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Wall Street had its first rush of euphoria in months Tuesday, with the Nasdaq composite posting its biggest one-day advance ever amid optimism that the Federal Reserve will cut interest rates. Blue chip stocks also soared, carrying the Dow Jones industrials up more than 338 points. 

Some market analysts interpreted the buying spree as a signal that Wall Street might actually have reached a bottom after months of earnings-driven selling. 

“This rally will stick. The market won’t go straight up again, but I think the worst is behind us,” said Bill Barker, an investment consultant with Dain Rauscher. 

The Nasdaq rose 274.05 to 2,889.80, or 10.4 percent, according to preliminary calculations.  

Much of the day’s gains occurred after Federal Reserve Chairman Alan Greenspan indicated at a banking conference that he was concerned about the nation’s slowing economic growth. 

But investors had already begun the day optimistic that the presidential deadlock was close to being resolved and pleased with news that Nokia expects strong sales and revenues next year. 

Nokia’s announcement gave investors further reason to buy following months of selling based on bad earnings reports. Nokia rose $5.50 to $49.88. 

— The Associated Press 

Stocks really surged after Greenspan expressed concern about the effects higher energy costs and tightening credit are having on businesses and consumers’ willingness to spend. 

Analysts said the chairman’s statement makes it very likely the Fed will relax its stance against cutting rates when it meets Dec. 19. That raises the possibility of an interest rate cut early next year. The Fed boosted rates half a dozen times between summer 1999 and summer 2000 because of concerns the economy was growing too rapidly and becoming vulnerable to inflation. 

“When you have a market that’s been as repressed as this, you set up this kind of coil-spring syndrome. You get some good news and that’s all it takes,” said Larry Wachtel, a market analyst with Prudential Securities. “You got clarification on the president, you had Mr. Greenspan making his speech, and that’s all you needed to snap back.” 

Indeed, after weeks of selling off stocks on earnings worries compounded by the election limbo, investors were buying with gusto Tuesday. 

Banker J.P. Morgan boosted blue chips, rising $13.13 to $151.63. Shares of Minnesota Mining & Manufacturing were up $11.63 at $116.63, an 11 percent gain, after announcing it had named W. James McNerney Jr., the head of General Electric Co.’s aircraft engines division who was passed over for GE’s top job, to be its next chairman and chief executive. 

Tech stocks, which have been among the most battered in recent weeks, also shot up. Microsoft rose $3.44 to $59.88; Sun Microsystems climbed $12.88 to $91.75, a 16 percent gain. 

But investors were still punishing stocks that warned of disappointing earnings. Shares of 3Com tumbled $3.34 to $10.01, a 25 percent drop, after the supplier of broadband equipment warned of soft quarterly results. 

Wall Street also shunned pharmaceutical and energy-related stocks, which had been viewed as safe havens during the market’s volatility. Drug maker Merck fell $2.25 to $89.75; Exelon fell $2.28 to $63.01.. 

“During the bad times, when most of the market was getting killed, drugs and utilities were on the ’high’ list,” said Wachtel, the Prudential analyst. “If I’m going to bargain hunt, I’m not going to look at these stocks.” 

Advancing issues outnumbered decliners more than 2-to-1 on the New York Stock Exchange, where volume came to 1.38 billion shares, well ahead of the 1.1 billion reported at the same point Monday. 

The Russell 2000 index rose 20.78 to 471.17. 

Overseas, Japan’s Nikkei stock average fell 1.7 percent. Germany’s DAX index rose 3.6 percent, Britain’s FT-SE 100 was up 2.3 percent, and France’s CAC-40 climbed 3.5 percent. 

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On the Net: 

New York Stock Exchange: http://www.nyse.com 

Nasdaq Stock Market: http://www.nasdaq.com