Stocks Extend Gains in Broad-Based Rally

Stocks rose in a broad-based rally Wednesday, extending Tuesday’s gains and boosting hopes that the bulls were taking back control on Wall Street.

The Nasdaq composite index scored its biggest one-day percentage gain since Dec. 1, rising 26.14 points, or 1.3%, to 2,046.09.

The Russell 2,000 index of smaller stocks jumped 10.07 points, or 1.7%, to 616.57, its best one-day percentage advance since Nov. 3.

Those indexes had been among the most beaten down as the market stumbled in the first three weeks of this year.

Overall, rising stocks swamped losers by more than 2 to 1 on the New York Stock Exchange and on Nasdaq.

“The stock market internals improved, especially breadth, and the small-cap indices and high techs were at the forefront. This is a good sign,” said Steve Todd, editor of the Todd Market Forecast in Mission Viejo.

Missing, however, was a jump in trading volume that would indicate a rush of investors returning to the market, Todd said.

But analysts were happy to see stocks respond favorably to some strong quarterly profit reports and to a drop in oil prices.

A batch of healthy earnings reports had sparked buying Tuesday, when the blue-chip Dow Jones industrial average rallied 92.95 points, the biggest gain of the new year.

The Dow slowed on Wednesday, adding 37.03 points, or 0.4%, to 10,498.59. But most other major indexes picked up the pace. The Standard & Poor’s 500 was up 5.66 points, or 0.5%, to 1,174.07, after gaining 0.4% on Tuesday.

Stocks rising on earnings reports Wednesday included Texas Instruments, up $1.54 to $22.66; medical device maker Becton Dickinson, up $1.65 to $55.94; oil company ConocoPhillips, up $1.59 to $90.49; and electronics manufacturer Flextronics, up $1.52 to $13.94.

On the downside, mutual fund company Janus Capital lost 59 cents to $14.52 on its earnings report. Tool maker Black & Decker slumped $3.89 to $79.47 after its report.

Internet stocks attracted attention. Yahoo gained $1.43 to $35.47 after Merrill Lynch raised it to “buy” from “neutral.”

About two-thirds of the S&P; 500 companies that have reported earnings this month have exceeded analysts’ estimates, according to Thomson First Call.

But investors have been distracted by other issues. Oil prices have jumped this year on supply concerns. On Wednesday, however, near-term crude futures in New York fell 86 cents to $48.78 a barrel after the government’s weekly report on U.S. oil inventories showed supplies up 3.4 million barrels to 295.6 million, more than expected.

Some investors also have been nervous about inflation and the potential for the Federal Reserve to tighten credit at a faster pace. Fed policymakers meet next week and are expected to raise their benchmark short-term rate to 2.5% from 2.25%.

In the bond market on Wednesday, the yield on the existing two-year Treasury note rose to 3.27% -- the highest since 2002 -- from 3.21% Tuesday, after an auction of $24 billion in new two-year notes met with lackluster demand. The new notes were sold at a yield of 3.25%.

The yield on the 10-year T-note was unchanged at 4.20%.

For the stock market, today’s session could be a big test: Major indexes haven’t been able to string together three consecutive winning sessions since before Christmas.

If stocks rise today, with the Iraqi election looming Sunday, it could suggest that the bulls are gaining the upper hand despite some significant short-term obstacles, analysts say.