China and India may be the first countries that come to mind when speaking of emerging markets. But another important nation is Brazil, where the Bovespa stock index is near record highs.

Several Brazilian banks’ shares are also on the rise, including Banco Itau Holding Financeira. ()

The Sao Paulo-based firm is one of the largest banks in Brazil, serving consumers and businesses. It also has branches in the Cayman Islands, in New York and across Europe.

Its profit rose 56% in 2003, but growth has slowed since then. Its earnings grew 29% last year. Still, analysts see a rebound to 45% this year.

Its quarterly earnings picture has improved. Last month, the bank delivered a 53% jump in third-quarter results. That was its best performance in nine quarters and the third straight period of accelerating growth. Its after-tax margin rose for the third straight quarter, to 22.1%.

The bank suffered trading losses for Q3 due to market volatility. But its loan portfolio expanded 26.9% in the quarter, led by a 62% jump in auto loans and a 26% rise in credit to small and midsize firms.

Banco Itau’s nonperforming loans ratio fell to 4.7% from 5.1% in the second quarter.

Indexes faltered to a mixed close Wednesday as slipping crude oil prices and a possibly final interest-rate cut failed to buttress buyers.

The NYSE composite closed 0.2% higher, based on early figures, led by energy stocks.

But the Nasdaq notched a 0.6% loss. The S&P 500 slipped 0.4% while the Dow ended down a fraction.

Preliminary figures showed volume rose across the board, marking the Nasdaq’s second distribution day in recent weeks. It was also a distribution day for the S&P 500. The Dow’s loss was too small to be considered institutional selling.

The Nasdaq slipped despite a 3% jump by Google () as other tech stocks tumbled.

Research In Motion () took a pounding, losing 4.66 to 121.63. The smartphone maker appears to be adding another handle to its base.

On the upside, communications chipmaker NetLogic Microsystems () gapped up for a 3.93 gain to 32.79. The company handily topped Q1 consensus. The 14% jump left shares just below a possible buy point at 33.

On the foreign front, Brazil’s Bovespa index rose to a record high, blasting ahead 6.3% after Standard & Poor’s announced it was raising the country’s foreign bond rating. The move gives Brazil’s bonds investment-grade ratings, on par with India, Morocco and Romania, and may help attract additional foreign capital.

Brazilian home builder Gafisa ()jumped 5.89 to 43.55. Companhia Brasileira () added 3.94 to 45.49. Unibanco Holding () spiked up 15.28 to 145.41. Banco Itau Holding () gained 2.28 to 28.05. Banco Bradesco () rose 1.58 to 22.58.

3:15 p.m. Update: Stocks Retreat After Fed Announcement

By VINCENT MAO

The major stock indexes hovered near session highs in late trade Wednesday. Equities extended gains just after the Fed gave the market another rate cut, but they’ve pulled back some.

At 2:51 p.m. EDT, the Dow and Nasdaq were up 1% each. The S&P 500 gained 0.6% and Nasdaq 0.5%.

Volume was tracking higher on both exchanges.

Techne () climbed 2.43 to a near eight-year high of 74.22 in heavy trading. The biotech is following through after clearing a 71.52 buy point from a base-on-base pattern Tuesday.

Cummins () powered up 4.75 to 62.24 in heavy trade. Earlier today, the engine maker topped views with a 37% jump in Q1 earnings. That was its best performance in several quarters. Cummins is building a potential cup base.

On the downside, Cash America International () dropped 4.25 to 40.90 in busy trading. But it bounced from a session low of 38.30. Jefferies & Co. cut the pawnshop operator to hold from buy, citing valuation.

2:30 p.m. Update: Fed Cuts Rates As Expected

By ED CARSON

The Federal Reserve cut the fed funds rate by 25 basis points to 2%, as expected, citing weak U.S. economic activity and “stressed” financial markets. But it also cited rising commodity prices and inflation expectations, making the inflation outlook unclear.

The Fed said it expects sharp rate cuts in recent months would support growth, but stood ready to act as needed.

The vote was 8-2, with the dissenters likely favoring no move. Many analysts expect that this would be the last Fed cut of the latest cycle of rate reductions.

Stocks, which were rallying just ahead of the Fed’s action, moved up and down after the news. At 11:24 a.m., the Dow was up 0.9%, while the Nasdaq and S&P 500 rose 0.5%.

1:15 p.m. Update: Indexes Back Off Ahead Of Fed

By VINCENT MAO AND ALAN R. ELLIOTT

Stocks pulled back from session highs by midday Wednesday, ahead of the central bank’s decision on interest rates.

At 12:44 p.m. EDT, the Dow led with a 0.7% gain. A 13% jump in shares of General Motors () on an earnings report boosted the index. The Nasdaq and NYSE composites were up 0.5% each, the S&P 500 0.3%.

