Stocks advance as credit fears fade

Stocks posted a solid advance Wednesday, as fears of tight credit eased. An upbeat outlook by information technology stalwart Cisco Systems helped technology stocks.

The Dow Jones industrial average rose 153.56 points, or 1.1 percent, to 13,657.86. American Express and Exxon Mobil were the biggest contributors to the Dow's gain. Honeywell International and Disney were the big losers in the index.

Cisco, which issued its quarterly report and outlook late Tuesday, added $1.99, or nearly 7 percent, to $31.68.

Cisco was the second-biggest contributor, after Exxon Mobil, to the advance in the Standard & Poor's 500 index, which closed up 20.78, or 1.4 percent, at 1497.49.

The Nasdaq composite index jumped 51.38, or 2 percent, to 2612.98.

The Russell 2000 index of small-company stocks did even better, advancing 21.53, or 2.8 percent, to 795.66.

Financial-services firms and home builders, which have suffered in the mortgage and housing slump, advanced.

After the close of regular trading, financial-services giant American International Group, a Dow stock, rallied. The company posted better-than-expected quarterly results and said "we continue to be very comfortable with our exposure to the U.S. mortgage market."

AIG holds $33 billion of subprime mortgages, which are loans to less creditworthy home buyers.

New York Stock Exchange trading volume reached 2.58 billion shares, up from 2.24 billion shares Tuesday. Winning stocks outnumbered losers by a 12-5 ratio among NYSE-listed stocks. Nasdaq trading volume totaled 3.55 billion shares, up from 2.72 billion shares Tuesday. Nasdaq winners topped losers by a 7-3 ratio.

Treasury securities slipped, as investors switched to stocks and corporate bonds. Northfield-based food giant Kraft was one of the companies issuing debt securities amid the renewed appetite for debt.

A government auction of $13 billion of 10-year notes brought a yield of 4.85 percent, down from 5.23 percent at the previous 10-year note auction, but higher than analysts expected.

Oil prices fell, despite a report of tighter U.S. oil stockpiles. Crude oil for September delivery fell 27 cents a barrel, to $72.15.

source:www.chicagotribune.com