A dose of good economic news sent U.S. stocks sharply higher Wednesday and erased the Dow Jones industrials' big plunge of last week.
The Dow rose 148 points to return to where it stood before Thursday's tumble that briefly took the average down nearly 1,000 points. The technology-dominated Nasdaq composite index led major indexes with a 2 percent gain. Investors moved into tech stocks ahead of earnings from network gear maker Cisco Systems Inc. and following upbeat forecasts from Intel Corp. and IBM Corp.
Analysts say the market's rebound from last week's drop reflects investors' growing confidence that Europe's debt problems are contained for now. Fears that Europe's problems would spill over to the U.S. fed the market's plunge.
Economic reports from the U.S. and Europe helped reassure investors that the global recovery is intact. The Commerce Department said exports rose in March to their highest levels since 2008. That was a welcome signal for the manufacturing industry, which has been strengthening since last year. Increased demand could eventually lead to more hiring.
Most European markets posted big gains after better economic numbers signaled that a rebound is occurring in many parts of the continent. A round of spending cuts in Spain bolstered hopes that debt-strapped countries in Europe would take steps to slash costs. Stocks surged around the world Monday after European leaders agreed to a nearly $1 trillion bailout to contain fears of a debt crisis that pounded markets last week.
While stocks have stabilized, currency markets are still in flux. That signals that investors are still somewhat uneasy after last week's slide. The euro edged higher against the dollar Wednesday but is still hovering near a 14-month low.
Uncertainty over the long-term health of the euro helped lift gold to a record high. Investors worry that the euro could still lose value as European countries try to work though debt problems by taking on more debt. Investors have turned to gold as an alternative to holding currencies.
Gold settled up $22.80 at $1,243.10 an ounce after hitting a record high of $1,247.70 an ounce. That lifted shares of gold producers Freeport-McMoRan Copper & Gold Inc. and Newmont Mining Corp.
Max Bublitz, chief strategist at SCM Advisors in San Francisco, said the swings of the past few weeks spooked investors who had become overconfident. Now, the focus can return to the U.S. economy. Expectations of a recovery have driven the market higher since major stocks indexes hit 12-year lows in March last year. The market made steady gains from February-April before concerns about Greece briefly erased stocks' gains for the year.
"We got a lot of the bullishness and complacency out of the market," he said. "As long as we have doubters out there, then I'm a lot more comfortable saying the trend that's been in place the last 14 months stays there."
The Dow rose 148.65, or 1.4 percent, to 10,896.91. The Dow stands at its highest level since May 4. The Dow is up 5 percent in three days, its best gain since July.
The Standard & Poor's 500 index rose 15.88, or 1.4 percent, to 1,171.67, while the Nasdaq rose 49.71, or 2.1 percent, to 2,425.02. The index has gained 5.5 percent in three days, its best showing since July.
Bond prices fell, pushing yields higher. The yield on the benchmark 10-year note rose to 3.58 percent from 3.53 percent late Tuesday.
Crude oil fell 72 cents to $75.65 per barrel on the New York Mercantile Exchange after the International Energy Agency said global oil demand is expected to rise less than previously expected in 2010.
The Commerce Department said that the U.S. trade deficit rose to a 15-month high in March as higher oil prices pushed import costs higher. The report also showed exports rose 3.2 percent to their highest level since October 2008, a sign the economy continues to get stronger.
Tech stocks led the market higher. Cisco rose 78 cents, or 3 percent, to $26.74 ahead of its report, which was released after the end of regular trading. The company said its net income for the latest quarter rose 63 percent from a year earlier. The stock slipped 24 cents, or 0.9 percent, to $26.25 in after-hours trading.
Intel rose 81 cents, or 3.6 percent, to $23.09 after the chipmaker forecast that rising demand would increase revenue and net income in the coming years.
IBM predicted it would earn at least $20 per share by 2015 on increased spending by companies on technology. The stock rose $5.79, or 4.6 percent, to $132.68.
Morgan Stanley shares fell after The Wall Street Journal reported that the investment bank is facing an investigation into its dealings in mortgage securities. The stock fell 58 cents, or 2 percent, to $27.80.
A Morgan Stanley spokesman said the bank hasn't been contacted by the Justice Department about the deals in question and that he isn't aware of an investigation.
Freeport-McMoRan rose $2.76, or 3.9 percent, to $73, while Newmont Mining rose 51 cents, or 0.9 percent, to $58.71.
About six stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1.3 billion shares, compared with 1.5 billion Tuesday.
The Russell 2000 index of smaller companies rose 20.63, or 3 percent, to 716.11.
In Europe, Germany's DAX index jumped 2.4 percent after a report showed its economy grew more than expected in the first quarter. Britain's FTSE 100 climbed 0.9 percent and France's CAC-40 gained 1.1 percent.