NEW YORK ( TheStreet) -- Stocks rallied across the board Wednesday as encouraging earnings, deals news and positive sentiment drove market momentum.

The Dow Jones Industrial Average surged 61 points, or 0.5%, to close at 12,288. The S&P 500 gained 8 points, or 0.6%, to finish at 1,336, more than double its intra-day low of 666 in March 2009. The Nasdaq soared 21 points, or 0.8%, to 2,826.

Financials and energy stocks were among the session's top gainers, with JPMorgan Chase ( JPM) topping the Dow while Verizon ( VZ), Microsoft ( MSFT) and AT&T ( T) were the biggest laggards.

The Federal Reserve raised its GDP projections slightly and lowered its forecasts for both the unemployment rate and inflation moderately, according to minutes of the Fed's latest policy meeting. The unemployment rate is now projected to drop to 8.8% to 9% by the end of 2011, down by a tenth from its November projection of 8.9% to 9.1%.

Despite the Street's concerns about inflation, the Fed still has a subdued outlook for inflation, with personal core expenditures inflation, or PCE inflation, forecast to rise to the Fed's mandate of 2% only in 2013. The Fed reduced its forecast for core PCE inflation, which excludes food and energy prices, to 1 % to 1.3% in 2011, down from its earlier projection of 0.9% to 1.6%.

Minutes of the meeting also showed some members were unsure on the impact of quantitative easing on the economy but felt that it would not be appropriate to make changes to the policy.

John Canally, economist at LPL Financial, said that based on the Fed's forecasts for inflation and unemployment, the central bank was unlikely to raise rates anytime soon. "The mid-point of their forecast for core inflation in 2012 is 1.25%. That is still lower than the lower end of the Fed's comfort zone of 1.5%. Again the unemployment rate for 2012 is 7.8%. That is still higher than the unemployment rate they consider normal of 6.7%. They are not going to tighten till 2012," said Canally. He, however, said the Fed could resort to other passive tightening measures such as deciding not to go for QE3.

Economic reports were mixed Wednesday. January housing starts jumped 14.6% to a better-than-expected level of 596,000 but building permits fell to a lower level than the market forecast, and industrial production unexpectedly slipped in January, by 0.1%, after surging by 1.2% in December. Market observers said most of the gains in housing starts came from the volatile multi-family units segment.

In other economic news, producer prices rose 0.8% in January, which was mildly higher than the 0.7% uptick that the market had expected, according to The core rate, which excludes volatile food and energy costs, gained 0.5%, compared with the growth of 0.2% that had been expected. In December, producer prices rose 0.9% and the core rate increased 0.2%.

Michael Yoshikami, president and chief investment strategist at YCMNET Advisors, said the mixed economic news suggested that the market was rising on general momentum more than anything else.

"The market had fallen back a little so this is really just a rally back from a pause," he said, adding, "I think the general trend of the market will be up. There are lots of underlying positives in the market."

James Dailey, senior portfolio manager at Team Asset Strategy Fund, agreed with Yoshikami's comments. "I think it is pure momentum at this point. People are afraid to sell because they might miss the train leaving the station," Dailey said.

926 million shares traded on the New York Stock Exchange, 73% of which advanced while 24% lost ground. On the Nasdaq, 2.2 billion shares changed hands.

Oil prices surged following reports that two Iranian warships traveled through the Suez Canal on the way to Syria -- a move that was viewed as a provocation. Roughly 3% of the world's oil supply travels through the Suez Canal, according to a CNBC report.

The March crude oil contract rose 67 cents to settle at $84.98 a barrel.

Earlier, the Energy Information Administration said crude oil inventories added 860,000 in the week ended Feb. 11, which was lower than the increase of 2.8 million barrels that analysts had been anticipating, according to Platts.

In earnings news, Dell ( DELL) blew past profit estimates Dell blew past profit estimates with fourth-quarter earnings of 53 cents a share, compared with the profit of 37 cents a share that Wall Street projected. The PC maker also said fourth-quarter gross margin came in at 21%. The stock finished 11.8% higher at $15.56.

Agricultural products company Deere ( DE) said net income roughly doubled in the first quarter, reporting earnings of $1.20 a share on sales of $6.12 billion. Analysts had projected a profit of 99 cents a share on sales of $5.67 billion. The stock finished ahead by 2.4% at $95.86.

Entertainment and cable company Comcast ( CMCSA) reported adjusted earnings of 35 cents a share on revenue of $9.72 billion for the fourth quarter, exceeding Wall Street's expectations for a profit of 32 cents a share on sales of $9.58 billion. The stock rose 4% to $25.13.

Sanofi-Aventis ( SNY) agreed to buy U.S. biotech company Genzyme ( GENZ) for $74 a share in cash, or $20.1 billion. Sanofi's stock gained 1.3% at $34.95 and Genzyme shares gained 1.1% to $75.01.

Shares of Family Dollar ( FDO) surged 21% higher at $53.25 Wednesday after Nelson Peltz's Trian Fund offered to take the discount-chain store private for $55 to $60 a share.

Shares of Air Products ( APD) rose 4.9% to $94.61 after it abandoned plans to buy Airgas ( ARG) for $70 per share.

Shares of Abercrombie & Fitch ( ANF) rose 7.5% to $57.46 after it said profit jumped 95% on strong international sales. The company is also shutting down 50 underperforming stores in 2011.

Borders ( BGP) filed for Chapter 11bankruptcy protection on Wednesday saying, in a statement, that it "does not have the capital resources it needs to be a viable competitor."

Elsewhere in commodity markets, the April gold contract, the most actively traded gold future, rose $1.1 to settle at $1,375.10 an ounce.

The benchmark 10-year Treasury fell 5/32, lifting the yield to 3.623%. The dollar weakened against a basket of currencies with the dollar index down by 0.3%.


Hong Kong's Hang Seng jumped 1.1% and Japan's Nikkei added 0.6%. London's FTSE was added 0.9% and the DAX in Frankfurt was ahead by 0.4%.

--Written by Melinda Peer and Shanthi Bharatwaj in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

More from Markets

Week Ahead: Trade Fears and Stress Tests Signal More Volatility To Come

Week Ahead: Trade Fears and Stress Tests Signal More Volatility To Come

Trump Takes Aim at Auto Imports; Markets End Mixed -- ICYMI

Trump Takes Aim at Auto Imports; Markets End Mixed -- ICYMI

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

REPLAY: Jim Cramer on the Markets, Oil, Starbucks, Tesla, Okta and Red Hat

REPLAY: Jim Cramer on the Markets, Oil, Starbucks, Tesla, Okta and Red Hat

Flashback Friday: The Market Movers

Flashback Friday: The Market Movers