Dow Recaptures Levels It Held Before 'Flash Crash'

Stocks close higher Wednesday in a broad-based rally led by tech stocks. Gregg Greenberg has The Real Story.
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NEW YORK (

TheStreet

) -- Stocks rallied to finish close to their highs Wednesday, and the

Dow Jones Industrial Average

marked a triple-digit gain with the help of a surging tech sector, as the blue-chip average recaptured levels last seen before Thursday's disastrous plunge.

The Dow added 149 points, or 1.4%, to 10,897. The

S&P 500

gained 16 points, or 1.4%, to 1172 and the

Nasdaq

went ahead by 50 points, or 2.1%, at 2425.

Tech heavyweights

IBM

(IBM) - Get Report

,

Intel

(INTC) - Get Report

and

Cisco Systems

(CSCO) - Get Report

helped lead the Dow as the outlook for tech spending brightened. Both Intel and IBM strengthened long-term guidance, according to

CNBC

.

After the closing bell,

Cisco reported third-quarter adjusted earnings of 42 cents a share, topping estimates. "We witnessed a return to strong balanced growth across geographies, products and customer segments that we haven't seen since before the global economic challenges began," CEO John Chambers said in a statement, later adding, "our results in Q3 were the proof points that our strategy is working and was probably the strongest quarter in our history."

Shares climbed higher by 3% in the afternoon session, but were edging lower in extended trading.

Earlier, the Commerce Department said the March

trade deficit widened to the largest level since December 2008.

"Global economic conditions continue to favor expanding U.S. trade," said PNC Chief Economist Stuart Hoffman, pointing to the strength of economic recovery in Canada and Mexico, key U.S. trading partners. Europe, however, remains a concern despite the eurozone financial rescue package, Hoffman said.

"The European Central Bank and the International Monetary Fund have cobbled together a $1 trillion loan fund to stave off the near-term threat of defaults, but loans are just a band-aid for insolvent countries. Fiscal austerity, the real medicine, will likely be a drag on GDP for the southern tier of eurozone countries."

In Europe, Spain announced curbed public spending to reduce its budget deficit, and gross domestic product in the eurozone rose 0.2% during the January to March period, compared with the previous quarter's growth of 0.5%, according to

Reuters

.

The FTSE in London rose by 0.9%, and the DAX in Frankfurt added 2.4%.

In Asian markets, Hong Kong's Hang Seng gained 0.3% while Japan's Nikkei lost 0.2%.

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The Economy

In the afternoon session Wednesday, the U.S. Treasury Department said the budget deficit rose to its largest on record in April. The deficit, which grew to $82.7 billion last month, outpaced forecasts calling for a $52 billion shortfall, according to consensus forecasts provided by Briefing.com.

The U.S. trade gap widened to $40.42 billion in March from February's deficit of $39.43 billion. Economists had been expecting a March deficit of $40.5 billion.

Mortgage application volume rose by a seasonally adjusted 3.9% last week, the Mortgage Bankers Association said. Refinancing applications surged 14.8% week over week, while purchasing applications fell by 9.5%.

The Energy Information Administration said crude oil inventories gained 1.9 million barrels in the week ended May 7, which was higher than the build of 1.7 million barrels that analysts polled by Platts had been expecting, and well above the increase of 362,000 barrels that the American Petroleum Institute reported late Tuesday.

Gasoline supplies unexpectedly fell by 2.8 million barrels, and distillates added 1.4 million barrels to stockpiles. Analysts had projected a build of 850,000 barrels in gasoline stocks and an additional 1.28 million barrels of distillates.

>>Overview

>>Company News

>>Commodities and the Dollar

>>Treasuries

Company News

Shares of

Netflix

(NFLX) - Get Report

gained 8% amid reignited takeover rumors.

Morgan Stanley

(MS) - Get Report

is being investigated by federal prosecutors over whether it misled investors about mortgage-derivative deals that it helped design and sometimes bet against,

The Wall Street Journal

reported. The stock lost 58 cents, or 2%, to $27.80.

Shares of

Macy's

(M) - Get Report

climbed 3.4% higher to $24.70 after the department store beat first-quarter estimates by a penny and strengthened its year-end sales guidance.

Deutsche Telekom (DT) - Get Report

swung to a profit in the first quarter, but sales at its U.S. unit, T-Mobile USA, fell.

Starbucks

(SBUX) - Get Report

plans to unveil a new logo for Seattle's Best Coffee, the brand it acquired in 2003. It also aims to expand Seattle's Best's franchising efforts.

>>Overview

>>The Economy

>>Commodities and the Dollar

>>Treasuries

Commodities and the Dollar

After the EIA's inventory report,

crude oil for June delivery lost 72 cents to finish at $75.65 a barrel.

The June

gold contract, which has been hitting record highs amid currency jitters, gained $22.80 to settle at $1,243.10 an ounce.

The dollar was trading higher against a basket of currencies, with the

dollar index up by 0.4%.

>>Overview

>>The Economy

>>Company News

>>Treasuries

Treasuries

For the second day in a row, the Treasury Department saw strong demand at auction, this time for the sale of $24 billion in 10-year notes. The high yield landed at 3.548%, according to

MarketWatch

, while the bid-to-cover ratio came to an above average 2.96. Indirect bidders, a gauge used to measure foreign central banker demand by market watchers, scooped up 41.8%, while direct bidders bought 25%, both above the norm.

The benchmark 10-year Treasury weakened 13/32, lifting the yield to 3.579%.

The two-year note declined 2/32, raising the yield to 0.871%. The 30-year bond fell 1 3/32, strengthening the yield to 4.490%.

--Written by Melinda Peer and Sung Moss in New York

.

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>>The Economy

>>Company News

>>Commodities and the Dollar