US stocks rose on Wednesday as investors bet on recently weakened technology and financial shares ahead of earnings from bellwethers Intel Corp and J.P. Morgan Chase & Co, taking the Dow industrials to a fresh 15-month high. A brokerage upgrade of drugmaker Merck & Co and an upbeat outlook from Kraft Foods Inc gave an extra boost to the healthcare and consumer sectors.
After a rough start to earnings season with Alcoa Inc's disappointing results, investors are looking for companies to meet or beat expectations to fuel a stocks rally that has lifted the S&P 500 almost 70 percent from its March lows. Chipmaker Intel is scheduled to post quarterly results on Thursday and bank J.P. Morgan on Friday.
J.P. Morgan shares, up 1.8 percent to $44.25, led gains in the KBW bank index, while chipmaker Advance Micro Devices jumped 5.8 percent to $9.15 after falling nine of the last 11 sessions. Intel shares rose 1.7 percent to $20.96 and a semiconductor index gained 1.6 percent.
"Heading into Intel and J.P. Morgan earnings, I think there was a sense things have sold off enough and buyers have felt more comfortable buying into semiconductors and financials," said Michael James, senior trader at Wedbush Morgan in Los Angeles. The Dow Jones industrial average gained 53.51 points, or 0.50 percent, to 10,680.77. The Standard & Poor's 500 Index added 9.46 points, or 0.83 percent, to 1,145.68. The Nasdaq Composite Index rose 25.59 points, or 1.12 percent, to 2,307.90.
The Federal Reserve said in its periodic report, the Beige Book, that while economic activity was at a low level, "conditions have improved modestly further, and those improvements are broader geographically than in the last report." Wall Street, which had its worst session so far this year on Tuesday, fell at the open weighed down by resource shares, but the Dow got its biggest boost from Merck shares, up 3.7 percent to $38.93 after Credit Suisse upgraded the stock.
Kraft raised its 2009 earnings outlook and rose for most of the trading day but finished down at 0.2 percent to $29.23. Chocolate maker Hershey Co was preparing a bid for Cadbury Plc that would top Kraft's hostile $17 billion take-over offer, the Financial Times reported on Wednesday. Hershey shares fell 3 percent to $36.61.
Google Inc's shares fell 0.6 percent to $587.09 after the Internet search giant said it may shut its China operations over censorship and hacking. Shares of rival Chinese search engine Baidu Inc jumped 13.7 percent to $439.48 and led percentage gains on the Nasdaq 100.
Crude oil prices settled 1.4 percent lower below $80 per barrel and Chevron Corp was the biggest drag on the Dow, falling 0.8 percent to $79.80. The heads of Wall Street's biggest banks defended the lucrative pay practices and size of their businesses before a commission investigating the 2008 financial crisis. "I think the rally in financial shares is more a function of gaining back yesterday's losses than what was going on in Washington," Wedbush Morgan's James said.
Less than 1 billion shares changed hands on the New York Stock Exchange, far below last year's estimated daily average of 2.18 billion. On the Nasdaq, about 2.32 billion shares traded, more than last year's daily average of 1.63 billion. Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 14 to 5, while on the Nasdaq nearly 2 stocks rose for every one that fell.
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