STOCKS BOUNCE BACK: Stocks made their broadest, sharpest gains of August as the Federal Reserve offered calming words on the growth of the economy and Cisco Systems provided proof of strong corporate earnings. The Dow Jones Industrial Average rose 132.65 points, or by 1.2 percent, to close at 10,787.80. Cisco sparked buying, rising $4.18} to $62.93} based on fourth-quarter earnings that beat analysts' estimates. But while the Fed survey, dubbed the "beige book," turned up little evidence of rising inflation, it also noted problems such as labor shortages and scattered reports of higher prices.
PROCTER & GAMBLE TO BUY IAMS: Procter & Gamble Co. has agreed to buy closely held pet-foodmaker Iams Co. for $2.3-billion in cash and assumed debt. Chief executive Durk Jager wants to enter fast-growing markets and introduce a flurry of new products to help triple P&G's sales growth, which was just 2.6 percent last year. Sales of expensive pet foods are increasing almost 10 percent a year.
MIXED DAY FOR IPOS: Red Hat Inc. shares nearly quadrupled in their first day of trading, underscoring investor confidence in the upstart Linux operating software. Red Hat closed at $52.06\ on the Nasdaq Stock Market after being initially priced at $14 and opening at $46. But shares of video rental chain Blockbuster Inc. were unchanged at $15 in their first day of trading, and Mortgage.com Inc. of Plantation saw its shares fall 84] cents to $7.15|.