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Dow Soars 300, Logs Biggest Gain in 2 Weeks

Stocks closed near session highs Tuesday, with the Dow posting its biggest gain in almost two weeks, despite a 5.8-magnitude earthquake in Virginia that shook parts of the U.S. East Coast and after investors shrugged off a handful of disappointing economic news.

The Dow Jones Industrial Average soared 322.11 points, or 2.97 percent, to finish at 11,176.76—well above the psychologically-significant 11,000 level.

ExxonMobil and Chevron led the blue-chip gainers. Still, the index is still on track for its biggest monthly point loss since Oct. 2008.

The S&P 500 jumped 38.53 points, or 3.43 percent, to end at 1,162.35. The Nasdaq spiked 100.68 points, or 4.29 percent, to close at 2,446.06.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, tumbled near 36.

All 10 S&P sectors gained, led by techs and other growth stocks including energy and materials.

A magnitude 5.8 earthquake struck the U.S. East Coast from Virginia to at least Boston, according to the U.S. Geological Survey. The Pentagon and U.S. Capitol Building in Washington were evacuated, as were courthouses in New York City.

Streets of NYC after the earthquake on Auguat
Photo: Jonathan Kim
Streets of NYC after the earthquake on Auguat

"Our building shook pretty well for about a minute, but then it stopped," said Peter Tuz, president of Chase Investment Counsel, based in Charlottesville, Va. "It is very unusual for this area. Mineral, Va., the epicenter, is about 30 miles to our east."

Stocks were higher throughout the session, despite a handful of weaker-than-expected economic reports and as investors awaited a speech by Fed Chairman Bernanke later this week.

“This is a dead-cat bounce…we were in an oversold position and investors are trying to find any single positive data to create an opportunity,” said Kenny Polcari, managing director of ICAP Equities, pointing to better-than-expected economic news from Germany and China.

At the end of the week, all eyes will be on Federal Reserve chairman Ben Bernanke as he makes his widely-anticipated speech at the Fed's annual Jackson Hole, Wyoming symposium. Investors will watch for any signs of a possible round of asset purchases(also known as quantitative easing) which will likely help bolster the stock market.

Sprint surged after a report that the wireless carrier will be getting rights to Apple's new iPhone 5 along with AT&T and Verizon , according to the Wall Street Journal.

Apple is also targeting a launch for the next-generation iPhone 5 in late September, according to sources. In addition, Apple suppliers in Asia have started producing a cheaper version of the popular iPhone 4 with a smaller 8-gigabyte flash drive, according to sources.

Microsoft gained after the firm announced it will develop and market cloud-computing products in China with China Standard Software.

Nintendo soared more than 8 percent after news the Japanese video console maker is taking action to shore up lackluster salesof its 3DS player.

Nvidia jumped after Wells Fargo upgraded the chipmaker's stock to "outperform" from "market perform."

Among banks, Goldman Sachs edged higher after CEO Lloyd Blankfein confirmed he had hired Reid Weingarten, a high-profile Washington defense attorney. Investigations continue of Goldman and its role during the financial crisis.

Meanwhile, UBS said it plans to cut 3,500 jobs—almost half of them from its investment bank—in an annual cost-cutting move.

Bank of America was the only decliner on the Dow. The stock hit fresh 52-week lows earlier amid ongoing worries that the bank may need to raise capital to absorb billions in mortgage losses. Former equity research strategist Henry Blodget even said the bank might need up to $200 billion in fresh capital.

Meanwhile, the company spokesperson stated that Blodget's claims are "exaggerated and unwarrented" and that his statement of sovereign exposure is off by a factor of 10, while his commercial real estate figures were off by a factor of 4.

On the earnings front, Heinz slipped even after the ketchup maker beat earnings expectations, helped by growth in emerging markets. Meanwhile, Medtronic gained after the medical device maker posted earnings that matched analyst expectations.

PharMerica skyrocketed almost 30 percent after rival Omnicare announced it may acquire the pharmacy services company.

Gold prices retreated from its record high of $1,911 an ounce, but the precious metal is still on track for its biggest one-month gain since Sept. 1999.

Treasury prices slippedeven after the government auctioned $35 billion in two-year notes at a high yield of 0.222 percent and a bid-to-cover of 3.44.

Volume was slightly above average with the consolidated tape of the NYSE at 5.02 billion shares, while 1.25 billion shares changed hands on the floor.

Investors shrugged off news that new home sales dipped in July, to a five month low, according to the Commerce Department. And adding to the negative economic news, the Richmond Federal Reserve said its index of factory activity slumped in July amid slower growth in new orders and shipments.

European shares closed slightly higherwith stocks showing some signs of stability.

—Follow JeeYeon Park on Twitter: twitter.com/JeeYeonParkCNBC

Coming Up This Week:

WEDNESDAY: Weekly mortgage apps, durable goods orders, oil inventories, 5-yr note auction; Earnings from Toll Brothers, Applied Materials, TiVo
THURSDAY: Weekly jobless claims, 7-yr note auction, Medtronic shareholders mtg, USDA food prices outlook; Earnings from Hormel, Pandora
FRIDAY: GDP, corproate profits, consumer sentiment, Bernanke speaks, short-sale bans expire; Earnings from Tiffany

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