Stocks rose after a series of strong earnings reports and on expectations that the Federal Reserve will act to stimulate the economy.
The Dow Jones Industrial Average rose more than 100 points, afterreaching a five-month high on Tuesday after a volatile session.
American Express , Cisco , and Boeing led the blue-chip index, while Chevron and JP Morgan fell.
The S&P 500 and the Nasdaq also rose. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 19.
All the key S&P 500 sectors were higher, led by industrials, materials and technology.
The upbeat tone to the market comes on the heels of better-than-expected earnings reports from Intel, CSX, and JPMorgan, which reported Wednesday morning before the bell. Also playing a role are increased expectations that the Federal Reserve will step into to boost the economyafter the release of minutes from the central bank's September meeting.
"I know I was pretty cautious on earnings," said Jack Ablin, chief investment officer at Harris Private Bank. "I wanted to get into the market, but I was also a little bit concerned about how these earnings would play out."
The fact that earnings have started to come in better than estimates Ablin had considered too optimistic is a positive sign that gives investors a reason to buy.
"Stocks are cheap," Ablin added, especially with the prospect of another recession seeming less likely.
On the tech front, Intelreleased strong results after the bell Tuesday, powered by demand from emerging markets and corporations.
Also, shares of Apple topped $300 for the first time. The tech giant's stock price had been trending higher ahead of its earnings release next week. Apple will unveil the next version of its operating system at an event next week, CNBC reported Wednesday.
CSX shares continued to rise Wednesday after reporting better-than-expected profits due to rising demand for freight.
Rival railroad stocks also rose, including Kansas City Southern , Union Pacific and Norfolk Southern . The Dow Jones Transportation Indexalso rose.
Standard Chartered shares fell sharply after the bank announced a rights issue. Asian markets ended mostly in the green with India posting the strongest gains.
Costco shares were slightly higher despite a rating downgrade to "neutral" from "buy" from UBS. The brokerage said it continues to believe Costco has a strong business model, but after a 15 percent gain in the stock, it is fairly valued.
Wal-Mart, meanwhile, was also higher after CEO Mike Duke said he expects higher sales in the fourth quarteras the discount retailer shifts back to an "everyday low price strategy." Duke spoke at Wal-mart's annual meeting with analysts and investors.
Also in earnings news, Chevron warned after-the-bell that its quarterly earnings could belower than those of its second quarter, sending its shares lower.
Elsewhere in energy news, Williams soared after the natural gas company announced Alan Armstrong will become CEO at the end of the year after CEO Steve Malcolm reitres. Armstrong will also be chairman and CEO of Williams Partners GP.
Among financial stocks, JPMorgan Chase was flat after posting third-quarter earnings of $1.01 a share, better than analyst estimates of 90 cents a share. Revenue, however, was slightly short of expectations.
Investment management firms were also higher after several ratings upgrades. JPMorgan raised its price targets for Invesco , Eaton Vance , Federated Investors , Franklin Resources , Janus Capital , and T. Rowe Price .
In mergers and acquisitions news, Lion's Gate Entertainment has proposed merging with Metro-Goldwyn-Mayer, which is in bankruptcy. Carl Icahn, Lion's Gate's largest shareholder, approved the merger.
In economic news, import prices declined, as a decline in oil prices offset gains in food and other goods, the U.S. Labor Department reported.
U.S. mortgage applications for home refinancing loans rose for the first time in six weeks,although applications for new homes declined, the Mortgage Bankers Association reported Wednesday. The seasonally adjusted index of mortgage applications, including purchases and refinancings, rose 14.6 percent for the week ended Oct. 8.
European shares were higher across the board with technology stocks leading the gains.
The currency trade was again influencing the market's direction, as the U.S. dollar fell against a basket of foreign currencies. Goldapproached $1,360 an ounce, while crude oilpassed $83 a barrel.
Results of the Treasury's $21 billion auction of 10-year notes will be out at 1 p.m.
Coming Up This Week:
WEDNESDAY: Richmond Fed Pres Lacker speaks
THURSDAY: International trade; PPI; weekly jobless claims; oil inventories; 30-year bond auction; Minnesota Fed Pres Kocherlakota speaks; OPEC meeting; Earnings from Google and AMD
FRIDAY: Atlanta Fed Pres Lockhart speaks; Bernanke speaks; CPI; retail sales; Empire State mfg survey; consumer sentiment; credit card default rates reported; Earnings from GE and Mattel
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