Updated from 4:03 p.m. EST

Stocks closed higher for a second day Wednesday, as more solid earnings, bullish remarks from Cisco's ( CSCO) CEO and increasing comfort with Federal Reserve interest rate policy drove a broad-based rally.

The Nasdaq added 33.67 points, or 1.73%, to 1976.76, buoyed by Cisco and positive research on Yahoo! ( YHOO), notching its first back-to-back gains in three weeks. The Dow added 115.63 points, or 1.14%, to 10,300.30, its biggest single-day point gain since Feb. 11; while the S&P 500 rose 13.07 points, or 1.18%, to 1123.77. Since touching a three-month low Monday, the Dow is up more than 200 points.

Trading volume on the New York Stock Exchange approached 1.5 billion shares and almost 1.7 billion shares changed hands on the Nasdaq, still light compared to recent down sessions. Advancers outnumbered decliners by about 7 to 2 on both exchanges.

"I think the Fed's decision was positive news, and the market needed to hear something like that, especially after what loomed over everyone over the past few days like the bombing in Madrid and all those down days," said Robert Pavlik, portfolio manager with Oaktree Asset Management. "Once we passed a certain level on the Dow, with several positive earnings reports, we got out of a bit of a trading range and the short-term technicals kicked in, making people think maybe the correction is over for now."

Tech stocks were leading the charge, with the Philadelphia Semiconductor Index up 2.1%, following encouraging comments from Cisco CEO John Chambers. Chambers predicted increased capital spending in the technology sector over the next two quarters and hinted at the possibility that his company will pay a dividend sometime soon. Shares were recently up 32 cents, or 1.4%, to $23.44.

Yahoo! was contributing to the strength, closing up $2.20, or 5.2%, to $44.77. Smith Barney upgraded the stock to buy and raised its price target to $60 from $50, saying the market is discounting strength in its core cash flow.

Financials also were higher, with the Amex Bank Index gaining 1.2% after Bear Stearns ( BSC) beat quarterly earnings expectations, posting a profit of $2.57 a share in its first quarter compared with a consensus estimate of $2.05. The brokerage kept pace with Lehman Brothers ( LEH), which handily beat estimates Tuesday. Shares of Bear Stearns closed up 71 cents, or 0.8%, to $88.71.

The 10-year Treasury note was trading down 6/32 to yield 3.7%. In a statement following a one-day meeting, the Fed's policymaking arm said the risks to the U.S. economy remain roughly balanced between inflation and disinflation, although it noted that job growth continues to lag the rebound in the broader economy. Traders took the comments to mean no change in interest policy is likely this year.