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Wall Street embraces earnings from Cisco, Disney

SHARE Wall Street embraces earnings from Cisco, Disney

NEW YORK — Strong earnings from Cisco Systems Inc. and the Walt Disney Co. sent stocks higher Wednesday and helped investors digest the latest monetary policy statement from the Federal Reserve.

Cisco's year-over-year gains and bullish profit forecast helped Wall Street overcome a recent bias against the tech sector, while investors gained confidence in Disney's new management after the entertainment company's latest results beat analysts' forecasts.

Stocks recovered from a late selloff Tuesday after the Federal Reserve kept the nation's benchmark rate steady, as Wall Street had hoped, but also said inflation risks remain a concern. With the Fed not ruling out another rate hike, the sense of finality investors had hoped for never materialized.

Nonetheless, the pause combined with earnings was enough to encourage investors to return to the market after fitful, range-bound trading over the last few sessions.

"I think the Fed's message was loud and clear: we're pausing, but we reserve the right to raise rates in the future," said Philip S. Dow, managing director of equity strategy at RBC Dain Rauscher in Minneapolis. "But I do think the market is giving some credence to the Fed's relatively dovish take on inflation."

In late morning trading, the technology-focused Nasdaq composite index climbed 20.96, or 1.02 percent, to 2,081.81.

Other stock indicators also advanced. The Standard & Poor's 500 index rose 7.25, or 0.57 percent, to 1,278.73, and the Dow Jones industrial average added 34.41, or 0.32 percent, to 11,208.01.

Bonds fell in response to the Fed decision, with the yield on the benchmark 10-year Treasury note rising to 4.95 percent from 4.92 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices rose.

Oil prices jumped higher after the Energy Department reported a 1.1 million-barrel drawdown in the nation's crude reserves, exacerbating the market's supply concerns after the weekend shutdown of an Alaskan oil field. A barrel of light crude was quoted at $76.90, up 59 cents, on the New York Mercantile Exchange.

In economic news, wholesale inventories rose 0.8 percent in June, according to the Commerce Department, slightly less than May's 0.9 percent increase. Sales are still growing faster than inventory gains, however, which bodes well for economic growth.

The 22 percent jump in Cisco's second-quarter profits led the maker of computer networking systems to raise its full-year estimates, though at least one analyst warned that tech spending could falter if the economy slows further. But overall, investors were pleased, and Cisco jumped $2.28, or 13 percent, to $19.57.

Disney rose 84 cents to $29.82 after it reported quarterly profits that beat Wall Street forecasts by 9 cents a share. The company saw strength in all of its businesses, particularly its movie studio due to the success of the animated film "Cars" and DVD sales of "The Chronicles of Narnia." Theme park attendance is also rising.

Revenue and profits at Federated Department Stores Inc. doubled from a year ago, and the owner of the Macy's and Bloomingdale's chains raised its full-year earnings forecasts. Federated gained 78 cents to $34.57.

Advancing issues outnumbered decliners by nearly 3 to 2 on the New York Stock Exchange, where volume came to 469.22 million shares, compared with 384.81 million traded at the same point Tuesday.

The Russell 2000 index of smaller companies was up 2.11, or 0.31 percent, at 689.58.

Overseas, Japan's Nikkei stock average rose 1.24 percent. In afternoon trading, Britain's FTSE 100 was up 0.32 percent, Germany's DAX index gained 0.59 percent, and France's CAC-40 climbed 0.9 percent.

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