Stocks advanced Wednesday after Spain promised to take wide austerity measures and Intel said it expects earnings growth to double. Techs and industrials led the way. Gold surged.
The Dow Jones Industrial Average was up more than 100 points, or 1 percent, in late-morning trading, after a see-saw session Tuesday that left the blue-chip index down 0.3 percent.
The CBOE volatility index, widely considered the best gauge of fear in the market, dropped 10 percent to around 25, after topping 40 last week.
Intel was among the Dow's top gainers after CEO Paul Otellini said at the company's annual shareholder meeting that the chip maker expects to double its earnings growth growth in the next few years and raised its margin outlook as it expands its chips into new products besides the PC, including smartphones and TVs.
Cisco was also at the front of the Dow pack ahead of its earnings, due out after the bell today.
Adding to the tech bullishness, IBM said at its shareholder meeting that it expects to earn at least $20 a share by 2015.
Tech was the best-performing sector today, with the tech-heavy Nasdaq outperforming both the Dow and the S&P 500.
Industrials also turned in a strong showing, with DuPont , Boeing and Caterpillar all up more than 1 percent.
Spain vowed to institute cuts that will save it $19 billion in 2010 and 2011. Prime Minister Jose Luis Rodriguez Zapatero said Madrid would cut the pay of government workers by 5 percent this year and freeze it next year and slash 13,000 government jobs this year.
This helped soothe the market's jitters over Europe's sovereign-debt crisis, particularly after the EU and IMF over the weekend pledged a $1 trillion emergency-rescue plan to stop the crisis from spreading.
The euro gained against the dollarafter Spain's announcement.
Gold continued its meteoric ascent, trading above $1,245 an ounce. Oil fell to nearly $76 a barrel.
In the day's economic news, the U.S. trade deficit rose to $40.42 billionin April.
And the Treasury's 10-year auction was met with solid demand, with a high yield of 3.548 and a bid-to-cover ratio of 2.96. This came after strong demand at the three-year auction yesterday. Still to come: The 30-year, tomorrow.
Morgan Stanley shares skidded after the Wall Street Journal reported the big bank is being probed for allegedly misleading investors about mortgage derivative products it helped create and sometimes bet against.
Dow component Walt Disney posted better-than-expected earnings after-the-bell Tuesday. But results at its media network division were considered disappointing by some analysts.
And retailer Macy'sswung to a profit, hitting its earnings target and narrowly beat revenue projections.
Microsoft is getting more aggressive with free software, offering a new version of Office software for businesses that will work in a Web browser is free.
And Starbucks is stepping up marketing of its Seattle's Best Coffee brand to increase its presence and help the company compete against lower-priced rivals like McDonald's .
Electronic Arts skidded after the videogame maker beat expectations on both earnings and revenue but projected a loss for the current quarter.
Still to come: The government will issue its April federal budget numbers and is expected to report a deficit of $45 billion.
Still to Come:
WEDNESDAY: 10-year auction; Fed's Bullard speaks; earnings from Cisco after the bell
THURSDAY: Ford, Google shareholder meetings; weekly jobless claims; import/export prices; Fed's Kocherlakota speaks; 30-year auction; earnings from Kohl's, Nordstrom, Nvidia
FRIDAY: Government's retail-sales report; industrial production; consumer sentiment; business inventories; earnings from JCPenney
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