The Light Reading Index climbed 27.51 (6%) to 481.69 in midday trading today. A broad stock market rally and investor optimism indicated that the market may be coming out of its seemingly endless freefall (see chart).

Likewise, the Dow Jones Telecommunications Index, comprising mostly service provider stocks, rose 4.72 (2%) to 216.87 early this afternoon.

After weeks of lousy corporate earnings announcements, way-after-the-fact analyst downgrades, and watered-down commentary by the nation’s top economists, it seems as if investors finally feel that most stocks have fallen far enough.

One notable example is Xilinx Inc. (Nasdaq: XLNX). Despite the fact that it and two other chip companies lowered their sales estimates to reflect the current recession (or, if you prefer, “negative economic growth period”), Xilinx shares were up 3.50 (8%) to 46.75 at midday (see Xilinx Posts Q3 Returns).

In a commentary on Morgan Stanley Dean Witter's Web site, Peter Canelo, a principal in the bank’s U.S. Investment Strategy Group, writes: “I think the stock market is bottoming... I expect the market to be significantly higher in the next six to 12 months.”

At midday, the big gainers in the Light Reading Index included Advanced Fibre Communications Inc. (Nasdaq: AFCI), up 2.44 (14.4%) to 19.31; Digital Lightwave Inc. (Nasdaq: DIGL), up 2.81 (10.84%) to 28.75; Juniper Networks Inc. (Nasdaq: JNPR), up 6.63 (11.3%) to 65.25; and Vitesse Semiconductor Corp. (Nasdaq: VTSS), up 3.91 (10%) to 42.97.

Only two stocks in the Light Reading Index were losing ground in the noon hour: Corvis Corp. (Nasdaq: CORV) dropped 0.91 (10.03%) to 8.13 and New Focus Inc. (Nasdaq: NUFO) was down 2.69 (12.65%) to 18.56 (see Broadwing Sells Corvis Shares).

-- Phil Harvey, senior editor, Light Reading http://www.lightreading.com