Wall Street: Wednesday close

THE Cisco Kid proved a friend to Wall Street with an upbeat quarterly report which helped send markets soaring to their biggest gains in months. John Chambers, chief executive of network equipment maker

The Dow Jones Industrial Average leapt 305.28 points or 3.10% to 10,141.83 to erase the year's losses. The Nasdaq Index enjoyed one of its best days ever, vaulting 122.47 points or 7.78% to 1,696.29.

The ebullient response to Cisco's results came after markets had dithered for weeks over whether the US economy is growing fast enough to lift profits. Chambers, while announcing that Cisco had exceeded expectations, was careful to avoid sounding too confident. He said it was 'too early to call a possible turnaround' and he described the current environment as 'challenging'.

Still, investors starved of signs of a profit rebound jumped on the Cisco news, driving the company's shares up $3.19 or 24.4% to $16.27. The shares have seen relentless selling in the telecoms downturn since they peaked at $82 in early 2000. Cisco's market value, which topped out at $565bn, now stands at $113.4bn.

Cisco's rivals benefited from the news as did much of the tech sector. Juniper Networks jumped $1.19 or 14% to $9.62, Lucent climbed 31 cents or 7.2% to $4.62 and Nortel Networks rose 27 cents or 10% to $2.98. Microsoft surged $5.50 or 11% to $54.97, Intel rose $2.83 or 10.8% to $29.98 and IBM rebounded $6.09 or 8% to $82.44.

Broker Merrill Lynch strengthened $3.31 or 8% to $43.95 after it said that it was close to a settlement agreement with New York Attorney-General Eliot Spitzer on allegations over analysts' advice to investors.

The entire financial services sector was stronger with Citigroup up $2.62 or 6.2% to $44.77, American Express ahead $2.04 or 5% to $42.70 and Lehman higher by $4.10 or 6.8% to $64.50.

Among Dow components, General Electric was up $2.20 or 7.2% to $32.85, Walt Disney rose 94 cents or 4.1% to $23.83 and Wal-Mart gained $1.38 or 2.5% to $56.39.

Analysts said it was too early to tell if the rally represented a sea change in investor psychology or whether it would be re-traced in subsequent days as have similar surges in recent months. 'It's a Cisco market,' said Peter Cardillo, chief investment strategist with Global Partners Securities. 'But a one-day rally can't change the mood on Wall Street. For now it's a short-covering rally. We need another couple of days of rallies on strong volume to say the market has tuned a corner.'