US stocks posted their biggest rally in more than six weeks yesterday after technology bellwether Cisco Systems said business is stabilizing, and strong new home sales boosted optimism consumers are propping up a key sector of the US economy.
Lucent Technologies also offered a ray of hope when the telecom equipment maker said it expects the hard-hit communications equipment market to rebound in 2003. Cisco and Lucent stocks were the most actively traded stocks and spurred a rally in related tech stocks.
"People are saying that if things are stabilising, it means orders will be coming for other parts of the high-tech area, and therefore it's conceivable we're turning the corner," said Mr Ned Collins, executive vice president for Daiwa Securities.
The technology-laced Nasdaq index gained 73.83 points, or 4.01 per cent, to 1,916.80. That's the biggest one-day gain since July 12th, when the Nasdaq surged 5.26 per cent, according to research firm MarketHistory.com
The Dow Jones industrial average jumped 194.02 points, or 1.9 per cent, to 10,423.17 - also its biggest rally since July 12th. Only three stocks of the average's 30 stocks fell.
For the week, the Dow finished 1.8 per cent higher, while the Nasdaq gained 2.7 per cent.
The rally came just days after stocks tumbled to lows unseen since early April. Stocks took a dive on Tuesday after the US Federal Reserve cut interest rates for a seventh time this year and gave little hope the sluggish US economy is rebounding.