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Stocks jump after Lehman, Goldman beat estimates; market expects big Fed rate cut
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    NEW YORK — Wall Street barreled higher Tuesday in the final minutes before a widely expected rate cut by the Federal Reserve, with investors also optimistic about better-than-expected results from Lehman Brothers and Goldman Sachs. The Dow Jones industrial average surged 300 points.
    Investors, while they’ve seen a number of huge advances amid the market’s recent volatility, appeared considerably more upbeat than in the past few days. They’re confident that when the Fed’s meeting lets out at 2:15 p.m. EDT, it will reduce the target federal funds rate by a full point, bringing the rate to 2 percent.
    The central bank has shown it is trying everything in its power to revive the stagnant credit markets and rescue the financial industry from collapse — it already relaxed its lending practices, and has backed JPMorgan Chase & Co.’s buyout of failing investment bank Bear Stearns Cos.
    Quarterly results from two rivals of Bear Stearns — Lehman Brothers Inc. and Goldman Sachs Group Inc. — also gave some solace to a market fearful about investment banks weakening further from losing bets on mortgage-backed securities. Both Lehman and Goldman posted quarterly profits that were significantly lower than they were a year ago, but higher than analysts predicted.
    There had been particular concern about Lehman. But Tuesday, Lehman shares spiked back up 38 percent, by $12.03 to $43.78. Goldman shares rose 14 percent, by $21.02 to $172.04, while Bear Stearns shares jumped 40 percent, by $1.93 to $6.74.
    There’s no telling, however, how stocks will react to the Fed’s rate decision. Anything less than a full-point cut could trigger frenetic selling, while anything more could rekindle the feeling that the credit markets and economy are in worse shape than Wall Street thought.
    And meanwhile, the Fed’s accompanying economic statement will be closely read for signs that the central bank is still willing to lower rates and come up with new ways to free up cash in the financial system. Many market participants are unsure if rate cuts will give the markets and the economy the stimulus they need; rate cuts also drive down the dollar, which in turn lifts commodity prices.
    ‘‘They’re looking for any kind of comments about whether they’ll be stopping or slowing their easing,’’ said Alexander Paris, economist and market analyst for Chicago-based Barrington Research. ‘‘They’re looking at, where do you go from here? More and more people are concerned about inflation.’’
    In mid-afternoon trading Tuesday, the Dow rose 303.67, or 2.54 percent, to 12,275.92.
    Broader stock indicators also surged. The Standard & Poor’s 500 index rose 38.79, or 3.04 percent, to 1,315.39, and the Nasdaq composite index rose 62.46, or 2.87 percent, to 2,239.47.
    A day earlier, the three major indexes finished widely mixed as investors sought the safety of blue chip stocks and abandoned companies viewed as riskier bets.
    Bond prices fell as investors returned to stocks. The yield on the benchmark 10-year Treasury note, which move opposite its price, rose to 3.39 percent from 3.30 percent late Friday.
    The dollar was mixed against other major currencies, while gold prices rose. Light, sweet crude rose $2.10 to $107.78 a barrel on the New York Mercantile Exchange.
    Wall Street was not concentrating on economic data, but Tuesday’s reports supported the notion that the economy is sliding while costs are rising. The Commerce Department said home construction fell in February: housing starts fell 0.6 percent, while building permits plummeted 7.8 percent.
    Meanwhile, the Labor Department reported a 0.3 percent rise in its Producer Price Index for February, in line with estimates, but the core PPI, which strips out food and energy prices, rose by a greater-than-expected 0.5 percent. The inflation figure had no discernible impact on trading.
    After soaring Monday, JPMorgan rose another $2.05, or 5.1 percent, to $42.36 Tuesday. As of Monday’s close, JPMorgan’s buyout valued Bear Stearns at $2.21 a share, or $260.5 million.   The Fed on Sunday, in addition to guaranteeing up to $30 billion of Bear Stearn’s most troubled assets for JPMorgan, lowered its discount rate — the rate it charges banks directly — by a quarter-point. It is also allowing more types of financial firms to borrow from the central bank, and accepting more types of collateral.
    Advancing issues outnumbered decliners by nearly 9 to 1 on the New York Stock Exchange, where volume came to 924.3 million shares.
    The Russell 2000 index of smaller companies rose 20.45, or 3.14 percent, to 670.93.
    Stocks markets overseas rebounded from sharp drops a day earlier. Japan’s Nikkei stock average bounced 1.50 percent, while Hong Kong’s Hang Seng index rose 1.4 percent. Britain’s FTSE 100 rose 3.54 percent, Germany’s DAX index added 3.41 percent, and France’s CAC-40 increased 3.42 percent.

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