Wall St rises on Fed view in wild day, Cisco up late

By Caroline Valetkevitch

NEW YORK (Reuters) - Stocks rose on Tuesday after the Federal Reserve said it still saw moderate economic growth ahead even though credit conditions have tightened for some consumers and businesses.

The Fed, which also left interest rates unchanged at a policy meeting, buoyed the market by reassuring investors that problems in mortgage lending and corporate finance would not drag on the broader economy.

Oil prices rose in a stabilizing move after Monday's slide of 4.5 percent and lifted energy shares in Tuesday's session. Exxon Mobil Corp. gained 2.6 percent, leading the Dow industrials and the S&P 500 higher. Earnings from power company Duke Energy Corp. beat Wall Street's expectations, pushing its stock up 5.4 percent and driving the S&P utilities index up 2.1 percent for the day.

Financial shares rebounded after some initial disappointment that the Fed did not signal a rate cut as investors embraced the central bank's sanguine outlook.

"It was more of a balanced reading. Yes, they may not cut rates soon, but the economy is in good shape, so that's good for the equity markets," said Giri Cherukuri, head trader at OakBrook Investments LLC in Lisle, Illinois.

The Dow Jones industrial average rose 35.52 points, or 0.26 percent, to end at 13,504.30. The Standard & Poor's 500 Index gained 9.04 points, or 0.62 percent, to finish at 1,476.71. The Nasdaq Composite Index advanced 14.27 points, or 0.56 percent, to close at 2,561.60.

In volatile trading, the Dow swung 260.94 points from its session low at 13,347.17 to its intraday high at 13,608.11 as investors digested the Fed's policy statement. All three U.S. stock indexes fell quickly after the Fed's announcement and later regained their footing.

The CBOE Volatility Index, or the VIX, which is known as Wall Street's fear gauge, slipped 6.02 percent to end the session at 21.56. This was the ninth straight trading session in which the VIX held above a key reading of 20, indicating that that investor anxiety is still significant and more turbulence may be ahead for the U.S. stock market.

The relatively muted advance on the day for the Dow snapped a string of five straight sessions when the blue-chip average had net moves of at least 100 points up or down.

After the close, shares of Cisco Systems Inc., which makes routers and switches that direct Internet traffic, rose 5.4 percent to $31.30 in electronic trading after it posted a quarterly profit excluding special items that was slightly above expectations. Cisco also forecast revenue growth of 13 percent to 16 percent in fiscal year 2008. The stock closed on Nasdaq at $29.69, up 0.6 percent.

FINANCIALS FLY AFTER THE FED

In the regular session, the S&P financial index ended up 0.9 percent after initially falling 0.8 percent on the Fed's statement. Shares of Citigroup Inc. rose O.5 percent to close at $48.59 on the New York Stock Exchange.

A recovery in the beaten-down financial sector countered a drop in shares of big manufacturers earlier in the day.

Goldman Sachs Group denied market talk that it was liquidating its Global Alpha hedge fund and its shares rose 1.8 percent to $191.25.

Shares of American International Group, the world's largest insurer, rose 1.5 percent to $65.55 on the NYSE, a day ahead of its quarterly earnings report.