Dow hits new record

Strong earnings from Cisco fire up the tech sector, propel blue-chips; oil prices tumble after choppy morning.

By Alexandra Twin, senior writer

NEW YORK ( -- Stocks rose Wednesday afternoon as Cisco's strong earnings report and falling oil prices boosted the Dow to a fresh all-time trading high and propelled the S&P 500 within reach of a 6-1/2 year peak.

The Nasdaq (up 22.51 to 2,494.00, Charts) composite added 0.9 percent with roughly 2-1/2 hours left in the session, and inched closer to a six-year high.

The Dow Jones industrial average (up 25.56 to 12,691.87, Charts) added a few points, hitting a fresh all-time trading high, before pulling back slightly. Should the blue-chip barometer end where it stood at around 1:30 p.m. ET, it would be at an all-time closing high.

The broader S&P 500 (up 4.28 to 1,452.28, Charts) index added about 0.3 percent, touching a 6-1/2 year high.

Cisco Systems (Charts) reported quarterly sales and earnings late Tuesday that rose from a year earlier and topped forecasts. Shares gained 4 percent and the stock was the Nasdaq's most-actively traded.

The company's upbeat earnings report was a relief to investors after a string of discouraging technology sector financial reports.

"The Cisco news helps," said Greg Church, president at Church Capital.

However, he said that the broader factors that have been lifting stocks continue to provide support as well.

"Earnings have been well received, the economy is chugging along and nearly every day we're seeing merger news, private equity deals," Church said.

Market breadth was positive. On the New York Stock Exchange, winners beat losers three to two on volume of 620 million shares. On the Nasdaq, advancers beat decliners by a similar margin on volume of 1.04 billion shares.

What's moving?

In addition to Cisco, a variety of large technology shares advanced, including Intel (up $0.24 to $21.55, Charts) and Hewlett-Packard (up $0.59 to $42.60, Charts).

Broadcom (up $1.95 to $33.94, Charts) rose 6 percent in active Nasdaq trading after Morgan Stanley upgraded it to "overweight" from "equal weight," according to Reuters.

Nortel Networks (up $1.11 to $27.04, Charts) rose after announcing job cuts over the next two years as part of a cost-cutting plan.

A variety of Internet shares advanced, including Yahoo! (up $0.63 to $29.98, Charts), eBay (up $0.65 to $33.50, Charts) and (up $0.91 to $39.18, Charts). The Goldman Sachs Internet (Charts) index added 2 percent.

However, gains for the blue-chip averages were more subdued, with select stocks keeping the Dow industrials higher, including Caterpillar (up $1.36 to $65.78, Charts) and DuPont (up $0.55 to $51.16, Charts).

Shares of Dow component Walt Disney (up $0.22 to $35.41, Charts) also inched higher ahead of its quarterly earnings announcement, due after the close Wednesday.

With around 70 percent of the S&P 500 earnings already out, results are on track to have risen about 10.6 percent in the fourth quarter versus a year ago, according to the latest figures from Thomson Financial. That's a blended number, combining reported and expected earnings.

Although the growth rate is slower than in recent quarters, by topping the 10 percent mark, it extends the S&P 500's track record to 14 consecutive quarters of double-digit expansion, as per Thomson.

Oil zigzags

Crude oil for March delivery fell 98 cents to $57.90 a barrel on the New York Mercantile Exchange. The price of oil seesawed after the weekly inventories report showed a steeper-than-expected decline in heating oil supplies.

Oil prices slumped in the first part of January, before rebounding more recently. Investors are keeping an eye on the $60 a barrel mark. Should the price of oil move back above that again, it could spark a little selling, analysts say, as it is seen as a key psychological level.

On the economic front, the first read on fourth-quarter productivity came in at a 3 percent growth rate, up from the previous month and beating forecasts for a 2 percent reading. Unit labor costs, the report's inflation component, came in at a smaller-than-expected 1.7 percent rate. (Full story).

The overall report seemed to further bets that economic growth, although moderating, remains solid, and that inflation pressures are dwindling.

Treasury prices rose, lowering the yield on the benchmark 10-year note to 4.74 percent from 4.76 percent late Tuesday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar gained versus the yen and slid versus the euro.

COMEX gold for April delivery rose 90 cents to $659.60 an ounce.

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