Stocks finished at their highs for the day Wednesday as investors cheered the latest round of earnings, which included Intel and JPMorgan.
The Dow Jones Industrial Average gained 2.1 percent. The tech-heavy Nasdaq advanced 2.8 percent, while the S&P 500 index gained 2.3 percent.
"I think we had great news from Intel, we had good news from Coke, we had good news from JPMorgan and put all that together I think investors emerged from their bomb shelters and bought some stocks today," said Jack Ablin, chief investment officer at Harris Bank in Chicago.
"I think overall analysts are still very optimistic [about earnings] for the whole year but I think that once they start to lower their expectations, stocks can move higher," Ablin said. "I think the first and second quarters will be equally ugly."
JPMorgan Chase , the top gainer on the Dow, jumped 6.3 percent after the investment bank reported its profit fell 50 percent to $2.37 billion, or 68 cents a share, but beat earnings 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.
The S&P financial-sector index jumped 3.3 percent.
(Click here for an S&P 500 earnings scorecard, with 10 percent of companies reporting.)
Intel , the Dow's second biggest gainer, 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 also gave a boost to other tech stocks, including Sandisk , which jumped 7.6 percent.
Fellow Dow component Coca-Cola also topped forecasts, reporting its profit rose 19 percent to $1.50 billion, or 64 cents a share, helped by solid overseas sales.
Offering some encouragement for Thursday's trading, IBM after the closing bell reported net income rose 26 percentto $2.32 billion. Total revenue, of which two-thirds comes from outside the U.S., increased 11 percent. Shares jumped in after-hours trading as two key metrics met expectations: hardware and services sales. Analysts had been concerned that, since a quarter of services revenue comes from financial firms, it might fall short, but it didn't.
IBM chief Sam Palmisano also gave the market a shot in the arm, saying, "We feel good about the rest of the year."
Also reporting after the bell, eBay reported its net rose 22 percent, surpassing expectations. The online auctioneer, which is in the midst of an overhaul to promote long-term growth, also boosted it its 2008 revenue forecast by 2 to 3 percent, pegging revenue between $8.7 and $9 billion.
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. Still, Merrill shares gained 3.6 percent.
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, shedding 2.2 percent, 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 3.4 percent 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.
In economic news, 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.
Crude oil soared to new highs above $114 a barrel on Wednesday, after the EIA's weekly report showed crude supplies unexpectedly fell by 2.3 million barrels. The dollar hit a new low against the euro.
This Week:
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
Send comments to cindy.perman@nbcuni.com.