The Fed’s interest rate announcement is due at about 2:15 p.m. EDT. A quarter-point cut to 2% is expected.

May crude futures fell an additional $1.88 a barrel, slipping to $113.75. A 3.9-million-barrel increase in weekly inventories was nearly triple the consensus forecast and the 13th increase in the past 16 weeks. Gasoline inventories fell for a seventh straight week.

Crude pegged a record high Monday after the shutdown of some production and a major pipeline outage in the North Sea, along with various production interruptions in Nigeria. Oil dropped nearly 3% on Tuesday after the restart of the North Sea pipeline. It is now 5% off Monday’s high.

CyberSource () climbed 1.99, or 12%, to 18.29 in fast trade. It cleared a 17.66 buy point of a double-bottom base. Volume was tracking more than three times average. It’s in buying range until 18.54. After Tuesday’s close, the provider of online payment services posted a Q1 profit, excluding items, of 16 cents per share. That was 2 cents above views and double year-ago levels. Revenue surged 141% to $53.4 million, also above views.

NetLogic Microsystems () gapped up and rallied 3.40, or 12%, to 32.26. Late Tuesday, the chipmaker reported a 58% jump in first-quarter profit and a 46% rise in revenue. Both were ahead of views. The stock’s Accumulation/Distribution Rating has improved to B from a worst-possible E last month.

Open Text () gapped up and gained 1.67 to 35.65 in fast trade. This morning, the business software maker won two upgrades after posting better-than-expected earnings and sales late Tuesday. Research Capital upgraded the business software firm to buy from accumulate. And GMP Securities lifted shares to buy from hold. Both brokers raised their price targets on the stock.

On the downside, Bois d’Arc () gapped down and tumbled 1.95, or 8%, to 24.03 in huge trade. The oil and gas producer dropped despite news that it would be acquired by Stone Energy () in a deal valued at $1.8 billion. Stone shares tumbled 9%.

11:15 a.m. Update: Indexes Hold Ground In Mixed Volume

By ALAN R. ELLIOTT

Indexes clung to highs after an early jump spurred by earnings wins across a broad range of sectors.

The NYSE composite held a 0.7% gain, and the Nasdaq stuck with a 0.6% advance at 10:53 a.m. EDT. International issues led the NYSE’s upside, while biotechs scored solid gains for the Nasdaq. The S&P 500’s 0.4% rise lagged the Dow’s 0.7%. Citigroup () pulled both indexes lower.

Advancing stocks led decliners by better than 3-to-2 on both exchanges. Trading volume was lower on the NYSE, slightly higher on the Nasdaq.

Stocks were deeply mixed across Asia. The Shanghai composite bolted 4.8% as banks and insurers drove higher on solid Q1 earnings reports. Hong Kong’s Hang Seng index slipped 0.6% ahead of a holiday Thursday.

In Europe and the U.K., indexes recovered from early losses and had posted moderate gains in late trading.

The April Chicago Purchasing Managers’ Index, a broad gauge of manufacturing activity in the Midwest region, came in better than expected. The 48.3 reading was still below the crucial boom-bust 50 mark that would begin to indicate economic expansion. But it was the index’s third monthly gain after slipping to a six-year low in February.

Monolithic Power Systems () amped up for a 1.20 gain to 22.42. The semiconductor chip maker reported Tuesday it neatly topped Q1 views and said it planned to restate some prior tax figures to lower levels. The move broke shares above a 22.03 buy point from a handle in a six-month, double-bottom base. Cummins Diesel () powered ahead 5.38 to 62.87 after plowing over Q1 sales and earnings views.

Private college educator Strayer Education () jumped 16.18 to 196.07 on powerful volume. It, too, topped Q1 EPS views and upped Q2 guidance above consensus. The gap-up move launched the stock above the 196.01 buy point from a five-month cup-shaped base.

10:15 a.m. Stocks Rise On Mixed Volume

By VINCENT MAO

Stocks opened to the upside Wednesday and tacked on more gains ahead of this afternoon’s decision on interest rates.

At 9:54 a.m. EDT, the NYSE composite had gained 0.6% and the Dow 0.5%. The Nasdaq and S&P 500 each rose 0.4%.

Volume was tracking mixed, with NYSE higher and Nasdaq lower.

First Solar () gapped up and rose 13.37, or 7%, to 298.29. That puts the stock 5% past a 283.10 buy point from a cup base. Before the open, the maker of solar modules said Q1 earnings spiked to 57 cents a share, up from 7 cents a year earlier and a dime above views. Sales nearly tripled to $196.9 million, also above views.

Visa () added 1.10 to a new high of 81.98. On Tuesday, the credit card processor staged a huge reversal. Shares fell more than 6% early in the day but bounced back to close up 7%.

