By Alexandra Scaggs
U.S. equities gained broadly, as rising hopes of economic
stimulus from Asia helped calm investor nerves.
Biotechnology and other highflying stocks saw more big
moves.
The Dow Jones Industrial Average rose 131 points, or 0.8%, to
16393. The S&P 500 index advanced 16 points, or 0.8%, to 1859,
with all 10 sectors higher. The Nasdaq Composite Index climbed 41
points, or 1%, to 4076.
On Tuesday, stocks ended a roller-coaster session broadly
higher. The Dow closed up 89 points to post the best two-day point
gain since March 18.
The rally picked up some steam in afternoon trading, led by
high-octane biotechnology and social-media stocks. The Nasdaq
Biotechnology Index rose 2%. Those so-called momentum stocks made a
series of big swings in the first half of April, roiling the
tech-heavy Nasdaq Composite. So far this month, the Nasdaq has lost
3%, and the Nasdaq Biotechnology Index has dropped 6.3%. Initially,
many of those sharp moves were driven by trading in exchange-traded
funds, traders said.
But during the latest rebound, traders saw "real buyers come in"
and buy shares of individual companies, said Viren Chandrasoma,
managing director in equity trading at Credit Suisse Group AG. "I
don't think it's fast money... it's really led by the stocks
themselves."
Stock benchmarks started the session with broad gains, after a
report showing that China's gross domestic product grew 7.4% in the
first quarter, the slowest rate in 18 months, but above economists'
forecasts of 7.3%. Traders said the slowing pace of growth raised
some hopes of more stimulus from the Chinese government.
"The Chinese data certainly corroborates the idea that the
economy is slowing, but at the same time officials have become
concerned enough" that more stimulus could be a possibility, said
Dan Greenhaus, chief market strategist at New York brokerage firm
BTIG.
And that is a positive factor for stocks globally, he said.
Stocks in Europe and Asia gained, with the Stoxx Europe 600 up
1.3%. Japan's Nikkei Stock Average shot up 3% after Bank of Japan
Governor Haruhiko Kuroda said he would closely monitor stock prices
and that inflation was on a steady track toward a 2.0% target.
China's Shanghai Composite gained 0.2%.
Despite the recent volatile trading, U.S. stock benchmarks
haven't given up much ground from their record levels hit on April
2. The S&P 500 has lost 0.7% this month, and is 1.7% below its
all-time high. The Dow industrials have held up better, down 0.3%
this month and 1% from their record levels.
Benchmarks have held up despite expectations for relatively weak
first-quarter corporate earnings. With 47 companies reporting, the
S&P 500 is on pace to report that first-quarter earnings
declined 1.9% from the previous year, according to FactSet, and
that sales rose 2.2%.
U.S. stock-market gains this year will be mostly based on
earnings, said Christian Ledoux, director of equity research at
South Texas Money Management. "It is going to be bumpy for most of
the year... equity [valuations] are slightly above average, and
they're working their way toward overvalued."
Still, he said he is keeping his allocation to stocks steady,
since they are a good value when compared with investments such as
bonds.
Dow component Intel shares rose 0.3% after it reported late
Tuesday first-quarter earnings that topped analyst estimates, while
revenue was in line with its forecast and PC sales continued to
decline.
Yahoo surged 6% after first-quarter results exceeded
expectations, and the company provided an upbeat revenue outlook
for the current quarter.
Bank of America slipped 1.6% after the banking giant reported it
swung to a first-quarter loss as a result of previously-disclosed
litigation expenses, while revenue fell slightly less than
expected.
Stocks held their broad gains as Federal Reserve Chairwoman
Janet Yellen spoke about monetary policy and the economy at the
Economic Club of New York. The Fed also released its "beige book"
report, a read on the U.S. economy from anecdotes gathered by the
central bank's 12 districts, which said that economic activity in
most of the country rebounded after an unusually icy winter
hampered growth.
In other economic news, new residential construction for March
rose 2.8% to a seasonally adjusted annualized rate of 946,000,
falling well below forecasts of a rise of 6.4% to a seasonally
adjusted annualized rate of 965,000. Building permits fell 2.4% to
990,000, versus forecasts of 1.01 million.
Industrial production rose 0.7% in March, while a rise of 0.4%
was forecast. Capacity utilization rose by more than expected as
well.
The yield on the 10-year Treasury note rose to 2.637% from
2.628% late Tuesday. Gold futures gained 0.2% to $1,303.10 a troy
ounce, after falling 2% Tuesday to mark the biggest one-day
percentage loss since Dec. 19.
Crude-oil futures tacked on less than 0.1% to $103.76 a barrel.
The dollar rose against the yen, but lost some ground against the
euro.
In corporate news, New York investment bank Moelis & Co.
rose 5.1% in its public debut, after pricing its initial public
offering below its forecast range.
Google, which is due to report results after the close, rose
2.8%.
Twitter slipped 2.2%. The stock shot up 11% Tuesday, the biggest
one-day gain since the microblogging site went public in November.
Tuesday's rally came one day after some of the company's earliest
and biggest backers said they didn't plan to sell shares when rules
barring them from doing so expire next month.
Twitter had been one of the hardest-hit of the previous
highfliers, as the stock was down 37% on the year through Friday,
after ending last year 145% above its $26 initial public offering
price.
Write to Alexandra Scaggs at alexandra.scaggs@wsj.com