Stocks opened sharply higher Wednesday as Intel's positive outlook and better-than-expected bank earnings lifted the mood on Wall Street. In-line economic readings also helped.
The Dow Jones Industrial Average jumped more than 100 points, or about 1 percent. The tech-heavy Nasdaq advanced 1.5 percent, while the S&P 500 index gained 1 percent.
In March, consumer prices rose 0.3 percent, held down by a second straight monthly drop in clothing prices, after a flat CPI reading in February. Economists had expected an increase of 0.4 percent. Core CPI, which excludes volatile food and energy costs, ticked up 0.2 percent.
Housing starts fell 11.9 percent last month to a lower-than-expected annual rate of 947,000 units. Building permits, a gauge of future building activity, slipped 5.8 percent.
Industrial production unexpectedly rebounded in March, climbing 0.3 percent after February's revised 0.7-percent drop, as utilities cranked up production to deal with colder weather, which offset weaker manufacturing activity due to a strike at a major auto-parts maker.
Crude oilset a new high at $114.53on Wednesday, while the dollarhit a new low against the euro. Crude supplies unexpectedly fell by 2.3 million barrels the EIA said in its weekly report. Analysts had expected a build of 1.5 million barrels.
But earnings were the big star of the day.
"The big fear has been that the credit woes are going to infect the main economy. And, so far, there have been no signs of epidemic," Bernard McSherry, senior vice president of strategic initiatives at Cattone & Co., told CNBC.
"The earnings that we've been seeing coming out have been reasonably strong, reasonably good," McSherry said. We'll have wait and see how financial earnings play out over the coming days, McSherry said, "but overall it's been OK."
JPMorgan Chase reported its profit fell 50 percent to $2.37 billion, or 68 cents a share, draggged down by $5.1 billion in reserves it set aside for bad loans and mortgages. But the bank's earnings beat expectations.
Wells Fargo also beat estimates. The fifth-largest bank reported its net fell 11 percent to $2 billion, or 60 cents a share, hit by credit problems. Analysts had expected earnings of 57 cents.
(Click here for an S&P 500 earnings scorecard, with 10 percent of companies reporting.)
Intel reported after the closing bell Tuesday. The chip giant met earnings expectations and boosted its forecast for the current quarter, saying it expects sales of $9 billion to $9.6 billion, compared with current estimates of $9.24 billion.
Intel shares rose about 5 percent Wednesday, making it the best performer on the Dow.
Fellow Dow component Coca-Cola also beat expectations, reporting its profit rose 19 percent to $1.50 billion, or 64 cents a share, helped by solid overseas sales.
But it wasn't all rosy news.
Seagate Technologies reported its profit rose 62 percent but the world's largest computer disk-drive maker missed expectations and lowered its forecast. The San Francisco company said profit margins have been squeezed by falling prices but demand -- at the consumer and corporate level -- remains strong despite the worsening economy.
Four brokerages cut their price targets on Seagate stock, but kept their ratings, which ranged from "neutral" to "strong buy."
Merrill Lynch may write down between $6 billion and $8 billion more, the Wall Street Journal reported, citing sources familiar with the situation. Merrill shares were off 0.8 percent premarket. The bank is also preparing a cost-saving plan that will include job cuts of 10 percent to 15 percent in some struggling business areas, such as bond financing, the paper said.
This came on top of dismal earnings from Washington Mutual. The largest U.S. savings and loan posted a $1.14 billion first-quarter loss, hurt by mounting credit losses as more mortgage borrowers fall behind on payments.
And U.S. money manager BlackRock reported its earnings rose 24 percent but still fell short of estimates.
In Europe, battered bank UBS cut its dividend by a third, based on current stock prices, as it moved to a stock dividend from cash to shore up its equity base.
Shares of J.C. Penney slipped after Chief Executive Myron Ullman said the department-store operator would no longer provide annual guidance. Ullman said this is probably the most unpredictable environment he's seen in the 39 years he's been in the business. The remarks came a day after Ullman said the retailer would need more time to meet its five-year growth plan.
This Week:
WEDNESDAY: eBay, IBM earnings; crude inventories; Beige Book; Fed's Yellen, Plosser speak
THURSDAY: Merrill Lynch, Nokia, Pfizer, Capital One, Google earnings; jobless claims; Philly Fed report; leading indicators; Fed's Kohn, Fisher speak
FRIDAY: Caterpillar, Citigroup, Honeywell, Xerox earnings; Fed's Lacker, Rosengren speak
Send comments to cindy.perman@nbcuni.com.