A much-awaited reversal took the major averages sharply higher Wednesday afternoon, as the market rebounded from morning weakness brought on by disappointing guidance from tech bellwether Intel ( INTC).

The upbeat mood may carry over Thursday morning as eBay ( EBAY) lifted its earnings guidance after posting in-line results after the close. However, shares of the online-auction outfit were recently down 5.4% in after-hours trading, perhaps a victim of their 3.9% pre-earnings run-up. In addition, biotech bellwether Amgen ( AMGN) was down 6% in after-hours trading, after its revenue fell short of expectations.

The after-hours action aside, gains were indeed substantial for most tech shares Wednesday. The Nasdaq Composite soared 35.24 points, or 1.71%, to 2091.24 vs. its intraday low of 2,042.03.

And after trading as low as 10,232.98 early in the day, the Dow Jones Industrial Average rebounded to gain 128.87 points, or 1.25%, by the close, to finish at 10,414.13.

The blue-chip average was lifted by strength in the likes of United Tech ( UTX), McDonald's ( MCD), Home Depot ( HD), and J.P. Morgan ( JPM), which posted strong earnings. This helped offset a 5% drop in Honeywell ( HON), whose earnings guidance disappointed.

The S&P 500 finished up 17.61 points, or 1.49%, at 1195.75 vs. its morning low of 1170.85.

Market internals also showed the forceful return of buyers, with advancing issues beating decliners 2 to 1 on both the NYSE and the Nasdaq, on strong volume of 2 billion and 1.9 billion shares, respectively.

Wednesday's action all went down as Marc Pado, market strategist at Cantor Fitzgerald, had hoped, and as outlined here on Friday. Mostly, he liked that Intel, which fell near 4% in morning trade, finished with a modest loss of 0.03 cents, or 0.13% at $23.69.

During the severe market downturn in early October, the market was discounting inflation fears and higher rates, and some expectations that fourth-quarter earnings may not be as strong as expected. And even as the market bounced back on Friday and Monday, there still was some need to discount more earnings disappointment, Pado says.

But with Intel managing to rebound by the close, it shows that "the bad news is now priced in," Pado says.

Early Wednesday, the market overlooked Tuesday's postclose positive earnings from Motorola ( MOT) and Yahoo! ( YHOO) and focused only on the negatives; namely, disappointments from Intel and Honeywell and another round of hawkish comments from Federal Reserve officials.

But now that bad news is already baked into prices, Pado believes the market can rally on positive earnings, such as eBay's.

"I feel pretty comfortable about this turnaround. Now the timing is right to get back in this market and there should be some decent reward from here" until at least the end of November, the Cantor strategist says.

Technically speaking, Pado says Wednesday's action was important because the S&P 500 retested the five-month low hit last Thursday, from which it bounced. That action suggests that a sustainable bottom from which to rebound had been made vs. the less soild moves of Friday and Monday.

Sentiment also improved for the broad market as crude oil prices continued to drop, losing $1.03 to $62.17 per barrel after bearish inventory data and as Hurricane Wilma continued to veer away from sensitive energy operations in the Gulf Coast.

In yet another example of the market's newfound positivism, even the oil sector managed to rebound, lending strong support to the afternoon. The Amex Oil Index rose 1.7%, led by strong gains in the likes of Amerada Hess ( AHC), Occidental Petroleum ( OXY) and Repsol YPF ( REP).

Similarly, with a lot of negativity already priced into stocks, the market all but completely ignored an avalanche of Fed speakers on Wednesday, who all confirmed the central bank's focus on inflation and that higher interest rates are on the way.

Fed Vice Chairman Roger Ferguson began the pounding Tuesday night by saying that surging energy costs will cut into economic growth but won't stop the Fed from hiking rates.

By early afternoon Wednesday, a slew of other Fed speakers -- Fed Governor Donald Kohn, Cleveland Fed President Sandra Pianalto, New York Fed President Tim Geithner, and Dallas Fed President Richard Fisher -- all hammered home the same message.

The prospect of higher rates originally led the dollar to a two-year high against the yen and a two-week high against the euro, but the greenback eventually pared its gains.

Bond prices, however, remained firmer into the close. The benchmark 10-year Treasury bond finished up 3/32 while its yield dropped to 4.46%.

To view Gregg Greenberg's video take on today's market, click here .
In keeping with TSC's editorial policy, Godt doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He appreciates your feedback; click here to send him an email.