Stocks rallied yesterday as the Federal Reserve delivered a deep interest rate cut and said it may do it again. The Fed cut its funds rate to 2 per cent, its lowest level in 40 years.

The Dow Jones industrial average climbed 150.09 points, or 1.59 per cent, to 9,591.12, the highest close since the blue-chip index finished at 9,605.5 on September 10th. The Nasdaq composite jumped 41.44 points, or 2.31 per cent, to 1,835.09, and the Standard & Poor's 500 rose 16.02 points, or 1.45 per cent, to 1,118.86.

Hewlett-Packard shot higher on news that Hewlett family members, who own a 5 per cent stake in HP, said they opposed a merger between HP and Compaq Computer. HP soared $2.51 to $19.40, accounting for 13.5 per cent of the Dow's rise, while Compaq fell 49 cents to $8.50.

Cisco was the most active on Nasdaq and gained 57 cents to $18.47. It reported profits that beat estimates. Cisco said sales rose from the previous quarter and forecast revenues will be flat to slightly higher in the next quarter.