mixed in the early going. The September crude contract was down 0.5% at $72.02 a barrel, ahead of the weekly petroleum supply numbers.

The front-month gold contract added 0.7% to stand at $687.50 an ounce, after posting losses during the last two sessions.

By Leslie Wines