The intensity didn't match

Tuesday's session, but the stock market's revival kept chugging along Wednesday.

The

Dow Jones Industrial Average

rose 0.4% to 8515.66, eclipsing 8500 for the first time since March 21, although the index failed to sustain a move above its March high of 8522 after trading as high as 8526.38 intraday. The

S&P 500

rose 0.8% to 919.02 and the

Nasdaq Composite

gained 1% to 1466.16.

The gains were relatively tame vs. the prior day but volume remained solid, if not overwhelming, with 1.6 billion shares traded on the

New York Stock Exchange

where advancing stocks bested decliners 5 to 3. In addition, new 52-week highs topped new lows by 187 to 13 on the Big Board and by 160 to 20 in over-the-counter trading, where 1.2 billion shares changed hands.

As has been the case of late, the gains were fueled by optimism over earnings and arrived despite desultory economic data. The Fed's Beige Book reported overall "lackluster" economic activity in March and early April, as well as ongoing weakness in manufacturing, a "cautious attitude" toward business spending and a "slump" in commercial real estate.

But any concerns about the

macro backdrop were again overshadowed by upbeat corporate earnings. Stock proxies were boosted by better-than-expected results late Tuesday and early Wednesday from the likes of

Amgen

(AMGN) - Get Report

,

eBay

(EBAY) - Get Report

,

AOL Time Warner

(AOL)

,

Boeing

(BA) - Get Report

, and

Wythe

(WYE)

.

In addition, robust results from

AT&T

(T) - Get Report

,

Bell South

(BLS)

and

SBC Communications

(SBC)

sparked a sharp rally in telecommunications shares. The Amex Telecom Index rose 3.2% and the Nasdaq Telecommunications Index gained 1.6%.

Eastman Kodak

(EK)

was the day's biggest big-cap disappointment, falling 5.2% after posting a sharp decline in first-quarter earnings and warning that full-year results will fall shy of prior expectations. Another Dow component,

3M

(MMM) - Get Report

, fell 1.5% following a downgrade by Credit Suisse First Boston.

Another support for shares came from declining oil prices, which tumbled to a five-month low of $26.72 per barrel after the Energy Department reported a 3.3% increase in inventories and OPEC warned of a possible "glut" of oil.

As was the case Tuesday, strength in shares did not take a terrible toll on Treasuries nor dramatically bolster the dollar. The price of the benchmark 10-year Treasury fell 2/32 to 99 5/32, its yield rising to 3.98%. The dollar did rise modestly vs. the euro and yen.

Something for Everyone

Once again, shares rose because of a growing sense that things are getting better on the geopolitical front, which many participants believe has been the economy's main restraint.

Victory in Iraq and, now, joint talks among the U.S., China and North Korea have overshadowed any concerns about rebuilding and policing postwar Iraq, or SARS in the consciousness of market participants (although the Canadian dollar was rocked by concerns about the economic impact of SARS). Furthermore, the market's rise has fueled itself as many money managers fear "missing out" on the up move and plow into shares themselves.

Optimists were further enlivened Wednesday that ChartCraft.com's

Investors' Intelligence

survey showed bullish sentiment decreased to 42.7% from 50.6% on April 16 while bearish sentiment increased to 34.8% from 30.3%.

Among other sentiment indicators, the CBOE Market Volatility Index dipped 0.1% to 23.49 while its Nasdaq counterpart shed 1.5% to 33.13 and the put/call ratio slid to 0.63 from 0.88 on Tuesday. The 1-day Arms Index rose 52% to 0.76.

In sum, sentiment indicators painted a mixed picture about direction, although it is instructive that market participants were more focused on the positive fall in the

Investors Intelligence

data vs. the negative implications of drops in the VXN and put/call.

On a separate but related issue, the NYSE and American Stock Exchange released monthly data on short interest late Tuesday. At the Big Board, short interest rose to just over 8 billion shares on April 15 from slightly under 8 billion on March 14.

At AMEX, short interest fell to 457.6 million shares on April 15 from over 495 million in mid-March. Notably, short interest fell dramatically, by 26%, on the

Nasdaq 100 Trust

(QQQ) - Get Report

, which rose 0.9% to 27.68 Wednesday.

"There is something in the data for everyone," observed Phil Erlanger of Erlanger's Squeeze Play, who previewed the data late last week, as reported

here. "The overall shares short is little changed, which on the surface seems bullish given the bounce off the lows in the market. However, the overall level of short selling is still very low relative to trading activity," at 2.3% of the total shares on the Big Board. (The AMEX did not provide comparable figures.)

That's potentially bearish because the absence of short positions, relative to the overall market, means less shares that will need to be covered if the market continues to rise. However, the 2.3% figure is among the highest levels of short interest in the Big Board's history and thus a potentially bullish factor. The Nasdaq reports monthly short-selling activity after the close on Friday.

Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to

Aaron L. Task.