A market anxious about corporate earnings and their effect on the economy was relieved after JPMorgan Chase & Co., Coca-Cola Co. and Intel Corp. all topped first-quarter projections. The three companies are among dozens posting quarterly results Wednesday.
The battered financial sector advanced after JPMorgan beat analysts' expectations despite a 50 percent drop in quarterly profit. The nation's third-biggest bank, which is in the process of acquiring ailing Bear Stearns Cos., reported $2.6 billion of write-downs tied to its loan portfolio.
"You have a combination of JPMorgan and all these other strong earnings out there from a broad range 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."
Salamone and other analysts have been hoping that strength in corporate earnings would act as a catalyst for a significant rally; the market has managed a choppy ascent since hitting lows in early March. Investors have been growing more confident in recent weeks that the Federal Reserve's efforts to boost the economy and the troubled credit markets are working. Wednesday's earnings reports bolstered that sentiment.
Along with earnings results, Wall Street weighed sluggish economic reports on inflation and housing that were mostly within expectations. The Federal Reserve also released its Beige Book report, an outline of regional economic activity that pointed to widespread weakening amid a softening labor market.
But neither those factors nor a new trading high of $115.07 for a barrel of oil on the New York Mercantile Exchange damped the market rally.
Oil prices rose after a government report showed crude inventories fell unexpectedly last week, the second straight weekly decline. Light, sweet crude settled up $1.14 at a record $114.93 a barrel on the Nymex.
The Dow rose 256.80, or 2.08 percent, to 12,619.27. The index is up nearly 900 points from a low near 11,740, reached March 10.
Broader market indexes also gained. The Standard & Poor's 500 index rose 30.28, or 2.27 percent, to 1,364.71; and the Nasdaq composite index advanced 64.07, or 2.80 percent, to 2,350.11.
The Russell 2000 index of smaller companies rose 21.33, or 3.1 percent, to 713.39.
Gold prices rose, and the dollar was mostly lower against other major currencies.
"The market has been worried about the U.S. consumer being flat on his back for some time and the high price of oil feeds into that," said Kevin Gaughan, portfolio manager and equity strategist at Wells Capital Management in Milwaukee.
He suggested investors who had been myopically focusing on the U.S. consumer are rotating back to a more global view, and looking toward expanding markets overseas. "The oil thing is 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.
In fact, Coca-Cola credited overseas growth with boosting its first-quarter profit 19 percent, despite weak results in North America. Coca-Cola shares rose 21 cents to $61.15 after its results came in well ahead of Wall Street expectation.
JPMorgan rose $2.84, or 6.7 percent, to $44.96 after issuing its quarterly report. Chief Executive Jamie Dimon said the bank is well capitalized and has enough liquidity to handle difficult market conditions, but he did not call an end to the credit crisis as some other bank CEOs have in recent weeks.
Dow component Bank of America Corp. rose $1.40, or 3.9 percent, to $36.98, while Wells Fargo Corp., which also beat earnings expectations, rose $1.20, or 4.3 percent, to $29.01.
"We got a nice rally here and that's because of the financials, they are holding their gains," said Todd Leone, managing director of equity trading at Cowen & Co. "They have helped out the market and are a real driver."
Intel, another Dow stock, rose $1.22, or 5.8 percent, to $22.13 after reporting late Tuesday that quarterly profit matched analysts' expectations and sales topped projections. Intel also issued a forecast that kept profit-margin predictions for 2008 intact.
Wall Street had little reaction to a new batch of disappointing economic data; many investors have already tempered their expectations about the economy.
Government data showed that consumer inflation pushed higher last month as increases in energy, food and airline tickets overwhelmed the biggest drop in clothing prices in nearly a decade. The Labor Department reported consumer prices rose 0.3 percent in March after being unchanged in February.
Core inflation, which excludes food and energy prices, posted a 0.2 percent rise. Both the overall increase and the rise in core prices were in line with analysts' expectations.
Meanwhile, home construction plummeted during March to its lowest level in 17 years, the government said in a report signaling that the housing sector will continue slumping. Housing starts fell 11.9 percent to a seasonally adjusted 947,000 annual rate, after falling 0.7 percent in February to 1.075 million, according to the Commerce Department.
Advancing issues led decliners by a 5 to 1 basis on the New York Stock Exchange, where volume came to 1.44 billion shares compared with 1.2 billion shares traded Tuesday.
Overseas, Japan's Nikkei stock average rose 1.20 percent. Britain's FTSE 100 rose 2.36 percent, Germany's DAX index was up 1.79 percent, and France's CAC-40 added 1.56 percent.