US stocks soar after Fed rates cut

US Stocks soared today in a last-minute rally that overcame Wall Street’s initially lukewarm response to the Federal Reserve’s ninth interest rate cut of the year.

Analysts said the advance reflected some optimism that, while lower rates would not do much immediately for the suffering stock market, they should help business and the economy turn around in the longer term.

The Dow Jones industrial average closed up 113.76, or 1.2%, at 8,950.59. The gains, which came chiefly in the last hour of trading, added to a rebound that began last week after the market’s huge post-attack selloff.

Broader indexes also were higher. The Standard & Poor’s 500 index rose 12.78 to 1,051.33, while the Nasdaq composite index was up 11.83 at 1,492.29.

The Fed’s half-point cut had been widely anticipated because of the severe impact of last month’s terrorist attacks on the already weak economy. It was the second rate cut in just over two weeks.

In a statement accompanying today’s action, the Fed indicated the attacks had significantly heightened uncertainty and that there was a risk of economic weakness ahead.

That pessimistic tone might have contributed to the market’s initial quiet reaction to the rate cut, although the Fed was echoing what many economists have said since the attacks. Also, with the Fed funds rate now at 2.5%, it is not clear how much more there is to cut.

The Dow was lifted by buying in manufacturing and retail components. Boeing rose dlrs 1.85 at dlrs 34.25, despite fears its airplane business will suffer as Americans curb their travel because of terrorism threats, while Wal-Mart gained dlrs 2.24 to dlrs 54.

Pharmaceutical stocks fell, including Johnson & Johnson, down 43 cents at dlrs 54.99, on profit-taking from last week’s big rally.

Tech stocks were less successful, though.

A third-quarter earnings warning from Compaq sent its stock down 17 cents to dlrs 8.16, in selling that spread to other computer-related businesses. Texas Instruments dropped dlrs 1.85 to dlrs 23.14, while Apple Computer lost 49 cents to dlrs 15.05.

Wall Street is waiting for more information about the US response to the attacks, and how they will affect business.

The uncertainty, analysts say, adds up to a weak market where investors have more incentive to hold steady rather than make any big moves.

‘‘It doesn’t mean we can’t move up a couple of hundred points, but I don’t see a new bull market. There’s just too much military and economy uncertainty,’’ said Larry Rice, chief investment officer at Josephthal & Co.

Advancing issues led decliners 2 to 1 on the New York Stock Exchange. Volume came to an active 1.26 billion shares, compared with 1.17 billion on Monday.

The Russell 2000 index rose 4.17 to 401.77.