Stocks resumed their earnings-inspired ascent Wednesday after a brief mood swing following the Federal Reserve's beige-book report, which snipped some gains.
The Dow Jones Industrial Average was up about 1.5 percent. The tech-heavy Nasdaq advanced 2.3 percent, while the S&P 500 index gained 1.6 percent.
Nine of 12 Federal Reserve branches reported signs of economic weakening in their respective regions, the central bank said. Price pressures were up, crimping profit margins and leaving labor markets soft. Even commercial real estate in New York and San Francisco, previously resilient areas, began to show cracks in prices.
Among other economic news released today, consumer prices rose 0.3 percentin March, held down by a second straight monthly drop in clothing prices. Housing starts fell 11.9 percent last month, while building permits slipped 5.8 percent. Industrial production unexpectedly rebounded in March, climbing 0.3 percent.
But earnings were the big star of the day.
"The big fear has been that the credit woes are going to infect the main economy. And, so far, there have been no signs of epidemic," Bernard McSherry, senior vice president of strategic initiatives at Cattone & Co., told CNBC.
"The earnings that we've been seeing coming out have been reasonably strong, reasonably good," McSherry said. We'll have wait and see how financial earnings play out over the coming days, McSherry said, "but overall it's been OK."
JPMorgan Chase reported its profit fell 50 percent to $2.37 billion, or 68 cents a share, draggged down by $5.1 billion in reserves it set aside for bad loans and mortgages. But the bank's earnings beat expectations.
Wells Fargo also beat estimates. The fifth-largest bank reported its net fell 11 percent to $2 billion, or 60 cents a share, hit by credit problems. Analysts had expected earnings of 57 cents.
(Click here for an S&P 500 earnings scorecard, with 10 percent of companies reporting.)
Intel reported after the closing bell Tuesday. The chip giant met earnings expectations and raised its forecast for the current quarter, saying it expects sales of $9 billion to s$9.6 billion, compared with current estimates of $9.24 billion.
Intel and JPMorgan shares rose about 5 percent, making them the top two gainers on the Dow. Intel gave a boost to other tech stocks.
Fellow Dow component Coca-Cola also beat expectations, reporting its profit rose 19 percent to $1.50 billion, or 64 cents a share, helped by solid overseas sales.
Next up for blue chips is Big Blue. IBM shares rose ahead of the hardware giant's earnings, due out after the closing bell. Analysts expect IBM to hit its earnings targetbut it remains to be seen if it will follow Intel and deliver a better-than-expected outlook.
Also reporting after the bell is eBay . Analysts expect the online auctioneer to deliver earnings at the high end of its range, but concerns about eBay's ability to compete with Amazon and boost profits linger.
Meanwhile, there were some earnings disappointments.
Seagate Technologies reported its profit rose 62 percent but the world's largest computer disk-drive maker missed expectations and lowered its forecast. The San Francisco company said profit margins have been squeezed by falling prices but demand -- at the consumer and corporate level -- remains strong despite the worsening economy.
Four brokerages cut their price targets on Seagate stock, but kept their ratings, which ranged from "neutral" to "strong buy."
Merrill Lynchmay need to raise more capital, senior executives told CNBC, contradicting comments from CEO John Thain last week. And, Merrill may write down between $6 billion and $8 billion more, the Wall Street Journal reported, citing sources familiar with the situation. Merrill shares were off 0.8 percent premarket. The bank is also preparing a cost-saving plan that will include job cuts of 10 percent to 15 percent in some struggling business areas, such as bond financing, the paper said.
This came on top of dismal earnings from Washington Mutual. The largest U.S. savings and loan posted a $1.14 billion first-quarter loss, hurt by mounting credit losses as more mortgage borrowers fall behind on payments.
And U.S. money manager BlackRock reported its earnings rose 24 percent but still fell short of estimates.
In Europe, battered bank UBS cut its dividend by a third, based on current stock prices, as it moved to a stock dividend from cash to shore up its equity base.
Merck was the biggest decliner on the Dow after two articles in the Journal of the American Medical Association suggested that Merck had manipulated dozens of clinical-research articles on Vioxx.
Shares of J.C. Penney slipped after Chief Executive Myron Ullman said the department-store operator would no longer provide annual guidance. Ullman said this is probably the most unpredictable environment he's seen in the 39 years he's been in the business. The remarks came a day after Ullman said the retailer would need more time to meet its five-year growth plan.
WEDNESDAY: EBay, IBM earnings after the bell
THURSDAY: Merrill Lynch, Nokia, Pfizer, Capital One, Google earnings; jobless claims; Philly Fed report; leading indicators; Fed's Kohn, Fisher speak
FRIDAY: Caterpillar, Citigroup, Honeywell, Xerox earnings; Fed's Lacker, Rosengren speak
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