Though it flirted with negative territory in the early going, the Dow swung around to follow the Nasdaq's lead. The 30-stock index gained 36.18 points, or 0.32 percent, to 11337.92. But Internet-focused issues outpaced the general tech sector. The Industry Standard 100 rallied 30.69 points, or 6.8 percent, to 481.79. Economic optimism led investors to pick up some volatile small issues.
Small caps are much more reactionary to rate cuts than larger companies.
Technology is cyclical, but the smaller companies tend to be even more cyclical than the larger ones. Several Industry Standard 100 components posted strong performances. Peter Hooper, the chief economist at Deutsche Bank Alex. Brown, predicts a growth rate of 2 to 2.5 percent in the fourth quarter of this year, compared with a prior forecast of 1 to 1.5 percent. We also have factored in slightly more fiscal stimulus in the fourth quarter, though at this point less than looked possible when Congress appeared headed toward passing a huge rebate. Many big-cap stocks also posted spectacular gains as investors put money to work in the tech sector.