Big earnings surprises gave a positive turn to investor sentiment on Wednesday, propelling U.S. stocks to their best day in a month and lifting the Dow industrials to their highest in almost three years.
Investors had been set up for a series of disappointments but got an unexpected treat from blue chips Intel Corp (NasdaqGS:INTC -News) and United Technologies Corp (NYSE:UTX - News), sparking a broad-based rally that puts equities on the path for more gains in coming weeks.
The S&P 500 broke decidedly above its 20-day moving average, setting a near-term target at 1,340, according to its Bollinger bands chart, a technical indicator that tracks momentum and volatility.
"Until yesterday, earnings were lackluster, not too exciting, even disappointing," said Nick Kalivas, senior equity index analyst at MF Global in Chicago. He said the last round of reports "shifted the psychology quite significantly."
Shares of Intel rose 7.8 percent to $21.41 while United Tech gained 4.3 percent to $85.90.
The trend of positive earnings continued after the market's close, with Apple Inc (NasdaqGS:AAPL - News) up 2.7 percent at $351.80 after a blowout quarter that surged past expectations. Revenue for the tech giant rose 83 percent year-over-year.