U.S. stocks rise on hopes for solid earnings, recovery; Dow gains 0.88%

Investing.com - U.S. stocks rose on Wednesday amid hopes that first-quarter results may outpace earlier expectations for modest improvements, while Federal Reserve language fanned hopes for the economy to gain steam in the coming months.

At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.88%, the S&P 500 index rose 1.22%, while the Nasdaq Composite index rose 1.83%.

Earnings season is underway and hopes continued to build on Wednesday that top-line and bottom-line results may bring pleasant surprises in the coming weeks.

Meanwhile, the Federal Reserve released the minutes of its March monetary policy meeting earlier, which also pumped up share prices, especially when it comes to wrapping up stimulus programs.

The Fed is currently purchasing USD85 billion in mortgage debt and Treasury holdings held by banks a month, a monetary stimulus tool known as quantitative easing that pushes down interest rates and pumps the economy full of liquidity to encourage investing and hiring, which weakens the dollar and sends stocks rising as side effects.

Monetary authorities appear to be at odds over when to dismantle such stimulus programs.

"A few members felt that the risks and costs of purchases, along with the improved outlook since last fall, would likely make a reduction in the pace of purchases appropriate around midyear, with purchases ending later this year," the Fed said in the minutes.

"Several others thought that if the outlook for labor market conditions improved as anticipated, it would probably be appropriate to slow purchases later in the year and to stop them by year-end."

Investors in equities markets concluded that stocks win either way — either stimulus programs stay in effect longer and stocks rise on the liquidity surge, or the Fed winds down such programs on the conclusion that the economy is strengthening, which would also bring up share prices.

Investors also went long on Chinese data revealing the world's second-largest economy produced an unexpected trade surplus in March, as imports rose sharply, reflecting firming domestic demand.

U.S. technology and pharmaceutical companies performed particularly well.

Leading Dow Jones Industrial Average performers included Merck, up 2.94%, Pfizer, up 2.82%, and Cisco Systems, up 2.34%.

The Dow Jones Industrial Average's worst performers included Wal-Mart Stores, down 0.95%, Alcoa, down 0.83%, and Travelers Companies, down 0.55%.

European indices, meanwhile, finished higher.

After the close of European trade, the EURO STOXX 50 rose 2.56%, France's CAC 40 rose 1.99%, while Germany's DAX 30 finished up 2.27%. Meanwhile, in the U.K. the FTSE 100 gained 1.17%.

On Thursday, the U.S. is to release a weekly government report on initial jobless claims and official data on import prices.