Stocks ended sharply higher, sending major indexes to their biggest one-day advance in more than three months, as upbeat quarterly results from Wells Fargo eased credit concerns and a $4 slide in oil prices calmed inflation worries.
The major indexes each were up substantially, with the tech-gauge Nasdaq up 2.6 percent, the blue-chip Dow ahead nearly 2 percent and the Standard & Poor's 500 more than 1.5 percent on the plus side.
Financials gained across the board after Wells Fargo brought a surprise in earnings. Meanwhile, airlines, transportation stocks and automakers also benefited, after being beaten down by the rabid increase in oil prices.
Oil prices fell dramaticallyafter a report showed a surprising increase in crude supplies, indicating that demand was falling and conservation measures were taking hold.
"We got the follow-through that we looked for with these numbers," Tom Reiley, of SCS Commodities, said on CNBC. "It looks like the bubble may have burst for the short term."
Once the oil drop took hold, investors mostly shrugged off a Consumer Price Index reading showing thatprices in June rose by the biggest amount since 1982 on a continued surge in gasoline prices.
The bank rally began early when Wells Fargo , the fifth-largest US bank, posted earnings of 53 cents per sharewhich, though lower than a year ago, beat analyst expectations.
At the same time, the company said optimism about for the future will lead to a 10 percent dividend increase.