updated 7/28/2005 7:05:41 AM ET 2005-07-28T11:05:41

Wall Street had a surge of optimism Wednesday, shaking off an early funk and sending stocks higher after investors interpreted a Federal Reserve report on the economy as a sign that the Fed’s year-long string of interest rate hikes may be nearing an end.

Major Market Indices

Wall Street was mired in a narrow trading range until mid-afternoon, when the Fed released its Beige Book report , a survey of the business climate around the country. The central bank said the job market showed some improvement and that inflation, a major concern for the Fed and the stock market, was fairly contained. Seven out of 12 districts reported their regional economies were growing or holding steady.

“It’s a more benign take than previous Beige Books,” said Robert Tipp, chief investment strategist for Prudential Investment Management fixed income. “It will presumably open their eyes (the Fed’s) to the fact that the economy could be cooling ... and they won’t have to continue raising rates more than another two or three moves.”

The day’s other economic data were also strong: New home sales set a record in June and factory orders for big-ticket manufactured products rose at a strong clip. Analysts said investors were hearing the good economic news that they’ve been hoping for.

“The economic slowdown that was supposed to be happening at this time of year isn’t happening,” said Jack Caffrey, equities strategist at J.P. Morgan Private Bank.

Meanwhile, corporate earnings remained upbeat, with more companies surpassing expectations than missing them. The latest positive surprises came from Boeing Co. and Amazon.com Inc., whose stocks shot up after they reported earnings.

Crude oil futures closed down 9 cents at $59.11.

The Dow Jones industrial average finished the day up 57.32 points, or 0.5 percent, while the broader Standard & Poor’s 500-stock index rose 5.63 points, or 0.5 percent, to a fresh four-year closing high. The Nasdaq composite index rallied 10.23 points, or 0.5 percent.

Boeing rose 35 cents to $66.70 after the aerospace firm beat Wall Street earnings expectations and the company boosted its outlook for the year due to expected strength in its core commercial airplane and defense units.

Amazon also beat forecasts when it reported earnings after the close of regular trading Tuesday . Amazon, which said its sales rose 26 percent in the second quarter, rose $5.91 to $43.65.

Consumer products company Colgate-Palmolive Co. rose 25 cents to $52 after its second-quarter profit matched analysts’ estimates .

Reynolds American Inc., the nation’s second-largest cigarette maker, missed analysts’ expectations despite a 66 percent increase in second quarter profit. The cigarette maker also boosted its 2005 earnings guidance to reflect a favorable tax rate. Its stock price fell $1.18 to $83.07.

Sun Microsystems rose 2 cents to $3.87 after releasing its earnings late Tuesday . The company also announced a sale to General Motors Corp. on Wednesday.

Maytag Corp., which has already accepted one buyout offer, opened its books to Whirlpool Corp. which has proposed paying even more for its appliance making rival. Whirlpool has offered $18 a share, or about $1.43 billion, for Maytag. Maytag rose 6 cents to $16.91; Whirlpool fell 59 cents to $79.69.

Delta Air Lines Inc. fell 44 cents to $2.95 after its CEO said the company’s transformation plan, which includes cutting annual costs by $5 billion by the end of next year, is not enough to save the nation’s third-largest airline . Gerald Grinstein said the company is working on an out-of court solution, but faces increasing financial pressure.

Overseas, Japan’s Nikkei average rose 0.83 percent. Britain’s FTSE 100 edged up 0.14 percent, Germany’s DAX index was up 0.24 percent and France’s CAC-40 was up 0.28 percent.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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