A stream of good news has the stock market back on an upward path.
Encouraging corporate and economic reports Wednesday raised hopes that a recovery is taking hold although investors are still concerned about unemployment in the U.S. and debt problems in countries like Greece.
Deere & Co. and Whole Foods Market Inc. jumped after their profit reports topped expectations and the companies raised their forecasts. Upbeat reports on home construction and production at factories also helped lift the market.
The Dow Jones industrial average rose 40 points a day after it jumped 170. That rally was also in response to stronger economic and earning news. Treasury prices fell Wednesday as demand for safe investments eased.
Investors could get more insight into the economy Thursday from Wal-Mart Stores Inc. and Goodyear Tire & Rubber Co., which are scheduled to report earnings.
Stocks have fallen over the past month on overseas concerns, including Greece's debt crisis and moves by China to keep its economy from growing too fast. Investors are still uneasy, but they've been able to turn their attention to a stronger domestic economy.
The Commerce Department said construction of homes and apartments rose to an annual rate of 591,000 in January, better than the 580,000 units forecast by economists polled by Thomson Reuters.
A collapse of the housing market helped push the economy into recession, but recent reports have suggested the market is stabilizing. Applications for building permits, a barometer of future activity, fell 4.9 percent. A drop was expected after two months of big growth.
The Federal Reserve, meanwhile, said production at the nation's factories, mines and utilities rose 0.9 percent last month. It was the seventh straight month of growth and better than the 0.6 percent gain forecast by economists.
Investors also drew reassurance from a brighter assessment of the economy from the Fed. Minutes released from the central bank's last meeting suggest that policymakers remain cautious but that they expect stubborn unemployment rates will begin to fall next year.
Ken Kamen, president of Mercadien Asset Management in Hamilton, N.J., said there is still an underlying sense of unease in the market despite the gains of the past two days.
"From day to day there's no one boogeyman or no one exciting thing," Kamen said. "People age getting neck strain spinning their head from side to side looking at all the different pieces of information."
The Dow rose 40.43, or 0.4 percent, to 10,309.24. The Standard & Poor's 500 index rose 4.64, or 0.4 percent, to 1,099.51, while the Nasdaq composite index rose 12.10, or 0.6 percent, to 2,226.29.
Bond prices fell, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.73 percent from 3.66 percent late Tuesday.
The dollar rose against most other major currencies. Gold prices fell.
Crude oil rose 32 cents to $77.33 a barrel on the New York Mercantile Exchange.
Randy Frederick, director of trading and derivatives at Charles Schwab, contends that with the big gains Tuesday the market is back in balance after its slide over the past month. The S&P 500 index fell 9.2 percent from mid-January to the start of last week.
"I wouldn't be surprised to just see some sideways movement here and maybe small increases over the next week or two," he said.
Frederick said the level of the Chicago Board Options Exchange's Volatility Index, which is known as the market's fear gauge, shows a healthy caution in the market after the index got too low in January. An increase in the VIX signals that investors are prepared for swings in the market. The VIX stands at 21.8 compared with 17.6 in early January.
Deere reported stronger fiscal first-quarter earnings than expected and raised its full-year earnings forecast. Shares of the heavy equipment maker rose $2.70, or 5 percent, to $56.48.
Whole Foods rose $3.83, or 13 percent, to $34.35 after the grocer posted a 79 percent gain in its first-quarter earnings and it boosted its forecast for the year.
Walgreen Co. said it will purchase New York-area drugstore operator Duane Reade for about $623 million in cash. Including $457 million in debt held by Duane Reade, the entire transaction is valued at $1.08 billion. Shares of Walgreen rose 11 cents to $34.19.
The jump in stocks Tuesday came after better-than-expected earnings from companies like Barclays PLC, Merck & Co. and Abercrombie & Fitch provided reassurances that the economy is improving. Simon Property Group's takeover bid of rival mall operator General Growth Properties also indicated companies are becoming more confident.
Two stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 4.25 billion shares, compared with 4.21 billion Tuesday.
The Russell 2000 index of smaller companies rose 3.99, or 0.6 percent, to 624.83.
Britain's FTSE 100 rose 0.6 percent, Germany's DAX index rose 1 percent, and France's CAC-40 jumped 1.5 percent. Japan's Nikkei stock average rose 2.7 percent.