Stocks close sharply up, driven by earnings

The surge in the markets began after Intel released a surprisingly strong report on Tuesday, soundly beating forecasts with earnings of 59 cents a share on revenues of $12.85 billion, up from 43 cents on revenues of $10.3 billion a year ago.

Analysts had expected Intel to post earnings of 46 cents on revenue of $11.59 billion, according to Thomson Reuters. At least six brokerages boosted their price target for the firm after the results, pushing the stock up more than 6 percent on high volume.

The fact that Intel doesn't expect to be hurt by supply constraints due to the multiple disasters in Japan was also good news to investors, Godine at Signal Hill said.

The news boosted the entire semiconductor sector. The PHLX Semiconductor Sector Index rose more than 3 percent Wednesday.

IBM and Yahoo also released results after the market closed Tuesday. IBM slipped after reporting earnings better than forecasted, but the tech giant disappointed investors as new business in its global services division fell.

Yahoo, however, jumped after beating forecasts with first-quarter earnings of 17 cents a share, although that was down from 22 cents a year ago. Analysts had expected the search company to post earnings of 16 cents a share, according to Thomson Reuters.

Cree sank after reporting a 58 percent drop in earnings after the bell Tuesday, followed by several downgrades by stock analysts. The maker of LED products suffered from price cuts.

But VMWare soared after reporting surprisingly strong results and lifted the rest of the cloud computing sector with it. Salesforce shot to the top of the S&P 500. At least three brokerages raised their price target for VMWare.

Shares of Google, meanwhile, traded slightly higher despite a ratings downgrade by Citigroup. Citi removed the search engine giant from the CIRA recommended list, and downgraded the stock from "buy/high risk" to "hold/high risk."

CSX weakened despite a 30 percent gain in first-quarter earnings as demand and rising prices for shipping offset higher fuel costs. The railroad firm earned $395 million $1.06 a share, up from $305 million or 78 cents a share a year ago.

Meanwhile, gold futures traded above $1,500 an ounce during Wednesday's session, although futures slipped a bit before the close to end at $1498.30. Silver rose 1.24 percent to $44.47.

The dollar sank against a basket of currencies as the euro strengthened to its highest level in 15 months. The dollar index touched 74.27 during the session, the lowest level since Nov. 25, 2009.

Freeport McMoran Copper & Gold, which released upbeat earnings before the bell, soared Wednesday, as did other precious metals companies. The company beat estimates thanks to rising prices for metal and lower mining costs. Freeport McMoran also declared an extra stock dividend of 50 cents a share for the quarter.

Newmont Mining, Barrick Gold, and Kincross Gold, among other precious metals producers, also gained.

Wednesday marks the first anniversary of the BP oil spill in the Gulf of Mexico. Since the spill, the oil giant has lost $49 billion in market capitalization.

Oil prices rallied on the weak dollar, and as crude inventories came in lower than expected.

London Brent crude for June delivery rose more than 2 percent to $123.85, while U.S. light crude for June delivery soared nearly 3 percent to $111.

Energy stocks soared along with oil prices, led by QEP Resources, Marathon Oil, and Consol Energy.

Financials was the only sector not to participate in the rally as results by Wells Fargo dragged the sector lower. Wells Fargo slumped after reporting a 5.2 percent drop in revenue to $20.33 billion. Several regional banks that reported earnings on Tuesday, also fell, including Zions Bancorp and US Bancorp.

Meanwhile, Goldman gained after JMP Securities said investors should "back up the truck and buy GS shares" in a note to clients. Goldman shares suffered Tuesday despite delivering better-than-expected results. JMP raised its price target for the investment bank to $198 a share from $183. "There are indeed a few areas of concern, but we believe these to be either manageable or completely overblown," JMP Securities said.

And in M&A news, power company AES said it would buy smaller rival DPL for $3.5 billion in cash, Reuters reported.

The parade of tech earnings continues later today, when Apple releases its results after the market closes amid media reports the company could start shipping its new iPhone in September.

On the economic front, existing home sales rose 3.7 percent in March to an annual rate of 5.1 million units from an upwardly revised rate of 4.92 million units in February. Economists surveyed by Reuters had expected a 2.5 percent jump.

The Mortgage Bankers Association's index of mortgage application activity rose 5.3 percent in the week ended April 15, to the highest level since early December.

A strong showing in European markets on the heels of a successful Spanish bond offering as well as good earnings results also got the U.S. market off to an upbeat start on Wednesday. European markets closed higher.

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