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Nasdaq reaching its best finish in five years as stocks rallied after investors decided that the prior-session’s Fed-inspired sell-off was overdone. Investors went in for across-the-board bargain-hunting, with the Nasdaq remaining a bit ahead of the other two indices.

Today, the Dow Jones industrial average closed up 61.16 or 0.6% to 11,215.70, the broader Standard & Poor’s 500 index closed up 9.66 or 0.8% to 1,302.89, and the Nasdaq composite index closed up 33.32 or 1.5% to 2,337.78. This is the highest level for the Nasdaq since February 2001.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by 3 to 1 on volume of 1.57 billion shares. On the Nasdaq, advancers topped decliners by more than 11 to 4 on volume of 2.42 billion shares.

Today, the investors considered the fact that yesterday’s Fed statement was pretty positive overall and showed little change from the January statement. While worries are still in place about the threat of inflation and the possibility of the Fed “overshooting” or raising rates so much that it starts to slow the economy; these are at best second-half worries. Those who believe in the growth story of the economy, have to believe the growth story in stocks that we are seeing today.

It is expected that the economic growth in the first quarter could be the silver cloud with the dark lining. In the aftermath of a sluggish fourth-quarter performance, many economists are expecting a growth rate of 5% or more. The growing GDP could prompt the Fed’s to keep raising the interest rates, to 5.25% - which may be too far.

Shares in Dow component General Motors Corp closed down $0.60 or 2.6% to $22.15, after the it filed its delayed annual report with the U.S. SEC. The company said it would restate financial results for its GMAC financing unit from 2003 through to the third quarter of 2005. This is aimed at tidying up bookkeeping problems at GMAC that might otherwise scuttle a possible stake sale as well as ease pressure on GMAC’s credit rating.

Morgan Stanley upgraded Sun Microsystems and the stock closed up $0.22 or 4.6% to $5.25. Morgan Stanley upgraded the network computing company two notches to overweight from underweight, citing the financial benefits of an expected cost-cutting effort.

Shares in Boeing Co. rose 2.1% to $79.18 after the company won an airplane order worth $4 billion at list prices. The company said the General Electric Co’s, GE Commercial Aviation Services has put in a firm order for 30 Boeing Next-Generation 737s., with an option to buy 30 more. This continues the Cinderella story for Boeing and Airbus.

Stock of 3M, closed up 1.6% at $77.56 after Merrill Lynch raised its recommendation on the diversified industrial company to buy from neutral. It stated that the company’s overseas exposure means it is poised to benefit from faster international economic expansion.

Shares in Accenture closed down $1.79 or 6% to $29.11, after the company reported a drop in quarterly profit due to a $450 million pre-tax provision it took related to contracts with the UK’s National Health Service. Its fiscal second-quarter net income slumped 67% over year-ago levels.

Crude-oil futures finished higher after investors weighed a Department of Energy report showing a rise in weekly U.S. crude supplies, against the biggest drawdown in gasoline stocks since August 2003. The benchmark May contract closed up 38 cents at $66.45 a barrel on the New York Mercantile Exchange.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter