Stocks Surge on Big Fed Rate Cut

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The company now expects to finish in the upper half of its revised earnings forecast range of $3.00 to $3.15 a share for fiscal 2008.

Adobe Systems (ADBE) shares were up 1.5% after it reported a 55% surge in earnings to 45 cents a share from 29 cents a share in the third quarter of 2006 on a 41% jump in revenue. The software designer projects fourth-quarter revenue of $860 million to $890 million and non-GAAP earnings of 46 to 48 cents a share. S&P raised its profit estimates and kept its buy rating on the stock.

E*Trade Financial Corp. (ETFC) shares fell after it announced it will exit its wholesale mortgage business and restructure its institutional sales trading business. The online broker raised its allowance for loan losses and cuts its 2007 earnings forecast to $1.05 to $1.15 a share from a prior range of $1.53 to $1.67. S&P downgraded the stock to a hold from a buy rating. The rate cut helped the stock bounce from being down over 6% to a 1.5% decline.

Kroger Co. (KR) shares climbed 7.7% after it reported a second-quarter profit of 38 cents a share vs. 29 cents a year ago due to a 5.1% gain in identical supermarket sales and a 6.6% rise in total sales. For fiscal 2008, the supermarket chain sees identical supermarket sales growth of 4% to 5%, excluding fuel, and earnings of $1.64 to $1.67, compared with a prior range of $1.60 to $1.65 s share.

European equity indexes regained their footing as the Bank of England said it would guarantee all of Northern Rock's (NRK.L) deposits to end a run on the mortgage-lending bank. In London, the FTSE 100 index was up 1.63% to 6,283.30. Germany's DAX index climbed 1.27% to 7,575.21. In Paris, the CAC 40 index rose 2.02% to 5,549.35.

In Japan, the Nikkei 225 index fell 2.02% to 15,801.80. In Hong Kong, the Hang Seng index edged down 0.09% to 24,576.85. The Shanghai composite index was up 0.07% to 5,425.21.

Treasury Markets

Yields plunged in the wake of the FOMC's rare and surprisingly deep cut in both the Fed funds target and discount rate by a half percent, reports Action Economics. The 10-year yield sank to 4.46% and bounced to 4.47% on the inflationary implications.

Bogoslaw is a reporter for BusinessWeek's Investing channel.