Stocks had their best three-day run in 10 months Wednesday as Spain got the market off to a good start, promising tough austerity measures, and tech stocks rallied after some encouraging reports from Intel and IBM. Gold soared.
The Dow Jones Industrial Average rose 148.65, or 1.4 percent, to close at 10,896.91, 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.
IBM, Intel and Cisco powered the tech rally, which accelerated as the closing bell neared.
IBM was the biggest Dow gainer, up 4.6 percent, after the company said at its shareholder meeting that it expects to earn at least $20 a share by 2015.
Intel rose 3.6 percent after CEO Paul Otellini said at the chip maker's annual shareholder meeting that it 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, up 3 percent, ahead of its earnings, due out after the bell today.
The tech-heavy Nasdaq gained 2.1 percent, 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 2 percent.
Just three Dow stocks finished lower: Disney, Pfizer and Bank of America.
Walt Disney posted better-than-expected earnings after-the-bell Tuesday. But results at its media network division were considered disappointing by some analysts.
Morgan Stanley shares skidded 2 percent 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.
And, it turns out not just two but four banks apparently had perfect first quarters— Bank of America , Citigroup , Goldman Sachs and JPMorgan .
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 dollar recoveredafter initially falling against the euro after Spain's announcement.
Gold continued its meteoric ascent, with the May contract settling at $1,242.70 an ounce, after earlier trading above $1,245. Oil fell, settling at $75.65 a barrel.
In the day's economic news, the U.S. trade deficit rose to $40.42 billionin April.
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.
Retailer Macy'sswung to a profit, hitting its earnings target and narrowly beat revenue projections. Shares rose 3.4 percent.
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. Shares gained 1.9 percent.
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 . Its shares jumped over 4 percent.
Electronic Arts skidded nearly 6 percent after the videogame maker beat expectations on both earnings and revenue but projected a loss for the current quarter.
Volume came back to earth after last week's avalanche: About 1.2 billion shares changed hands on the New York Stock Exchange. Advancers outpaced decliners, roughly 10 to 1.
Still to Come:
WEDNESDAY: 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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