Stocks surged Wednesday, sending the Dow Jones industrials up more than 250 points, after better-than-expected earnings reports from three Dow components relieved anxiety about corporate profits and the economy.
The market advanced despite another record high for oil, which topped $115 a barrel for the first time, and a Federal Reserve report depicting economic weakness because of "anemic" real estate markets and a slowdown in consumer spending.
After enduring disappointing news from several prominent companies since "earnings season" began last week, investors cheerily greeted better-than-expected results from JPMorgan Chase, Coca-Cola and Intel, which were among dozens of companies posting quarterly numbers Wednesday.
"You have a combination of JPMorgan and all these other strong earnings out there from a broad range of sectors, and that's helping the buying we're seeing," said Todd Salamone, director of trading and vice president of research at Schaeffer's Investment Research. "There's an unwinding of all the negativity that we saw ahead of the earnings season."
The upbeat earnings parade continued after the market closed as IBM also reported higher-than-expected results.
Oil prices rose after the government said inventories of crude fell unexpectedly last week. After setting a trading high of $115.14 a barrel on the New York Mercantile Exchange, oil futures finished up $1.14 at a record close of $114.93.
The Dow rose 256.80 points, or 2.1%, to 12,619.27. The index is up nearly 900 points from a low near 11,740 reached March 10.
The Standard & Poor's 500 index rose 30.28 points, or 2.3%, to 1,364.71. The Nasdaq composite index advanced 64.07 points, or 2.8%, to 2,350.11.
The Russell 2,000 index of smaller companies gained 21.33 points, or 3.1%, to 713.39.
Advancing stocks outnumbered decliners 5 to 1 on the New York Stock Exchange.
Bond yields jumped along with stocks. The yield on the benchmark 10-year Treasury note surged to 3.68% from 3.6% after recording a comparable increase Tuesday.
Gold prices rose and the dollar sank. An index of the greenback's value against other major currencies slid 0.9% to a record low.
Investors who were focusing narrowly on the U.S. consumer are returning to a more global view that emphasizes expanding markets overseas, said Kevin Gaughan, equity strategist at Wells Capital Management in Milwaukee.
Record oil prices are "certainly a global constraint on consumer spending, but you have so many more consumers coming into the marketplace via Asia and other places, the numbers there are a huge offset," Gaughan said.
Coca-Cola credited overseas growth with a better-than-expected 19% increase in first-quarter profit despite weak results in North America. Coke shares rose 21 cents to $61.15.
The battered financial sector advanced after JPMorgan beat analysts' expectations despite a 50% profit decline and a $2.6-billion write-down of its loan portfolio.
Chief Executive Jamie Dimon said the bank was well capitalized and had enough liquidity to handle difficult market conditions. He also said the credit-market crisis might be as much as 80% over.
The problem "is working itself out," Dimon said. The heads of Goldman Sachs Group, Morgan Stanley and Lehman Bros. Holdings have made similar comments in the last week suggesting the credit crisis is winding down.
JPMorgan shares shot up $2.84, or 6.7%, to $44.96. Dow component Bank of America rose $1.40, or 3.9%, to $36.98, while Wells Fargo, which also beat earnings expectations, climbed $1.20, or 4.3%, to $29.01.
An index of financial stocks in the S&P 500 rose 3.3%.
"The numbers from financial companies are pretty terrible, but not as terrible as expected," said Jennifer Ellison at money manager Bingham, Osborn & Scarborough in San Francisco. "The market is taking that positively."
Also helping financial stocks was word that billionaire Wilbur Ross Jr., who made his fortune turning around distressed steel and textile companies, intends to raise $4 billion to buy U.S. banks.
In the tech sector, Intel rose $1.22, or 5.8%, to $22.13 after reporting late Tuesday better-than-expected sales and keeping profit-margin predictions for 2008 intact. Chip companies in the S&P 500 rose 4.7%, their biggest gain in four years.
In other market highlights:
IBM gained 2.9% to $123.94 in after-hours trading. The tech giant posted a first-quarter profit of $1.65 a share, beating the $1.46 average of analyst estimates. IBM also raised its full-year profit forecast.
Overseas stock markets rallied. Key indexes climbed 1.2% in Japan, 2.4% in Britain, 1.8% in Germany and 1.6% in France.