Stocks Close Strong After Late Surge

Updated from 4:09 p.m. EDT

Buying accelerated into the close Wednesday, and blue-chips finished near their session highs while tech stocks turned positive thanks to a profit reaffirmation from software giant Oracle (ORCL Quote).

The Dow Jones Industrial Average with a gain of 108.96 points, or 1.1%, to 9796.80. The Nasdaq rose 17.14 points, or 1.1%, to 1595.26, and the S&P 500 climbed 9.21 points, or 0.9%, to 1049.90.

Comforting words from the Federal Reserve and a potential blockbuster drug approval for AstraZeneca (AZN Quote) kept the Dow above the flatline all day, but a late surge added to its gains. The Nasdaq had been under pressure for most of the session until the last half hour of trading.

That's when Oracle CEO Larry Ellison said the company has "at least" met analysts' consensus earnings estimates for the fourth quarter. Still, at 12 cents, it means the company's earnings will fall short of its guidance provided in March.

AstraZeneca, Europe's No. 2 drugmaker, said before the opening bell that it received an approvable letter from the Food and Drug Administration for its cholesterol treatment Crestor. Details of the letter weren't disclosed, but analysts have said the treatment could eventually produce revenue of $1 billion a year. The company's shares rose 0.9% to $43.15.

Separately, Millennium Pharmaceuticals (MLNM Quote) surged 5% to $13.62 after the FDA granted "fast-track" status for the company's experimental treatments for leukemia and multiple myeloma. Drug companies are granted this type of expeditious review when the drugs are designed to treat life-threatening diseases and can potentially fulfill an unmet need for such a condition.

The federal government is threatening unprecedented action in its quest to get to the bottom of the energy crisis that afflicted California in 2000 and 2001. The Federal Energy Regulatory Commission is threatening to revoke four energy trading companies' rights to sell power at market rates if they don't properly cooperate with the investigation.

The companies are Avista (AVA Quote), El Paso Electric (EE Quote), Portland General, a unit of Enron, and the trading arm of Williams Cos. (WMB Quote).

On the earnings docket was supermarket chain Albertson's (ABS Quote), which reported a first-quarter loss as increased competition and restructuring charges weighed on its results. Shares of Albertson's were down 1%. Separately, meat producer Smithfield Foods (SFD Quote) reported a significant drop in fourth-quarter earnings as a surplus of meat caused by Russia's month-long ban on U.S. poultry imports led to lower prices. Smithfield was up 5.5%.

Switching to the technology sector, Manugistics (MANU Quote) was getting pummeled after warning of lower-than-expected first-quarter revenue and the need for job cuts. Several Wall Street firms were lowering estimates on the stock in light of the news. Shares of Manugistics dropped 26% to $5.90.

Cisco (CSCO Quote) Chief Executive John Chambers, speaking at a conference in Atlanta, told Reuters he sees a rebound in telecommunications industry spending next year.

Chambers also said he was "a little bit more optimistic about spending in the second half (of the year) for the enterprise customers than my counterparts are." Chambers repeated what he's previously said, that chief information officers at enterprise customers tell him they see second-half spending flat to up.

Shares of Cisco lost 1% to $15.92. Other telecom equipment makers, Lucent (LU Quote), Nortel (NT Quote), Juniper (JNPR Quote) and Alcatel (ALA Quote), were mixed.

Long-distance company WorldCom (WCOM Quote) is reportedly considering cutting 20% of its workforce, or about 16,000 jobs, in an effort to reduce expenditures amid a sizeable debt crisis. The stock fell 3% to $1.41.

After the close of trading, WorldCom said it would get out of the wireless resales business and terminate some of the unit's 2,200 workers.

Media giant AOL Time Warner (AOL Quote) reiterated its 2002 America Online advertising revenue target of $1.8 billion to $2.2 billion. Shares were active following the announcement, but the stock traded down 10 cents to $17.10.

Retailers were benefiting from a strong same-stores sales report from Wal-Mart (WMT Quote), which showed a 6.2% spike in May. Shares of the discount merchant added 2% to $54.96, and the Dow Jones U.S. Retail Index climbed 1.9%.

Elsewhere, eFunds (EFDS Quote), which provides electronic payment services for financial institutions, was one of the day's biggest losers. After the close Tuesday, the company warned that it wouldn't meet second-quarter and full-year earnings projections because of purchasing delays by its customers. In addition, the company said Chief Financial Officer Paul Bristow will resign June 30. Shares plunged 30% to $9.32.

On the research front, Credit Suisse First Boston lowered its 2002 earnings forecast for Hewlett-Packard (HPQ Quote) after the PC and hardware maker said it doesn't see a rebound in technology in the second half of the year. On a conference call Tuesday, H-P lowered guidance for its current fiscal year and said revenue would drop. Shares of H-P were down 1% to $18.79.

Outside the business world, troubles in the Middle East continued as a Palestinian terrorist detonated a powerful car bomb beside a bus in northern Israel Wednesday, killing at least 16 people and wounding at least 36 others.

The economic calendar only had one major item, the Institute for Supply Management's nonmanufacturing index . The ISM said its latest survey found that in May the services sector of the economy grew at its fastest pace since August 2000. The reading on the index came in ahead of analysts' expectations.

U.S. Treasuries were lower around 4 p.m. EDT. The 10-year note was losing 5/32 at 98 22/32, yielding 5.05%. Short-term notes and the bond were also weaker.

European markets were mixed. London's market reopened after a two-day holiday, losing 1.9% to 4989. Germany's Xetra DAX inched lower to close at 4624. In Asia, Japan's Nikkei 225 climbed 0.1% to 11,664, while Hong Kong's Hang Seng added 0.8% to 11,402.