US stocks rallied on Wednesday, with Apple's surge giving the Nasdaq its biggest gain of the year, while the Fed chairman reassured markets that the central bank would do more if necessary to lift the economy.
Apple fueled optimism that the current earnings season would be much stronger than expected, generating gains across all market sectors. Quarterly profits at Apple nearly doubled, while its revenue easily topped expectations. The rally in Apple's stock especially benefited the S&P 500 tech sector index . It jumped 3.2 per cent.
Federal Reserve Chairman Ben Bernanke spurred further gains when he said the US central bank "would not hesitate" to launch another round of bond purchases to drive borrowing costs lower if it looked like the economy needed it.
Shares of Apple, which has the world's biggest market capitalization, jumped 8.9 per cent to $US610. The stock had its best day since November 2008 and hit a session high at $US618.
Apple's results boosted S&P 500 companies' earnings growth to an estimated 6.9 per cent for the first quarter, up from an estimate of 4.6 per cent before Apple, according to Thomson Reuters data.
Apple's stock had sold off recently, partly on fears that its earnings could disappoint.
"It was a big relief" to many investors, said Giri Cherukuri, head trader at OakBrook Investments LLC in Lisle, Illinois, referring to Apple's results. "There were a lot of worries going into that earnings report. I think people were worried iPhone growth was going to slow, and it was the same thing with iPad growth.
"What they didn't take into account was iPhone growth throughout the world. That's what the market didn't see properly."
The Dow Jones industrial average shot up 89.16 points, or 0.69 per cent, to 13,090.72 at the close. The Standard & Poor's 500 Index rose 18.72 points, or 1.36 per cent, to 1,390.69. The Nasdaq Composite Index jumped 68.03 points, or 2.30 per cent, to 3,029.63, and scored its best daily per centage gain since Dec. 20.
The earnings season so far has been stronger than expected. With 200 of the S&P 500 companies reporting, three-fourths have topped estimates, according to Thomson Reuters data.
Giving the Dow its biggest lift was Boeing Co. It posted higher quarterly profit, helped by increased commercial aircraft sales, and raised its earnings forecast for the year. The stock shot up 5.3 per cent to $US77.08.
On the down side, Caterpillar Inc shares dropped 4.6 per cent to $US103.44 after it said profit rose 29 per cent. But the heavy equipment maker stoked Wall Street's fears about emerging markets by repeatedly citing slowdowns in economic growth in China and Brazil.
Bernanke's comments were a welcome surprise to some stock investors.
"People looked at the FOMC statement and saw no mention of QE3, but in his press conference, Bernanke made it quite clear that additional asset purchases remain completely on the table. That may have been a revelation to some of the earlier sellers," said William O'Donnell, managing director and head of US Treasury strategy at RBS Securities in Stamford, Connecticut.
The Dow Jones Transportation Average ended up 0.9 per cent, despite the day's downbeat economic data. Investors often watch the transportation average as an indicator of the stock market's future direction.
March durable goods orders fell 4.2 per cent in the biggest drop in three years. The report was the latest to show softness in US economic data.
Volume was 6.8 billion shares on the New York Stock Exchange, the Nasdaq and the NYSE Amex, compared with the daily average this year of 6.77 billion.