(CBS/AP) The Dow Jones industrial average has reclaimed 10,000 for the first time in a year.
The Dow crossed five figures in afternoon trading Wednesday, seven months after it hit a 12-year low of 6,547.05 on March 9. The comeback by the stock market's best-known indicator is the most visible sign yet that investors believe the economy is indeed recovering from the financial crisis and recession.
Cheering erupted from traders on the floor of the New York Stock Exchange as stocks briefly moved above the psychological barrier. The Dow at times fell back below 10,000 in the normal ebb and flow of trading.
"People feel more comfortable and feel like there's less risk in the market when you get above a psychological point like 10,000," said Carl Beck, a partner at Harris Financial Group.
Upbeat earnings reports from chip maker Intel and banker JPMorgan Chase Wednesday gave the Dow its final push past 10,000.
Investors are increasingly shaking off lingering doubts about the economy. However, analysts still warn that problems like rising unemployment and a weak housing market pose a threat to a solid recovery.
The Dow is now up 53 percent from its March low. But it remains 29 percent below its peak of 14,164.53 hit in October 2007.
The index first finished above 10,000 on March 29, 1999, in the midst of a powerful rally that ended with the dot-com bust at the start of this decade. Stocks then fell below that mark last October as investors sold stocks in a feverish panic following the downfall of Lehman Brothers.
The latest round of earnings reports, which will continue to pour in over the next few weeks, are the key to keeping the market's rally alive, analysts say. If earnings fall short of expectations, stocks could stumble.
JPMorgan Chase, the first major bank to report third-quarter earnings, stoked the market's optimism as it easily beat Wall Street's expectations, reporting a profit of $3.59 billion for the July-September period. The bank also achieved record year-to-date revenue.
Investors didn't seem fazed that JPMorgan, considered one of the strongest financial institutions throughout the financial crisis, doubled the amount of money it set aside during the quarter to cover failed home and credit card loans.
"Better-than-expected is a win," said Peter Schwartz, principal at Gregory J. Schwartz & Co. "People's expectations have been calibrated to buffer some of the bad news."
Intel also beat analysts' estimates, reporting a smaller-than-expected drop in profits and sales after the market closed Tuesday. The leading chip maker said it expects sales in the final period of the year to top projections, raising hopes that the computer market is improving.
Together, the reports quieted fears that major U.S. companies won't be able to boost profits through sales growth and not just massive cost-cutting, which was a main driver behind the improvement in second-quarter results.
According to preliminary calculations, the Dow rose 144.80, or 1.47 percent, to 10,015.90. The S&P 500 index rose 19.42, or 1.8 percent, to 1,092.61, and the Nasdaq composite composite index rose 33.02, or 1.5 percent, to 2,172.91.
Three stocks rose for every one that fell on the New York Stock Exchange, where 328 stocks hit new 52-week highs and only two hit new lows. Volume on the NYSE came to 960.9 million shares, compared with 832.2 million at the same time on Tuesday.
Investors displayed little reaction to minutes from the Federal Reserve's last meeting that indicated policymakers were conflicted over whether to expand or trim a program intended to drive down mortgage rates and support the housing market.
Fed Chairman Ben Bernanke and his colleagues agreed to slow down the pace of a $1.25 trillion program to buy mortgage securities from Fannie Mae and Freddie Mac. Instead of wrapping up the purchases by year-end, the Fed last month said it would do so by the end of March.
The strong results from JPMorgan helped alleviate worries about banks prompted the day before when a prominent analyst downgraded Goldman Sachs Group Inc. JPMorgan rose $1.48, or 3.2 percent, to $47.14, its highest level in a year. Intel shares gained 41 cents, or 2 percent, to $20.90.
The ICE Futures U.S. dollar index, which tracks the dollar against other major currencies, fell 0.5 percent, after earlier hitting its lowest point since August 2008.
Oil jumped $1.03 to settle at $75.18 a barrel on the New York Mercantile Exchange.
Bond prices fell as stocks soared. The yield on the 10-year Treasury note rose to 3.43 percent from 3.35 percent late Tuesday.
Third-quarter earnings, especially reports from major banks, are the market's focus this week. Goldman Sachs and Citigroup Inc. will report Thursday, followed by Bank of America Corp. on Friday.
Stronger bank earnings were a big factor behind the huge stock rally this spring and summer, which pushed the S&P 500 index up 60 percent since hitting a 12-year low in early March. The KBW Bank Index, which tracks 24 of the largest U.S. banks, has risen a massive 143.3 percent since then.
With stocks having run up so much, investors have long been bracing for a significant pullback. But any retreats in stocks have been modest - less than 10 percent - and brief. The market continues to feed on its own momentum.
"I think what's happened is you had all these people sitting on the sidelines waiting for the correction to come," Schwartz said. "But as time goes by and we haven't had any major pullbacks, these people sitting on the sidelines are finally pulling the trigger saying, 'I can't wait any longer.' "
The Russell 2000 index of smaller companies rose 12.10, or 2 percent, to 623.80.
Overseas stocks mainly rose, buoyed by news that the decline in China's exports slowed in September. China's Shanghai index rose 1.2 percent, while Hong Kong's Hang Seng index jumped 2 percent. Japan's Nikkei index slipped 0.2 percent.
Britain's FTSE 100 gained 2.0 percent, Germany's DAX index jumped 2.5 percent, and France's CAC-40 rallied 2.1 percent.