Fed cuts interest rates, tech stocks rise

Remember the technology market crash? You know, the one that carved the NASDAQ index in half like a Christmas ham and started talk about a recession? Well, the market seems ready to forget it, now that the U.S. Federal Reserve on Wednesday announced an interest-rate cut.

The half-point cut in the overnight bank loan rate to 6% has driven the technology-oriented NASDAQ index up over 200 points - about 9% - in Wednesday afternoon trading on the exchange.

"These actions were taken in light of further weakening of sales and production, and in the context of lower consumer confidence, tight conditions in some segments of financial markets, and high energy prices sapping household and business purchasing power," the Federal Reserve said in a news release. "Moreover, inflation pressures remain contained. Nonetheless, to date there is little evidence to suggest that longer-term advances in technology and associated gains in productivity are abating."

New-economy bellwether stocks charged uphill on the news. In afternoon trading, the maker of networking products Cisco rose 21% to $40.19 in the heaviest volume trading on the floor. Chip maker Intel rose 9% to $33.81; computer manufacturer Dell Computer rose 14% to $19.93; online retailer Amazon.com rose 18% to $16.38; and software maker Microsoft rose 11% to $48.31.

The NASDAQ telecommunications sector rose 13% in afternoon trading to 491.60. The NASDAQ computer sector was up 14% to 1,376.89.

The Federal Reserve doesn't usually make rate changes between meetings of the Central Bank's interest-rate committee. The last time it made an emergency cut was in October of 1998, to beat back financial pressure coming from the Asian financial crisis.