Fellow credit care firm MasterCard () extended Tuesday’s 13% pop, with Wednesday morning shares gaining 4.52 to 278.50. It’s now 25% past a 222.35 buy point.

On the downside, Rofin-Sinar Technologies () gapped down and slumped 8.27, or 18%, to 37.67 on huge trade. Before the open, the maker of laser cutting and welding tools posted fiscal Q2 earnings and sales below analysts’ expectations.

Chicago Bridge & Iron () gapped down and tumbled 6.20, or 13%, to 42.11 in heavy trading. The engineering and construction company reported Q1 profit shy of expectations.

9:15 a.m. Update: Stocks Poised For Higher Open

By VINCENT MAO

Stock futures pointed to a higher open Wednesday on better-than-expected GDP data.

Nasdaq futures climbed 6 points vs. fair value, S&P 500 futures gained 3 points and Dow futures rallied 37 points.

In economic news, the ADP Employment Survey predicted 10,000 new private-sector jobs in April.

The jobs report from the Labor Department will be out on Friday. A decrease of 80,000 jobs, both public and private, is seen.

The advanced reading of the first-quarter gross domestic product said the economy grew 0.6%, slightly above economists’ estimates for a 0.5% rise.

The employment cost index rose 0.7%, slightly below forecasts.

Just shortly after the open, the Chicago PMI index for April will be out. Forecasts call for a dip to 47.5.

The weekly energy inventories report is due out at 10:30 a.m. EDT.

Meanwhile, the Fed’s announcement on interest rates is due at 2:15 p.m. EDT. The central bank is widely expected to cut rates to 2% and then halt their string of cuts.

A couple of Dow components reported earnings.

General Motors () climbed 4% in the pre-market after reporting a smaller-than-expected first-quarter loss. The auto giant lost 62 cents a share, excluding items, down from a profit of 17 cents a share the prior year. Sales fell 2% to $42.7 billion, but that was above analysts’ estimates for $40.1 billion. During the quarter, the company faced a number of challenges, including the weak economy an labor strikes.

Procter & Gamble () climbed 3% in pre-open trading after it beat views. The consumer products supplier reported fiscal Q3 earnings of 82 cents a share, up 11% from a year before and a penny above estimates. Sales hit $20.46 billion, also above estimates. P&G raised the lower end of its full-year guidance to a range of $3.48 to $3.50 a share vs. views for $3.50.

Elsewhere, Citigroup () announced late Tuesday that it’s seeking to raise $3 billion through a stock offering to help boost its capital. A day later the company raised the offering to $4.5 billion. Citi has been hurt by huge write-downs tied to the subprime mortgage crisis. Shares fell 3% in the pre-market.

Garmin also fell 3% in pre-open trading after it delivered Q1 earnings and sales below views. The GPS device maker is trading near two-year lows.

The managers of Allianz OCC Growth Fund look for big stocks ready to make big moves.

“We do it through fundamental analysis,” said co-manager Robert Urquhart. “Our analysts try to find stocks with anomalies. We look for stocks that are underappreciated by the market.”

The fund likes stocks with attractive valuations. But the managers are not bargain hunters. “We’re looking for the best return opportunities at a given price,” said co-manager Martin Mickus.

The $472 million fund is tightly focused on growth stocks. Urquhart and Mickus want to ride the market’s rotation back toward that style.

Value stocks outperformed growth every year from 2001 through 2006. But starting in 2007, growth has outshined.

The Russell 3000 Growth Index gained 5.59% since Dec. 31, 2006, going into Tuesday. The Value Index lost 2.24%.

And growth stocks have more attractive valuations. Growth stocks’ average price-earnings ratio was 19.64 as of April 30, according to Russell Investments. Their P-E over the past 25 years averaged 24.98.

Value stocks have a P-E of 16.25. That tops their 15.92 long-term average. So growth stocks have more room to grow before hitting a wall in the form of a long-term trend.

This approach usually serves the fund well. Going into Wednesday, so far this year the fund was down 1.59%. That was less than half of the 4.26% decline averaged by the fund’s large-cap growth rivals tracked by Morningstar. The S&P 500 was down 2.76%.

Over the past three years the fund’s average annual return was 13.70% vs. 9.49% by its peers and 8.62% by the S&P.

Prosperous Prognosis

Home base for Urquhart and Mickus is fund subadviser Oppenheimer Capital, which Allianz Global Investors owns.

Biotech firm Celgene () is up 42% so far this year. The company makes therapies to treat cancer and immune-inflammatory-related diseases. Products include Revlimid and Thalomid.

Celgene was a top holding of the fund in its latest disclosure. The company’s pretax margin was 44.7% in 2007. That was up from 19.1% and 32.9% the prior two years. Return on equity the past three years rose from 12.7% to 16.1% and 18.8%.

