WALL Street closed higher today after a string of strong earning reports and after the Federal Reserve said the US economy was growing at a modest rate.
The blue-chip Dow Jones Industrial Average rose 129.35 points (1.18 per cent) to 11,107.97 points in closing trade, while the broader S&P 500 index was up 12.27 points (1.05 per cent) at 1178.17 points.
The tech-rich Nasdaq composite index gained 20.44 points (0.84 per cent) to 2457.39 points.
Yesterday, Wall Street stocks slumped after China hiked interest rates and Apple and IBM posted strong quarterly profits but issued a conservative forecast for the current quarter, weighing on technology stocks.
But today's earnings changed the mood on Wall Street.
Before the opening bell, US bank Wells Fargo reported a strong third-quarter profit of $US3.1 billion, while Morgan Stanley disappointed with a $US91 million loss in the quarter.
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The airline industry also supported the strong rally on Wall Street after three major airlines - American Airways, Delta Air Lines and US Airways - reported strong earnings, signaling the embattled sector was recovering.
US aerospace giant Boeing also posted a third-quarter profit of $US837 million, boosting its full-year earnings forecast after delivering more jetliners.
Shortly after the markets closed yesterday, Yahoo! said that net profit more than doubled in the third quarter to $US396.1 million and revenue rose two per cent to $US1.6 billion.
Another cause for optimism came after the Federal Reserve's said the economy was growing at a "modest" rate, even though it did not seem to weaken expectations that the central bank will renew major asset purchases to boost the economy.
In the Beige Book report on current economic conditions, the central bank painted, if not an upbeat picture of the economy, one better than the previous assessment that warned of signs the recovery was slowing.
"Reports from the 12 Federal Reserve Districts suggest that, on balance, national economic activity continued to rise, albeit at a modest pace, during the reporting period from September to early October," the report said.
The Beige Book will be used as a reference by the Fed's policymakers at a meeting next month.
The Federal Open Market Committee (FOMC) headed by Fed chairman Ben Bernanke is widely expected to restart major asset purchases, or quantitative easing, in November.
Dr Bernanke just days ago ramped up talk of intervention to support growth amid high unemployment, a battered housing market and tight credit.
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