U.S. Stocks Rally On Upbeat Intel View

NEW YORK (MarketWatch) -- U.S. stocks rallied on Wednesday as upbeat results from Intel, J.P. Morgan Chase, as well as in-line data on inflation, helped lift sentiment.

In-line report on consumer price inflation along with better-than-expected industrial production numbers for March also helped boost the market in early dealings.

A slump in the dollar, which hit another record low against the euro following high inflation numbers in Europe, also provided a lift to commodities-related stocks. The materials sector surged 2%, leading the gains on the broad S&P 500 index, closely followed by the industrials and information technology sectors.

The Dow Jones Industrial Average was up 148 points to 12,511, with 25 of its 30 components advancing.

Shares of Intel climbed 5.5% as the chipmaker predicted a 56% gross margin for the second quarter and said revenue would be better than analysts expected.

Bank of America Securities said Intel's outlook "steamrolled the consensus's gloomy view" and said the firm's new Atom chip for notebooks is off to a good start.

Fueling gains for other financial stocks on the Dow and the broad market, J.P. Morgan Chase's first-quarter profit, while cut in half, wasn't as bad as analysts predicted.

J.P. Morgan shares rose 4.3%, while Citigroup Inc. gained 2.2%, Bank of America gained 2.6%, and AIG rose 2%.

Also on the Dow, Coca-Cola fell 0.1%, even after the beverage giant reported a 19% profit rise during the first quarter, also topping forecasts.

The S&P 500 index rose 16 points to 1,351 and futures the tech-heavy Nasdaq Composite rose 42 points to 2,328.

Data

Lack of surprises in consumer prices also helped boost sentiment, given concerns that rising inflation will further dampen consumption, lift production costs, and prevent the Federal Reserve from cutting interest rates.

After virtually no change in February, the consumer price index in March rose 0.3%, matching estimates from analysts surveyed by MarketWatch. The core CPI, which excludes food and energy costs, rose 0.2% in March -- matching analysts' estimates -- after no growth in the prior month.

Better-than-expected March industrial production data also fueled early positive sentiment, rising 0.3% in March compared with economists expectations for a 0.1% drop,

Weak housing data, meanwhile, failed to have much of an impact on the market. New construction of U.S. houses plunged to the lowest level in 17 years in March, the Commerce Department estimated Wednesday.

The dollar dropped against major rivals, particularly the euro as euro-zone inflation jumped 3.6%.

Oil futures dropped 0.3% to $113.49 a barrel ahead of weekly energy inventory data.

After the close, International Business Machines and eBay are due to report results.

Merrill Lynch , which reports Thursday, is expected to make a write-down between $6 billion and $8 billion, according to The Wall Street Journal.

The chief executive of Credit Suisse's investment banking division, Paul Calello, expects more write downs though he said measures of investor risk and credit risk appetite are moving out of the "panic zone".

Elsewhere, France Telecom is reportedly considering a $54 billion bid for TeliaSonera in a deal that would need the support of the governments of France, Sweden and Finland.

Both the Nikkei 225 and the FTSE 100 in London were up over 1%.

Well-received results from regional banks helped U.S. stocks rise on Tuesday, albeit on light volumes. The Dow industrials rose 60 points, the S&P 500 added 6 points and the Nasdaq Composite rose 10 points.

By Nick Godt