The fund added to its stake in the middle of 2007. The managers felt Revlimid would generate better sales and earnings after its debut in Europe than other analysts expected, Urquhart says.

Gilead Sciences () is up 18% this year. The drug maker’s annual pre-tax margin ranged from 57.3% to 62.4% over the past three years. Its ROE climbed to 66.2% last year. The previous two years it was 32.2% and 53.9%.

The company, another top holding, is a leading maker of treatments for HIV such as Truvada.

“We still like Gilead,” Urquhart said. “We like its HIV franchise. They came out with a triple therapy (Atripla), which we didn’t think would cannibalize Truvada, the dual-therapy drug.”

Research In Motion () has enjoyed earnings per share growth of 70%, 100%, 110% and 118% the past four quarters. The maker of the BlackBerry has beaten consensus earnings estimates of analysts polled by Thomson Reuters for 11 of the past 12 quarters. The only exception was the second quarter last year, when the company matched the outlook.

Secular Shift

On Monday RIM came within a microchip of its all-time high around 137 set last Nov. 7. The stock, a top buy in the fund’s latest disclosure, is up 16% this year.

“RIM is benefiting from a huge secular shift,” Mickus said. “Smart phones like BlackBerry are growing faster than (regular) cell phones. RIM and Apple () we own both are taking market share from Nokia () and Motorola.” ()

Treasury prices plunged Tuesday, giving back gains after the biggest rally in three years.

Traders went into sell mode after Citigroup landed a cash injection that soothed some fears over the health of the financial sector.

Abu Dhabi Investment Authority, the world’s largest sovereign wealth fund, will take a 4.9% stake in Citi through a $7.5 billion issue of preferred stock. It gives Citi fresh capital as it wrestles with credit liquidity issues stemming from the subprime mortgage crisis.

The deal sparked some rare optimism over the ability of banks to cope with the credit debacle. Still, that relief was tempered by the 11% dividend Citi must pay Abu Dhabi, topping the average yield on U.S. junk bonds.

The benchmark 10-year note was yielding 3.95%, from 3.84% late Monday. In a strong rally Monday, 10-year yields were pushed down as far as about 3.79%, their lowest since early 2004.

Outside the optimism from the Citi cash injection, there was further bad news on the U.S. housing market that did little to pare bond losses. Grim tales on home sales have become commonplace.

The S&P/Case-Shiller National Home Price Index fell 1.7% from June, marking the largest quarterly decline in 21 years.

According to the index, prices of existing U.S. single-family homes in the third quarter slumped 4.5% from a year earlier, matching a record decline from the previous period.

Bonds held at weaker levels even after data showed U.S. consumer confidence hit a two-year low this month and manufacturing activity in the Midwest slipped in October.

Meantime, Goldman Sachs slashed its target for the expected trough in U.S. benchmark interest rates by a full percentage point, citing an increased probability of recession and the likelihood of a prolonged period of sluggish performance for the U.S. economy.

The two-year note was trading 10/32 lower in price for a yield of 3.08%, from 2.91% late Monday, while the five-year note fell 25/32 for a yield of 3.38%, from 3.21%.

The 30-year bond was 1-10/32 lower in price for a yield of 4.37%, from 4.29% on Monday.

One way a conservative investor can gain foreign exposure is to buy a U.S. stock with an international footprint.

Cleveland-based Parker Hannifin () is such a stock.

While many stocks are slipping amid the U.S. slowdown, Parker Hannifin is charging ahead.

The NYSE composite is down 5% from a year ago; Parker Hannifin’s stock rose 30% in the same period.

The reason is foreign exposure.

In 2001, international industrial sales made up about 21% of Parker Hannifin’s net sales. In the most recent quarter, that figure was 42%.

That 42% figure may understate the foreign exposure because of the way Parker reports segments.

North American industrial sales make up about 34% of net sales; aerospace, 15%; and climate and industrial controls, 9%. It isn’t clear how much of the latter two segments are foreign sales.

It is clear, however, that Parker Hannifin is firing on all cylinders.

Earnings jumped 30% in fiscal Q3 ended in March. Sales grew 14%.

That prompted Chief Executive Don Washkewicz to note at the April earnings call that while he thinks the U.S. has been in a recession for at least eight months, Parker Hannifin is not in a recession.

Growth is particularly strong in Asia and Latin America.

Plus the weak dollar is boosting sales. Six percentage points of Parker’s 14% sales increase in fiscal Q3 were tied to currency exchange.

That prompted analyst Alex Blanton of Ingalls & Snyder to ask the big question at the earnings call: What if the dollar strengthens?

Management had no easy answer.

“We just need to manage through it,” Chief Financial Officer Tim Pistell said.

Parker Hannifin’s dividend yield is 1%, and the annual payout has risen for 51 consecutive years.