The nation's big companies are giving investors a reason to restart Wall Street's spring rally.
Stocks surged Wednesday for the second time in three days, propelling all the major indexes up about 3% and the Dow Jones industrials up 257 points for their biggest one-day gain in nearly four months. An upbeat forecast from Intelt and the Federal Reserve's more positive take on the economy built on momentum that began Monday when an analyst issued an optimistic forecast for Goldman Sachs Group.
The news had investors believing again that the economy may not be as weak as many have feared. Wall Street had drifted lower over the past month, putting its big spring rally on hold as hopes for a quick recovery faded.
The latest encouragement came from Intel, the leading computer chipmaker whose much better results suggested that computer sales — and perhaps capital investment in general — is picking up faster than had been expected. Intel's news followed not just the upgrade of Goldman but the bank's strong profit report on Tuesday.
Meanwhile, the day's economic data were more reassuring than some of the numbers the market had seen recently. The Federal Reserve said industrial companies cut production far less in June than they had in previous months, with output at the nation's factories, mines and utilities slipping just 0.4% last month after sliding 1.2% in May.
Traders found more good news when the Fed released minutes from its June meeting, saying it now expects the economy to contract at a slower pace than previously thought.
"What we're seeing is some confirmation that stabilization is in fact upon us," said Matthew Kaufler, portfolio manager at Federated Clover Investment Advisors in Rochester, N.Y. "At least right now investors are willing to say it's not going to be as bad as feared."
Still, it's very early in the reporting period for second-quarter earnings. With so many companies still to release their results and outlooks, the market could still retreat if investors don't like what they're hearing.
The Dow jumped 256.72, or 3.1%, to 8,616.21, its biggest gain since March 23. The Dow is up 5.8% in three days, its best run since a three-day period ended April 2. The Dow is now down only 163 points from where it closed on June 12, when stocks began to slide after their surge in March and April.
The Standard & Poor's 500 index rose 26.84, or 3%, to 932.68, while the technology-laden Nasdaq composite index gained 63.17, or 3.5%, to 1,862.90, responding to Intel's news. The Nasdaq has now advanced for six straight days, giving it a gain of 6.7% over that stretch.
Investors are showing again this week that economic data are important but corporate earnings and forecasts can be even more effective in galvanizing buyers.
Wednesday's gain in the Dow was the best percentage climb since April 9, when the blue chips jumped 3.1% as banker Wells Fargo's early profit report topped expectations. For the S&P 500 index, Wednesday's jump was the biggest since a 3% rally on May 18 when a better-than-expected profit report from Lowe's Cos., the home-improvement chain, helped boost sentiment.
Robert B. MacIntosh, chief economist at Eaton Vance Management in Boston, remains cautious. He said investors had been bracing for weak earnings so it doesn't take much to beat expectations and that the excitement could mask trouble spots in the economy like unemployment.
"Real growth is when you start to create some jobs," he said. "People are going to be disappointed in the weakness and the length of the recovery."
Financial stocks jumped after American Express Co. and Capital One Financial Corp. said delinquency rates improved in June. That hinted that consumers weren't struggling as much as they had been.
Amex jumped $2.76, or 11.3%, to $27.22, while Capital One surged $2.73, or 11.8%, to $25.84.
The gains in stocks robbed Treasurys of some of their safe-haven appeal as investors became more willing to take on risk. The 10-year Treasury note, a widely used benchmark for mortgages and other loans, tumbled more than a point, pushing its yield up to 3.62% from 3.47% late Tuesday.
Investors will be watching other big banks — JPMorgan Chase, Bank of America and Citigroup. — reporting second-quarter results this week to see whether the industry is recovering.
Intel rose $1.22, or 7.3%, to $18.05.
The dollar fell, and prices for gold and other commodities rose. Light, sweet crude rose $2.02 to settle at $61.54 per barrel on the New York Mercantile Exchange.
Nine stocks rose for every one that fell on the New York Stock Exchange, where volume came to 5.5 billion shares, compared with 4.2 billion Tuesday.
The Russell 2000 index of smaller companies rose 18.22, or 3.7%, to 514.74.
Stocks also surged overseas following Intel's report. Britain's FTSE 100 jumped 2.6%, Germany's DAX index rose 3.1%, and France's CAC-40 gained 2.9%. Hong Kong's Hang Seng index gained 2.1%.