The Dow rallied to the finish line after a rocky session Wednesday amid a few glimmering signs that the recession may be easing up.
The Dow Jones Industrial Average gained 109.44, or 1.4 percent, to close at 8,029.62. The S&P 500 gained 1.3 percent, while the Nasdaq ended flat as techs dragged.
Among the encouraging signs: The Federal Reserve's "beige-book" report indicated that the pace of economic contraction may be slowing, the New York Fed delivered a better-than-expected report on manufacturing, Procter & Gamble raised its dividend and American Express said payment defaults rose only slightly.
And the CBOE Volatility Index, widely considered the best gauge of fear in the market, closed at 36.17, its lowest level since September.
Of course, there were still a few nagging signs of recession: Techs remained underwater as Intel's lack of guidance rattled the sector. And Wal-Mart issued a warning. Plus, HSBC downgraded U.S. equities by two notches to "underweight" from "overweight," saying "earnings have yet to trough and there is surely more financial debris still to surface."
On Tuesday, stocks dropped about 2 percentas retail sales unexpectedly declined and bank worries simmered ahead of some key earnings.
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Procter & Gamble jumped 3.2 percent after the maker of Tide detergent and Crest toothpaste raised its dividend 10 percent, adding to a string of payouts over the past 50 years.
American Express shot up 12 percent, buoying the financial sector, after the credit-card provider said payment defaults rose only slightly after months of barreling higher and forcing huge writedowns.
JPMorgan Chase rose 6.1 percent, while Citigroup fell 1 percent ahead of earnings from the banks, due out later this week. Bank of America, which reports on Monday, saw its shares climb 3.5 percent.
According to a New York Times report, the Obama administration is drawing up plans to disclose the conditions of the 19 banks in the country and will reveal some sensitive details of the stress tests now being completed.
European banks took a hit Wednesday after UBS , Switzerland's largest bank, said it will cut 8,700 jobs and expects a $1.75 billion first-quarter loss.
In other jobs-related news, Yahoo is planning to cut hundreds of jobs ahead of its first-quarter earnings report, the New York Times reported.
Global tech stocks declined after Intel reported earnings of 11 cents a share, less than half of the 25 cents it earned a year earlier, but managed to beat expectations. The big takeaway was that Intel said PC sales "bottomed out" in the first quarter — essentially calling a bottom — but what rattled the sector was that the chip giant refused to provide an outlook.
Bleak results from the Netherlands' ASML and India's Infosys also contributed to the fall in tech stocks.
Shares of Intel rival AMD slipped 5.2 percent. Computer maker Dell saw its shares fall 2.6 percent and networking-gear maker Cisco saiw its stock fall 2.1 percent.
"Tech stocks have moved significantly this year … so perhaps they have gotten a little bit ahead of themselves," Hank Smith, chief investment officer at Haverford Investments said on CNBC this morning.
There is a false sense of optimism over the economy and in the markets, this is still a bear market and the current rally is a bear-market rally, Smith said.
On the plus side for tech, eBay said it had reached a tentative agreement to buy a controlling stake in its South Korean counterpart GMarket, the largest such company by revenue in that country. The deal would be valued at $24 a share, the Wall Street Journal reported.
Meanwhile, some of the biggest beneficiaries of the recession — discount retailers and fast-food chains — started to show some signs of wear.
Wal-Mart CEO Mike Duke said he doesn't see a quick end to the recesssionas weakness persists.
And Burger King said it saw an unexpected drop in customer visitsto its restaurants in March.
In Asia, Dallas Fed President Richard Fisher said he shared President Obama's view that though the U.S. economy is not "out of the woods" yetbut added that there are "glimmers of hope" for a recovery in the future.
"The stimulus program is kicking in, our efforts to restore some vibrancy to the credit markets are taking grip", Fisher told CNBC.
After the closing bell on Tuesday, BlackRock announced plans toraise $5 billion to $7 billion worldwide to buy toxic assets from U.S. financial institutions under a planned US government program.
Abbott Laboratories shares skidded 4.6 percent after the drug maker's sales fell short of expectations but one-time gains and solid stent demand boosted earnings.
Starbucks shares dropped 1.8 percent after Deutsche Bank lowered its rating on the stock to "sell" from "hold."
Among the day's other economic news, consumer prices recorded their first annual drop since 1955 and industrial production fell for a fifth straight month in March, while mortgage applications slippedlast week even though borrowing rates remained low, though the results may have been skewed by the Easter holiday.
Trading volume was light, with 1.48 billion shares changing hands on the New York Stock Exchange. Advancers outpaced decliners, 7 to 3.
Still to Come:
THURSDAY: Housing starts; weekly jobless claims; Philly Fed survey; Fed's Lockhart, Yellen speak; Earnings from JPMorgan, Harley-Davidson, Nokia, Southwest Air and Google
FRIDAY: CNBC's 20th Anniversary; consumer sentiment; Bernanke speaks; Earnings from Citigroup, GE and Mattel
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