The Dow closed at a new record as blue chip stocks were again boosted by better-than-expected earnings reports, but stocks ended mixed after two notable tech names disappointed investors.
"The tech sector vastly underperformed today but otherwise everything is trending in the right direction," said Dan McMahon, head of listed trading at CIBC World Markets. "A lot of people are pointing to this earnings season to be a touchstone in terms of the economy, and how things will be going forward so people will be paying close attention."
The Dow Jones Industrial Average closed 17 points above the previous record set on Feb. 20 and is now 200 points above where it was the day before the 400-point market meltdown on Feb. 27. The blue chip index gained for the fifth straight day and is up 13 of the last 14 sessions.
The S&P 500 ended just above the unchanged mark while the Nasdaq lagged following weak results from Yahoo and IBM.
"We're in the middle of a sustained rally that is being driven by earnings, as investors' worst fears have proved to be somewhat overblown," said Frederic Dickson, chief market strategist at DA Davidson.
JP Morgan Chase closed at a new high, sparking a rally in the financial sector. The bank reported first-quarter earnings growth of 55%, citing strong results for its investment banking unit. The financials group rose 1% as positive sector momentum continues to build following Citigroup'sstrong earnings report Monday.
The technology sector was held down by lukewarm earnings reports from Yahoo! and a Goldman Sachs downgrade of IBM .
Yahoo fell wider than 10% after announcing an 11% decline in quarterly earnings. Yahoo's new advertising system Panama has yet to contribute to the company's bottom line but Chief Financial Officer Susan Decker told CNBC that things were going as planned, and the company feels "very good" about its position relative to competitors such as Google.
IBMreported first-quarter earnings which matched analysts' expectations, as earnings rose 8% to $1.84 billion. Overall profit was lifted by software acquisitions but the company said U.S. sales were weak.
"We're now sort of climbing the wall of worry and you're seeing some of this bad news come out in the technology space," said Bill Nichols, senior managing director of equity trading at Bear Stearns. "But the big picture is that the market has had a nice run."
Chip industry bellwether Intel rose 2% after raising forecasts for gross margins. First-quarter results were mixed, however, as earnings beat Wall Street estimates but revenue fell short. Analog chipmaker Linear Technology surged 12% after it announced stronger-than-expected bookings and a $3 billion share buyback.
The industrials sector, the day's second best performing group, was lifted by Boeing, which closed at a new high on strong commercial airplane sales. Meanwhile, Caterpillar shares rose 2.9% following an analyst upgrade.
"We've had companies come in with good positive earnings and then, on top of all of that, the M&A activity has been the icing on the cake," Andrew Seibert, senior portfolio manager at Stewart Capital, told CNBC.com.
MedImmune shares gained 4% after sources told CNBC a sale could be announced as early as Monday. Clear Channel Communicationsaccepted an increased offer of $27.6 billion takeover offer from a group of private equity firms.
New York light sweet crude futures closed up 3 cents to around $63.13 after gasoline inventories fell for the tenth week in a row, down 2.7 million barrels. Refinery runs increased, however, improving the supply outlook.
Treasury prices were higher, sending yields lower.
Europe Closes Lower, Asia Mixed
European stocks declined Wednesday, with a rate hike from the Bank of England now in the cards.
The London FTSE-100, Paris CAC-40 and Frankfurt DAX all finished lower.
The takeover battle for Dutch bank ABN Amro has more time to reach a conclusion. ABN Amro confirmed it will meet Royal Bank of Scotland, Banco Santander and Fortis to hear the group's takeover proposal, but will continue exclusive takeover talks with Barclays.
Foreign currency markets remained in focus as the British pound reached 15-year highs against the dollar as the inflation outlook for the U.S. cooled, suggesting a Fed rate cut might occur in the near future.
Tokyo's Nikkei 225 Average finished higher led by real estate stocks such as Sumitomo Realty & Development, as expectations for solid earnings results spread within the laggard sector after an upbeat outlook from Tokyu Land. Technology shares such as Kyocera also rose after U.S. peers including microchip maker Intel reported solid earnings results.
South Korea's Kospi Index hit a closing record, as LG Chem hit its highest in over a year on solid profits, while Samsung Fire enjoyed its biggest gain since November following news of an increased stock buyback plan.
Hong Kong stocks held steady as investors paused before the release of China's economic growth figures, while PICC Property and Casualty sank after its earnings lagged forecasts.
China's main stock index hit a record high in early trade but then dropped, led by weak blue chips. Massive speculation in third-tier stocks continued.