The Dow Jones industrial average popped back over the 11,000 mark for the first time in three months, rising 342.95 points to 11,215.92. The Nasdaq composite index gained 80.82 points to 2,166.40.
U.S. consumer prices rose more moderately than expected in April, giving the Federal Reserve one less thing to worry about. The Fed has engaged in an aggressive series of interest-rate cuts, including another half-percentage point cut Tuesday, in an effort to head off a recession. But market watchers have been concerned that could prompt an increase in inflation rates.
The Labor Department said Wednesday that the Consumer Price Index (CPI), a closely watched measure of inflation, rose 0.3 percent last month, compared with a 0.1 percent gain reported in March. The core CPI, which does not include food and energy costs, rose 0.2 percent in April, the same rate it grew in March.
Economists surveyed by Reuters had expected the overall CPI to climb 0.4 percent and the core to rise 0.2 percent.
In announcing the rate cut Tuesday, the Fed cited problems in the business sector, such as profit concerns, but also said it expects inflation to remain contained in an environment where "pressures on labor and product markets (are) easing."
SCI Systems CEO Eugene Sapp told investors at an analyst conference in New York that his company's fourth-quarter results could come in at the high end of projections. SCI, which makes contract equipment manufacturer and whose customers include Hewlett-Packard, was up 96 cents to $24.40.
Sprint cut estimates for its core business, saying it had fallen prey to bankruptcies among its customers. Shares dipped 2 cents to $21.56.
BEA Systems shot up $3.70 to $37.74, a day after it raised its earnings outlook for 2002. The company said Tuesday that it expected earnings per share for the year to be between 41 cents and 43 cents, 2 cents higher than previously forecast. The company was upgraded from "add" to "buy" by ABN AMRO and from "buy" to "strong buy" by Thomas Weisel. But Lazard Freres downgraded the stock from "outperform" to "hold."
Check Point Software fell 73 cents to $54.18 after Lehman Brothers downgraded the stock from "strong buy" to "buy" and cut its price target from $110 to $70. Analyst Israel Hernandez said the company could be hit by increasing competition and a glitch that caused it to miss out on three big deals recently.
Hyperion Solutions said it would lay off 15 percent of its staff, about 400 workers, in a cost-cutting move. Shares of the data analysis company gained 26 cents to $15.11.
Amazon.com was up 59 cents to $14.13. AOL Time Warner gained $2.33 cents to $53.08, and Yahoo rose $1.32 to $19.38.
Among leading volume movers, Cisco Systems rose $1.24 to $19.98. Microsoft gained 89 cents to $69.16. Nortel Networks gained 50 cents to $13.90. Intel rose $1.15 to $28.35, and Oracle lost 47 cents to $16.40.
Staff and Reuters contributed to this report.