Wall Street report: Monday close

HOPES that tumbling interest rates and oil prices will fuel a rip-roaring rebound in the US economy sent shares soaring. The Dow Jones Industrial Average, which lost 2.3% last week on gloomy news for the economy, jumped 117.44 points or 1.3% to 9,441.03. The Nasdaq Index vaulted 47.92 points or 2.7% to 1793.65.

The tech rally could continue today after Cisco Systems, the networking switch giant, said first-quarter sales fell less than expected.

Analysts said investors were looking beyond current gloom and betting that company profits would rebound with a snapback in the economy, perhaps as early as the second quarter of next year. 'This is not a vote on what is happening today,' one analyst said. 'This is about what should happen if everything comes together.'

The likelihood that US central bank chairman Alan Greenspan and his colleagues will cut rates by 0.5% when they meet today played into investor psychology. Another rate cut, the tenth since 3 January, would be aimed at boosting the US economy from its year-long slump and restoring sagging consumer confidence in the wake of the 11 September attacks.

Long-term interest rates have already been falling, helped by the US Treasury's decision last week to stop selling 30-year bonds. Economists said the decision, which was accompanied by a sharp drop in market rates, would put more money in consumers' pockets. And it would help the stock market as more investors choose to sell low-yielding bonds and buy shares instead.

Oil prices that have fallen to two-year lows will also cut consumer costs, freeing up more disposable income. A $100bn (£69bn) economic stimulus under consideration by Congress would also help lift the US economy, probably by the middle of next year, according to economists.

Most sectors of the market rose, with companies likely to benefit from higher consumer spending and better credit worthiness among the winners. Wal-Mart rose 93 cents or 1.8% to $53.90 and do-it-yourself retailer Home Depot added 68 cents or 3% to $41.55.

General Electric firmed 81 cents or 2.1% to $38.77. General Motors, the beneficiary of a car buying spree due to zero interest rates offered consumers, vaulted $1.53 or 3.6% to $43.78. Ford, in the midst of a restructuring following the replacement of chief executive Jac Nasser last week, fell another 11 cents or 0.7% to $16.18.

Financials were strong. American Express tacked on 43 cents or 1.4% to $30.37. Citigroup gained 34 cents or 0.7% to $47.27. JP MorganChase rose 32 cents or 0.9% to $36.36.

The box office reception given animated movie Monsters, Inc. sent Walt Disney higher by 29 cents or 1.5% to $19.16. Pixar, which did the animation for the movie, closed ahead 18 cents or 1.6% to $11.33 as Prudential Securities said investors would have to wait until 2003 to see the next major production from the studio. Monsters, Inc. brought in $63.5m at the weekend, a record for an animated feature.

Enron, the energy trader hammered lately by questions about its finances, fell 13 cents or 1.2% to $11.17 despite suggestions it could attract a hostile bid from a major energy company.

Techs rose, led by Cisco Systems, up 64 cents or 3.7% to $17.90 and another 4.70% to $18.70 in after-hours trading as it said revenues fell a less than expected 32%. Intel gained 68 cents 2.6% to $26.96. Microsoft rose $1.87 or 3% to $63.27 despite reports that some of the 18 State Attorneys-General involved in the anti-monopoly lawsuit against the world's biggest software maker would not sign off on the settlement agreement announced by the Justice Department last week.

AOL Time Warner advanced $1.48 or 4.6% to $33.49, apparently on hopes that media advertising will rebound with the hoped-for recovery in the economy. Eastman Kodak recovered $1.38 or 5.6% to $26.03.