NEW YORK (CNN/Money) - A surge in Cisco Systems ignited the U.S. stock market early Wednesday after the maker of equipment that connects computer networks posted stronger-than-expected profit.

Nasdaq's most actively traded stock, Cisco jumped more than 20 percent, taking other tech stocks with it amid hopes that spending on communications gear is finally picking up.

At 10:50 a.m. ET, the Nasdaq composite index rose 85.25 points, or more than 5 percent, to 1,659.07. The Dow Jones industrial average gained 206.20 to 10,042.70, attempting to hold above the 10,000 milestone most recently lost in Monday's selloff. The Standard & Poor's 500 index advanced 25.83 to 1,075.32.

Fiscal third-quarter profit at Cisco Systems (CSCO: up $2.64 to $15.72, Research, Estimates) nearly quadrupled, topping forecasts by 2 cents a share, as the communications equipment maker cut costs amid a slight rise in sales.

"That has helped the techs today (Wednesday)," said Alan Ackerman, chief market strategist Fahnestock & Co. "They have a reasonably upbeat forecast."

Ackerman also said investors may be encouraged by reports that Merrill Lynch is near settlement with the New York attorney general over conflicts of interests among its analysts. He also cited delayed reaction to signals from the Federal Reserve that interest rates will stay unchanged until at least August.

Still, Ackerman was reluctant to forecast any sustainability to a market that has burned investors for two years. "For now, this may just be a rally from an oversold condition," he said.

More stocks rose than fell. On the New York Stock Exchange, advancing stocks topped declining ones 5-to-3 as 438 million shares traded. Nasdaq winners beat losers nearly 7-to-3 as 793 million shares changed hands.

In overseas stock markets, Asia's and Europe's rose. Treasury securities fell. The dollar gained against the euro and yen.

Looking forward, Cisco said it doesn't see a speedy pickup in orders for Internet networking gear.

But that didn't keep the gains from spreading to Cisco rivals Juniper Networks (JNPR: up $0.94 to $9.37, Research, Estimates), Foundry Networks (FDRY: up $1.08 to $5.94, Research, Estimates) and Extreme Networks (EXTR: up $1.91 to $9.34, Research, Estimates).

At least five brokerages upped financial guidance for Cisco, which was briefly the world's most valuable company when its shares traded above $80 two years ago.

Gains in technology stocks also lifted the Dow as investors poured into Microsoft (MSFT: up $2.91 to $52.38, Research, Estimates), IBM (IBM: up $3.91 to $80.26, Research, Estimates) and Intel (INTC: up $1.80 to $27.95, Research, Estimates).

Only one Dow stock, Coca-Cola (KO: down $0.55 to $56.10, Research, Estimates), suffered sizable losses. The No. 1 soft drink maker said it would buy Seagram's mixers business from Diageo for an undisclosed sum, adding ginger ale, tonic, seltzer and club soda.

The Federal Reserve left interest rates unchanged Tuesday for the third straight meeting in its ongoing effort to maintain consumer spending and coax businesses to buy new equipment. Hinting that borrowing costs won't go higher anytime soon, Fed policy makers voiced concern that the sustainability of any expansion "is still uncertain."

Economists don't expect short-term borrowing costs to go higher until at least August.

Wednesday's early gains come amid a long downturn. The S&P 500 began the session down 8.6 percent on the year following two straight annual declines. But the upturn could prove fleeting if investors, burned by a series of head-fake rallies, cash in their gains.