Oil falls more as Dow rises

NEW YORK - Wall Street logged another winning day yesterday as a drop in oil prices and a better-than-expected profit report from technology bellwether Cisco Systems Inc. helped corral the market's worries about the financial sector.

Oil extended its slide into a third day. Light, sweet crude settled down 59 cents at $118.58 a barrel on the New York Mercantile Exchange after the government reported a jump in domestic inventories. Oil is now down about $30 from its record high of $147.27 reached July 11.

Cisco rose more than 5 percent after the networking-equipment company posted earnings late Tuesday that narrowly topped Wall Street's forecast. The report helped buoy sentiment and lifted the technology-laden Nasdaq composite index.

The buying came a day after Wall Street had a huge rally - an advance that in early trading yesterday looked as if it might not hold. Investors began the day fearing more industrywide write-downs of bad home loans after mortgage financier Freddie Mac reported a larger-than-expected second-quarter loss. But a reversal in oil prices, continuing a decline that propelled stocks sharply higher Tuesday, helped calm investors about the forces tugging at the economy.

The well-being of Freddie Mac and sister company Fannie Mae is a big concern on Wall Street as the government-chartered companies hold or back nearly half of all U.S. mortgage debt.

The Dow Jones industrial average rose 40.30, or 0.35 percent, to 11,656.07. The gain brought the Dow's two-day advance to about 370 points. The Standard & Poor's 500 index rose 4.31, or 0.34 percent, to 1,289.19, and the Nasdaq rose 28.54, or 1.21 percent, to 2,378.37.

The dollar rose to eight-week highs against the euro and seven-month highs against the yen, while gold prices fell.

Investors showed enthusiasm for technology names yesterday. Cisco rose $1.28, or 5.65 percent, to $23.93 after its report. Microsoft Corp., one of the 30 stocks that make up the Dow, rose 81 cents, or 3.09 percent, to $27.02.

But financials remained a weak spot. Freddie Mac fell $1.55, or 19.28 percent, to $6.49, while Fannie Mae fell $2, or 14.71 percent, to $11.60.

Other financial stocks also fell as investors worried about the sector. Citigroup Inc. slipped 22 cents to close at $19.70, while Wachovia Corp. fell 65 cents, or 3.41 percent, to $18.41.

The Russell 2000 index of smaller companies rose 4.86, or 0.67 percent, to 725.90.