Surprisingly strong earnings reports from Intel Corp. and JPMorgan Chase & Co. are sending stocks sharply higher.
The Dow Jones industrials were about 50 points away from the 10,000 mark in early trading Wednesday, a level not seen in a year. Major stock indexes all rose about 1 percent.
JPMorgan Chase, the first major bank to report third-quarter earnings, stoked the market's optimism as it handily beat Wall Street's expectations, reporting a profit of $3.59 billion for the July-September period. However the bank also said loan losses are still high and are likely to remain so for some time.
Intel also beat analysts' estimates, reporting a smaller-than-expected decline in profit and sales after the market closed Tuesday. The leading chip maker said it expects sales in the final period of the year to top analyst projections, raising hopes that the computer market was improving.
A smaller-than-expected decline in retail sales for September underpinned the market's early gains.
The Commerce Department said retail sales declined 1.5 percent last month as car sales tumbled following the end of the government's Cash for Clunkers program. While that was the largest monthly decline this year, it was not nearly as big as the 2.1 percent drop analysts had expected. Excluding autos, retail sales rose 0.5 percent, better than the 0.2 percent increase analysts forecast.
The dollar slumped to a fresh 14-month low against other major currencies as investors' appetite for risk increased, sending gold to another record high of $1,072 an ounce. Oil prices rose above $75 a barrel for the first time in a year.
Treasury prices fell as investors abandoned safe-haven assets for stocks and commodities.
The Dow rose 83.43, or 0.9 percent, to 9,954.49. The Standard & Poor's 500 index rose 11.20, or 1.0 percent, to 1,084.39, and the Nasdaq composite index rose 20.75, or 1.0 percent, to 2,160.64.
About four stocks rose for every one that fell on the New York Stock Exchange, where volume came to 159.1 million shares, compared with 144.4 million at the same time on Tuesday.
The market's big gains followed modest losses on Tuesday, sparked by a disappointing decline in sales at Johnson & Johnson that fanned fears that consumers and businesses are still curbing their spending. Adding to the day's woes was a downbeat report from an influential banking analyst suggesting bank stocks are overvalued. The reports from Intel and JPMorgan eased some of those concerns.
JPMorgan shares soared $1.58, or 3.5 percent, to $47.24, its highest level in a year. Intel shares gained 53 cents, or 2.6 percent, to $21.02.
The ICE Futures U.S. dollar index, which tracks the dollar against other major currencies, fell 0.5 percent, after earlier hitting its lowest point since August 2008.
Oil prices jumped $1 to $75.15 93 a barrel on the New York Mercantile Exchange. Gold prices retreated slightly after touching a fresh record high.
Bond prices tumbled as stocks soared. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.40 percent from 3.35 percent late Tuesday.
In other earnings news, the drugmaker Abbott Laboratories beat Wall Street's profit expectations and raised its projections for the year above current estimates. Abbott shares rose 70 cents to $50.35.
Third-quarter earnings, and more specifically, the reports from major banks, are the market's key focus this week. Goldman Sachs Group Inc. and Citigroup Inc. will issue results on Thursday, followed by Bank of America Corp. on Friday.
Better-than-expected quarterly reports from banks have been the key driver of the market's seven-month-long rally, and financial stocks have been some of the biggest beneficiaries of that rally.
The benchmark Standard & Poor's 500 index is up 58.6 percent since hitting a 12-year low in early March. The KBW Bank Index, which tracks 24 of the largest U.S. banks, has risen a massive 143.3 percent since then.
With bank stocks having run up so much over the past several months, investors are worried that current valuations may exceed companies' earnings potential. Investors want to see signs that loan losses are stabilizing and that banks have been able to build up solid core businesses.
Still, investors didn't seem fazed that JPMorgan, considered one of the strongest financial institutions throughout the financial crisis, doubled the amount of money it set aside during the quarter to cover failed home and credit card loans.
Instead they seemed to be encouraged by the fact that divisions like retail and investment banking at JPMorgan helped the bank earn a hefty profit.
"I think what JPMorgan has shown is that big banks still have earnings power," said Tyler Hall, an analyst at SNL Financial.
Analysts say companies' earnings reports, which will continue to pour in over the next few weeks, are the key to keeping the market's rally alive. If reports largely fall short of expectations, the stock market's advance could stall.
In other trading, the Russell 2000 index of smaller companies rose 6.25, or 1.0 percent, to 617.95.
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