Better-than-expected earnings reports helped investors shake some of their concerns about the ongoing housing slump and lingering problems in the credit markets. The market largely looked past weak housing data, while the Labor Department's reading on September consumer price inflation came in close to analyst expectations.Strong results from component companies of the Dow Jones industrial average, including JPMorgan Chase, Altria Group Inc. and United Technologies Group Inc., helped encourage investors that third-quarter earnings overall might come in better than expected. And technology shares led the Nasdaq higher after robust earnings from Intel Corp., Yahoo Inc. and International Business Machines Corp. late Tuesday.
In early trading, the Dow rose 53.65, or 0.39 percent, to 13,966.59. The Standard & Poor's 400 index rose 9.35, or 0.61 percent, to 1,547.88, while the Nasdaq composite index rose 30.73, or 1.11 percent, to 2,794.64.
Wall Street's recovery followed two days of declines. Stocks slid Tuesday after banks including Wells Fargo & Co. and KeyCorp reported disappointing quarterly results due to the ongoing credit crisis. Meanwhile, investors were also spooked after Federal Reserve Chairman Ben Bernanke said the housing slump may drag on through next year.
JPMorgan Chase said third-quarter profit rose 2 percent record earnings in asset management helped the country's third-largest bank overcome hefty writedowns on its leveraged loans credit loss provisions resulting from the summer's credit market turmoil. Its shares rose $1.09, or 2.4 percent, to $46.20.
Yahoo said late Tuesday that third-quarter profit fell less than analysts had expected, raising hopes of a turnaround at the Internet search company. Yahoo gained $2.03, or 7.6 percent, to $28.72.
Chipmaker Intel posted a 43 percent increase in third-quarter earnings late Tuesday. The company's shares jumped $1.02, or 4 percent, to $26.50.
Beyond earnings, investors absorbed two economic reports that appeared to give the Fed more wiggle room in cutting rates. Central bankers will next meet Oct. 30-31.
U.S. consumer prices rose modestly last month, suggesting there are still inflation risks, but they likely wouldn't get in the way of an interest rate cut. The consumer price index rose 0.3 percent in September, reversing August's 0.1 percent decline. The core CPI, which excludes volatile food and energy prices, advanced 0.2 percent for a fourth-straight month.
Meanwhile, the Commerce Department said new home construction slowed to the weakest pace in 14 years during September. Housing starts plunged 10.2 percent to a seasonally adjusted 1.191 million annual rate, after falling 3.2 percent in August to 1.327 million.
Investors are still waiting for the Fed to release its Beige Book report at 2 p.m. EDT. The report gauges regional economic conditions based on data gathered by the Fed's 12 regional district banks.
Oil traded higher ahead of the Energy Department's weekly petroleum report, which is forecast to show crude and gasoline inventories rose last week. A barrel of light, sweet crude rose 36 cents to $87.97 on the New York Mercantile Exchange.
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