Wall Street enjoyed a second straight day in the green, building on its huge gains from Tuesday thanks to a solid outlook from tech giant Cisco and a continuation of the downward spiral of crude oil prices. 

Today's Market

The Dow Jones Industrial Average rose 40.30 points, or 0.35% to 11656.07, the Standard & Poor’s 500 index gained 4.31 points, or 0.34%, to 1289.19 and the Nasdaq Composite Index picked up 28.54 points, or 1.21%, to 2378.37. The consumer-friendly FOX 50 added 1.75 points, or 0.19%, to 913.94.

While the gains paled in comparison to Tuesday's 331-point surge on the Dow, which was the best one-day rally since April 1, the market recovered from an early hole that had placed the blue chips almost 100 points in the red.  Stocks turned around following another decline in crude oil futures, which closed below $120 a barrel for the second day in a row. 

Microsoft (MSFT) and Caterpillar (CAT) posted the largest percentage gains on the Dow, rising more than 3% a piece. On the other hand, General Motors (GM) led the blue-chip decliners, sliding 4% on the day. Also, insurer AIG (AIG) saw its shares decline ahead of its earnings report due out after the closing bell.  

The Nasdaq Composite performed much better than Dow and S&P, jumping more than 1% for the second day in a row. Foster Wheeler (FWLT) and Garmin (GRMN) led the way up on the Nasdaq 100, posting big gains on the day. 

Tech stocks received a boost from bellwether Cisco (CSCO), which beat the Street with its second-quarter results and issued an optimistic economic outlook. The company said it expects the current economic environment to stick around for a relatively short time. Shares of Cisco jumped more than 6% on the day. 

The broader market benefited from another pullback in crude oil prices, which closed down 59 cents to $118.58 a barrel. Crude oil futures started descending after the Department of Energy's weekly inventory report, which showed crude stockpiles grew by a larger-than-expected 1.6 million barrels last week. However, gasoline stockpiles were down by 4.3 million barrels, a much larger decline than the 1.1 million barrels expected. 

A day ago crude futures tumbled below $120 a barrel to the lowest level since May 2. After hitting all-time records on July 3 of $145 a barrel, crude prices have plunged 18% as demand has declined amid record gas prices. The greenback wasn't giving oil any help as it jumped to seven-week highs against the euro and yen. Typically, as the currency gains in strength, dollar-traded commodities like oil tend to slide and vice versa. 

Earlier in the day the market was under pressure from Freddie Mac's (FRE) dismal results. The government-sponsored mortgage giant lost $1.63 a share, down from a profit of 96 cents a year ago. It marks the fourth-consecutive period of losses for Freddie, which reaffirmed its intent to raise at least $5.5 billion. The company, which has been slammed by the housing slump, also said it plans to slash its dividend by at least 80%. 

Last month the Treasury unveiled a backstop plan that will allow the government to invest in and loan to Freddie and sister company Fannie Mae (FNM) if needed. The plan highlights the outsized role of the mortgage giants, which back or own more than $5 trillion in U.S. mortgages. Shares of Fannie and Freddie closed significantly lower on the day. 

Corporate Movers

Sprint Nextel (S) fell 14% even though the telecom posted better-than-expected quarterly results and lost fewer subscribers during the period than analysts had anticipated. Shareholders keyed in on the company's expectations to take higher post-paid subscriber losses in the current quarter and its new plans to sell $3 billion in stock to pay off debt. Sprint posted adjusted-earnings of 6 cents per share, topping consensus estimates by 3 pennies. 

General Motors Corp.'s (GM) lead independent board member told The Wall Street Journal the board "unanimously" supports CEO Rick Wagoner and the rest of the management team and is actively involved in the company's operations. George Fisher told the newspaper the board met in a closed "executive session" without Wagoner this week and emerged with unanimous backing for him. He also said two-thirds to three-fourths of the board participates in weekly updates via teleconference, according to the Journal. 

Time Warner (TWX) confirmed its plans to split up AOL's dial-up Internet and ad segments as it reported second-quarter results that beat the Street. The media giant and owner of CNN and Warner Bros., posted an adjusted-profit of 24 cents per share, a penny higher than expected. Time Warner's revenue increased by 5% to $11.56 billion, above consensus estimates for $11.45 billion. 

Time Warner Cable (TWC), which is 84% owned by Time Warner but will soon be spun off, also beat the Street with an adjusted-profit of 34 cents per share, 2 cents higher than estimates. However, the cable operator's forecast fell below analyst expectations, sending its shares 5% lower. 

Lehman Brothers (LEH) may unload $30 billion to $50 billion in assets and slash its dividend by 90%, Ladenburg Thalmann analyst Richard Bove wrote in a research note. The influential analyst increased his forecast for 2008 losses and cut his forecast for 2009 profit. Bove, who also cut his price target to $23 from $27 on Lehman, said the investment bank may spin-off 20% of its asset management business Neuberger Berman, which is worth $1.3 billion.

AIG (AIG) is scheduled to report quarterly earnings after Wednesday's closing bell. The world's largest insurer is expected to post a quarterly profit of 63 cents a share, down from a profit of $1.77 a share from a year ago, according to data provided by Thomson Reuters. The company’s stock has fallen nearly 50% from the beginning of the year but has rebounded 10% over the past month.

Eli Lilly (LLY) and Covance (CVD) signed a 10-year strategic deal worth $1.6 billion aimed at transforming Lilly's R&D model. As part of the deal, Covance agreed to acquire Lilly's 450-acre drug development campus in Greenfield, Indiana for $50 million and to offer the 260 employees that will be impacted employment. Shares of Covance rose 6% on the news. 

Ambac Financial (ABK) quadrupled its quarterly results, boosting its shares 23%. The bond insurer's adjusted loss of $1.53 per share missed consensus estimates of 65 cents from Thomson Reuters. CEO Michael Callen said the company's new "triple-A" rated public finance arm could start business as early as the fourth quarter.

Blackstone Group (BX) saw its shares rise after the private equity company's adjusted-earnings of 15 cents per share came in ahead of average estimates of 8 cents. The company's revenue slid by 63% to $353.7 million as the M&A business has slowed considerably due to the credit crisis. 

Whole Foods (WFMI) plunged 12% after the natural foods grocer's earnings missed the Street and the company halted its quarterly dividend. The company also issued 2008 guidance below average estimates and announced plans to cut store growth for next year. Whole Foods earned 24 cents per share, down from 35 cents the year before. Analysts had been expecting 31 cents per share. The company's revenue jumped 22% to $1.8 billion but also missed estimates. 

Priceline.com (PCLN) sank more than 17% even though the online travel site boosted its full-year forecast after its quarterly results topped estimates. The company's adjusted-profit of $1.55 was well ahead of average estimates of $1.41. Shareholders soured on the stock as the company warned of trouble ahead. 

Nasdaq (NDAQ) soared as the operator of the Nasdaq Stock Market posted better-than-expected earnings in its first post-merger quarter. The company earned 48 cents per share on a 47% jump in revenue to $821.5 million, compared to average estimates for 43 cents on $842.3 million in revenue. 

World Markets 

The Dow Jones Euro Stoxx 50 Index, a gauge of the 50 biggest companies in Europe, gained 28.93 points, or 0.86%, to 3409.02. The FTSE 100, London's benchmark index, rose 31.60 points, or 0.58%, to 5486.10.

On the continent, Paris' CAC 40 picked up 61.98 points, or 1.41%, to 4448.33, while Germany's DAX added 42.69 points, or 0.65%, to 6561.39.

In Asia, Japan's Nikkei 225 jumped 340.23 points, or 2.63%, to 13254.89.