Stocks Climb, Led by Tech, Energy; AT&T Falls

Stocks continued to climb in a rally sparked by a surprisingly strong earnings report by Intel, and several other tech and manufacturing companies delivered solid results.

The Dow Jones Industrial Average gained more than 180 points, passing its previous 52-week intraday high of 12,450.93 during the session. The blue-chip index posted a modest gain on Tuesday.

Among Dow components, Intel, United Technologies and Microsoft advanced, while JPMorgan slipped.

The S&P 500 and the Nasdaq also rose sharply. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell to nearly 15.

All key S&P 500 sectors gained, led by technology, energy and consumer discretionary.

The market continues to wrestle with two simple things: cautious optimism around the recovery and uncertainty over the direction of monetary and fiscal policy, said Doug Godine, head of equities at Signal Hill Capital.

The signs of a good recovery, and not an overheated one, are evident in strong corporate balance sheets and in reasonable expectations by corporations, Godine said.

That good news, reflected in Wednesday's rally, is tempered by the lack of clarity over the future direction of monetary and fiscal policy as Congress and Obama wrestle over the budget, he added.

"What is going to be our stance on debt ceilings? What will be our stance on budget cuts? "Where will this shake out in terms of budget bill?" Godine asked. "At some point we’re going to have to figure out what our long-term monetary policy is."

Investors cheered earnings as they showed companies are benefiting from growing global demand for goods and services. Manufacturers United Technologies and Eaton, for instance, reported better-than-expected results before the market opened Tuesday as global demand for their products rose. Both manufacturers also raised their full-year earnings forecasts.

And AT&T fell despite delivering earnings of 57 cents a share, in line with expectations. The results showed the wireless phone company continued to grow despite the loss of exclusive U.S. rights to Apple's iPhone. AT&T's first quarter net income rose to $3.4 billion from $2.5 billion a year ago.

Wells Fargo also fell Wednesday despite a 51 percent jump in first-quarter income.

The surge in the markets began after Intel released a suprisingly strong reporton Tuesday, soundly beating forecasts with earnings of 59 cents a share on revenues of $12.85 billion, up from 43 cents on revenues of $10.3 billion a year ago.

Analysts had expected Intel to post earnings of 46 cents on revenue of $11.59 billion, according to Thomson Reuters. At least six brokerages boosted their price target for the firm after the results, pushing the stock up more than 6 percent on high volume.

The fact that Intel doesn't expect to be hurt by supply constraints due to the multiple disasters in Japan was also good news to investors, Godine at Signal Hill said.

The news boosted the entire semiconductor sector. The PHLX Semiconductor Sector Index rose more than 3 percent Wednesday.

IBM and Yahoo also released results after the market closed Tuesday. IBM slipped after reporting earnings better than forecasted, but the tech giant disappointed investors as new business in its global services division fell.

Yahoo , however, jumped after beating forecastswith first-quarter earnings of 17 cents a share, although that was down from 22 cents a year ago. Analysts had expected the search company to post earnings of 16 cents a share, according to Thomson Reuters.

Cree sank after reporting a 58 percent drop in earnings after the bell Tuesday, followed by several downgrades by stock analysts. The maker of LED products suffered from price cuts.

Meanwhile, Goldman gained more than 1 percent after JMP Securities said investors should "back up the truck and buy GS shares" in a note to clients. Goldman shares suffered Tuesday despite delivering better-than-expected results. JMP raised its price target for the investment bank to $198 a share from $183. "There are indeed a few areas of concern, but we believe these to be either manageable or completely overblown," JMP Securities said.

CSX advanced after reporting a 30 percent gain in first-quarter earnings as demand and rising prices for shipping offset higher fuel costs. The railroad firm earned $395 million $1.06 a share, up from $305 million or 78 cents a share a year ago.

Meanwhile, gold futures traded above $1,500 an ounce and silver hit a new 31-year high at $44.79 an ounce before slipping back. The dollar sank against a basket of currencies as the euro strengthened to its highest level in 15 months. The dollar index touched 74.27 during the session, the lowest level since Nov. 25, 2009.

Freeport McMoran Copper & Gold , which released upbeat earnings before the bell, soared Wednesday, as did other precious metals companies. The company beat estimates thanks to rising prices for metal and lower mining costs. Freeport McMoran also declared an extra stock dividend of 50 cents a share for the quarter.

Newmont Mining , Barrick Gold , and Kincross Gold , among other precious metals producers, also gained.

Wednesday marks the first anniversary of the BP oil spill in the Gulf of Mexico. Since the spill, the oil giant has lost $49 billion in market capitalization.

Oil prices ralliedon the weak dollar, and as crude inventories came in lower than expected.

London Brent crude rose above $123 a barrel, while U.S. light crude soared more than 2 percent to above $110.

And in M&A news, power company AES said it would buy smaller rival DPL for $3.5 billion in cash, Reuters reported.

The parade of tech earnings continues later today, when Apple releases its results after the market closes amid media reports the company could start shipping its new iPhone in September.

On the economic front, existing home sales rose 3.7 percent in March to an annual rate of 5.1 million units from an upwardly revised rate of 4.92 million units in February. Economists surveyed by Reuters had expected a 2.5 percent jump.

The Mortgage Bankers Association's indexof mortgage application activity rose 5.3 percent in the week ended April 15, to the highest level since early December.

A strong showing in European marketson the heels of a successful Spanish bond offering as well as good earnings results also got the U.S. market off to an upbeat start on Wednesday. European markets closed higher.

On Tap Next Week:

WEDNESDAY: Earnings from American Express, Amgen, Apple, Qualcomm, Yum Brands after-the-bell.
THURSDAY: Weekly jobless claims, Philadelphia Fed survey, leading indicators, money supply, Citigroup shareholders meeting; earnings from DuPont, GE, McDonald's, Morgan Stanley, Travelers and Verizon before-the-bell and Advanced Micro and Capital One after-the-bell.
FRIDAY: Good Friday—All markets closed, banks open.

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