Stocks advanced Tuesday after a report on Chinese exports blew past expectations, offering hope for the global recovery.
Chinese exports grew about 50 percent from a year earlier, which helped to assuage concerns about a double-dip recession and refueled investors' appetite for risk. Materials, consumer discretionary and industrials were the biggest gainers.
The Dow Jones Industrial Average was up more than 100 points, led by DuPont , Boeing and Caterpillar.
The CBOE volatility index, widely considered the best gauge of fear in the market, dropped 10 percent to around 30.
The euro rose above $1.20 against the dollar, sending energy prices higher: Oil topped $73 a barrel. But gold fell more than $10, tradign below $1,235 an ounce.
Texas Instruments rose after the chip maker said second-quarter earnings and revenues would be at the high end of previous forecasts.
And Ciena jumped after the company said its loss was narrower than expected and that customer spending was improving.
But the chip sector remained mixed after Intel was downgraded to "neutral" on Tuesday by SIG Susquehanna, which cited a weakening PC market.
Technology stocks have been under pressure lately, and in fact were among the top decliners in Tuesday's session, as many derive a large part of their income from Europe and there are worries that the debt crisis there will affect profits.
Sprint Nextel said on Tuesday it had inadvertently overstated the launch day sales of the much anticipated EVO 4G phone from HTC, which is touted as a serious competitor to Apple's iPhone 4.
In U.S. economic news, wholesale inventoriesrose 0.4 percentin April, while sales rose 0.7 percent.
Wall Street will be watching testimony from Fed Chairman Ben Bernanke on Capitol Hill this morning.
"Although the support to economic growth from fiscal policy is likely to diminish in the coming year, the incoming data suggest that gains in private final demand will sustain the demand in economic recovery,'' Bernanke said, according to prepared testimony released this morning.
Banks were lower but homebuilders were higher after a report showed mortgage applications fell to a 13-year low last week.
US-traded shares of BP remained under pressure amid concerns over whether the company can continue paying its dividend amid increasing claims against the company related to the Gulf oil spill. Separately, the US government is demanding more information on BP's next containment plan.
In health care, Regeneron Pharmaceuticals said a second late-stage study of its experimental gout drug failed to alleviate pain, even though a late-stage study met the trial goal of preventing gout attacks.
Eclipsys shares gained following news that it will be bought by Allscripts-Misys Healthcare Soluctions in a $1.3 billion all-share deal.
In Europe, Berlin and Paris urged the European Commission to consider an EU-wide ban on short selling of shares and sovereign bonds in a display of solidarity that may ease concerns over recent Franco-German policy splits.
Still to Come:
WEDNESDAY: Weekly crude inventories; 10-yr Treasury auction; Fed's beige book; Bernanke testimony and speech; Fed's Lacker speaks; Caterpillar shareholders meeting
THURDSAY: International trade; weekly jobless claims; quarterly services survey; 30-yr bond auction; Treasury budget; Earnings from: Del Monte Foods, National Semiconductor
FRIDAY: Fed's Plosser and Kockerlakota speak; retail sales; consumer sentiment; business inventories; S&P index rebalancing details announced
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