NEW YORK -- Investors had a surge of optimism Wednesday ahead of the first major fourth-quarter earnings reports, sending stocks sharply higher and carrying the Dow Jones industrial average up more than 110 points.
Wall Street managed to shake its nervousness from earlier in the week, investing heavily in blue chips and tech stocks in the hope that Intel Corp. and other major firms would come through with positive earnings results after the close of trading. Intel did easily beat earnings projections, but its first-quarter outlook appeared to disappoint the market, and it and other high-tech stocks fell in after-hours trading and raised the possibility of more selling on Thursday.
During the regular session, the Dow closed up 111.19, or 1.1 percent, at 10,538.37, more than making up for a 58-point drop on Tuesday.
Broader stock indicators also closed higher. The Nasdaq composite index was up 14.69, or 0.7 percent, at 2,111.13. The Standard & Poor's 500 index was up 9.09, or 0.8 percent, at 1,130.31.
Analysts said the market was looking to Intel in particular to see if Wednesday's gains could be sustained. But while the company posted earnings 8 cents per share above analysts' estimates and boasted record quarterly revenues, its first-quarter revenue forecast of $7.9 billion to $8.5 billion apparently fell short of what Wall Street was looking for.
Intel fell 2 percent in after-hours trading after falling 20 cents to $33.39 during regular trading.
Fellow high-tech bellwether Apple Computer Inc. beat expectations by 2 cents per share, while Yahoo! Inc.'s earnings were in line with estimates. Yahoo! closed down 41 cents at $48.39, while Apple rose 8 cents to close at $24.20. Both stocks were down in after-hours trading, but high-tech stocks were generally lower, a likely response to Intel's outlook.
It wasn't surprising that investors, concerned about the strength of the economic recovery and its effect on company earnings, would look closely at quarterly and full-year forecasts.
"The quarterly outlook seems fine, but the markets focus on the future," said Jay Suskind, head trader at Ryan Beck & Co.
Earlier in the day, Delta Air Lines disappointed Wall Street with higher-than-expected losses despite a year of cost-cutting measures. Nonetheless, Delta rose 1 cent to $12.15.
But investors were buoyed by positive economic data. The Commerce Department said the trade deficit shrank to $38 billion in December, the lowest level in a year and lower than Wall Street analysts expected, while the Federal Reserve reported the economy continued to strengthen from late November to the early part of this year. In addition, the Labor Department said wholesale prices rose by 0.3 percent in December, suggesting inflation is still in check.
The news helped investors offset Tuesday's losses, but with the market more focused on earnings and outlooks for the future, economic numbers are likely to have less of an impact in the coming days.
Reports of J.P. Morgan Chase & Co.'s acquisition of Bank One Inc. surfaced after the close of trading. J.P. Morgan shares fell nearly 5 percent in after hours trading, while Bank One was up nearly 10 percent.
AT&T Wireless Services Inc. jumped 17 percent on reports that the cellular company is in talks to be acquired by Cingular Wireless, a joint venture of SBC Communications Inc. and BellSouth Corp. AT&T Wireless rose $1.44 to $9.99.
Advancing issues outnumbered decliners 9 to 5 on the New York Stock Exchange. Consolidated volume on the floor of the Big Board came to 2.05 billion shares in moderate trading, down from 2.06 billion in the previous session.
The Russell 2000 index of smaller companies closed up 4.96, or 0.8 percent, at 586.12.
Overseas, Japan's Nikkei stock average closed up 0.1 percent, Britain's FTSE 100 was up 0.5 percent, France's CAC-40 index closed 1.0 percent higher and Germany's Xetra DAX rose 1.5 percent.
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