Stocks Surge on Cisco, NAPM and Stimulus News

Stocks surged on Wednesday and the Dow Jones industrials closed above 9,000 for the first time since the Sept. 11 terrorist attacks as a triple dose of bullish news temporarily pushed aside fears over the nation's fragile economy.

High-tech shares enjoyed much of the day's buying, bolstered by tech bellwether Cisco Systems' positive outlook. The Nasdaq Composite Index rack up its biggest percentage gain in more than five months.

The market waffled in early trading but rose decisively as President Bush urged Congress to approve an economic stimulus package worth $60 billion and $75 billion that would include tax cuts for individuals and business.

The National Association of Purchasing Management's added to the momentum with a non-manufacturing report for September that was much better than expected.  

The Nasdaq leaped 88.48 points, or 5.93 percent, to 1,580.81 — its largest percentage jump since April 18, when it racked up a gain of more than 8 percent.

The Dow Jones industrial average gained 173.19 points, or 1.93 percent, to 9,123.78, while the broader Standard & Poor's 500 Index jumped 20.94 points, or 1.99 percent, to 1,072.27.

"People are believing that between fiscal and monetary policy, the economy will stabilize,'' said Arthur Hogan, chief market analyst at Jefferies & Co.

Cisco jumped $2.46 to $13.94 and pulled the market higher. The company's chief executive said he is comfortable with analysts' quarterly estimates for the world's largest maker of Internet networking equipment.

The rally added to gains on Tuesday after the Federal Reserve cut interest rates for a ninth time this year to boost the economy.

"Three weeks after the greatest shock in our collective lives, there is a tremendous realization that the world is not going to come to an end,'' said Scott Bleier, chief investment strategist for Prime Charter Ltd. 

Bleier attributed the upturn to lower interest rates, the possible economic stimulus plan and steeply discounted stock prices.

The Philadelphia Stock Exchange semiconductor index spiked more than 11 percent, and the S&P computer software index jumped 8.15 percent. Chip leader Intel Corp. rallied $1.94 to $21.48, and software giant Microsoft Corp. climbed $3.57 to $56.62. Inc. bolted up 13 percent, rising 50 cents to $4.17. The firm said it expects revenues toward the high end of its range of $280 million to $300 million and that demand for its online travel services was recovering faster than expected in the wake of the attacks. 

Williams-Sonoma Inc. rose $4.94, or more than 22 percent, to $27.14. The home furnishings retailer expects third-quarter and full-year earnings to match its forecasts even though sales will fall short of expectations in the aftermath of attacks. 

Nortel Networks fell to a session low of $4.99, but later the stock recovered, rising 45 cents to $5.74. The struggling Canadian telecom equipment maker said it will slash its payroll by another 30 percent and post a $3.6 billion third-quarter loss as it trims operations to break even in future quarters. 

Openwave Systems Inc., a wireless Web software company, tumbled more than 38 percent in active Nasdaq trade. The company expects to post a quarterly loss, not the profit Wall Street had expected, due to the current "challenging'' economic environment. Shares fell $4.28 to $6.78. 

Eli Lilly fell $3.62 to $79.25 after the company issued a profit warning. It blamed a quicker than expected sales decline for its top-selling antidepressant drug Prozac, which lost patent protection in August.

Advancing issues outnumbered decliners slightly more than 2 to 1 on the New York Stock Exchange. Volume was 1.65 billion shares, well ahead of the 1.27 billion traded Tuesday. 

The Russell 2000 index, which measures the performance of smaller company stocks, rose 11.42 to 413.21. 

Stocks were mixed overseas Wednesday. Japan's Nikkei stock average closed the day down 2.1 percent. In Europe, France's CAC-40 fell 0.5 percent, while Germany's DAX index rose 3.1 percent and Britain's FT-SE advanced 1.0 percent.

Reuters and the Associated Press contributed to this report.