Bullish IBM sparks tech stock rally on Wall Street

IBM’s increased profit outlook has sparked a technology-led rally on Wall Street, pushing the Dow Jones Industrial Average to recoup the rest of its losses from last week's plunge – and then some.

At the close, the Dow was up 148.65 points, or 1.4%, to 10,895, about 29 points above its close last Wednesday before the "flash crash," in which the market plunged 1000 points in less than half an hour.

IBM gained 3.9% after its chief executive said the technology giant would double its earnings by 2015, as it more aggressively pursues business in software and high-growth emerging markets.

IBM is the Dow's most highly priced stock and its gains have an outsize effect on the average. Other blue-chip technology components also posted big gains. Intel climbed 3.3%, while Cisco Systems gained 2.6% and Hewlett-Packard 2.4%.

Bank stocks fell as the Senate debated regulatory-overhaul legislation, adopting new mortgage-underwriting rules and an amendment to retain the Federal Reserve's oversight of community banks. JP Morgan Chase fell 0.8%, while Bank of America slipped 0.3%.

The Nasdaq Composite closed 2.1% up at 2425.02, helped by a gain in Apple. The S&P 500 index was up 1.4% to 1171.67, with all of its sectors in the black.

Other markets: Europe, Asia up

European stocks rose, as upbeat corporate results and Spain's latest move to tackle its budget deficit boosted investor sentiment.

In the UK, investors found relief in the appointment of a new collation government, which investors hope will start dealing with the country's substantial budget deficit.

Financial stocks put in a strong performance on the back of better-than-expected first-quarter results from Germany's Allianz and the Netherlands' ING Groep, which rose 3.4% and 4.2%, respectively.

But in the UK, Royal Bank of Scotland fell 3.2% and Lloyds Bank shed 1.3%, amid concerns that the new coalition government may take more tough steps to rein in banks.

The pan-European Stoxx 600 index closed up 1.5% at 256.60, its highest level since May 3.

The UK's FTSE 100 index rose 0.9% to 5383.45, France's CAC-40 index gained 1.1% at 3733.87 and Germany's DAX added 2.4% to 6183.49. Markets in Spain, Portugal and Greece were also higher.

Asian markets ended mostly higher as Australian stocks climbed after the government announced a plan to return to a budget surplus in three years.

Chinese shares overcame intraday volatility to end higher as bargain buyers snapped up banks and property developers.

Hong Kong shares staged a last-minute rebound, with the Hang Seng Index finishing up 0.3%. India's Sensex rebounded to gain 0.3% as banks rose to offset sharp declines in telecommunication shares.

China's Shanghai Composite rose 0.3%, Japan's Nikkei Stock Average of 225 companies slipped 0.2%, Australia's S&P/ASX 200 gained 0.6%, South Korea's Kospi slid 0.4%, and Taiwan's Taiex slipped 0.1%.

Commodities: Oil down, gold up

Crude futures dropped as the International Energy Agency lowered its 2010 world oil demand forecast, its first substantial cut in a year.

Light, sweet crude for June delivery traded $US1.02, or 1.3%, lower at $US75.35 a barrel in New York, after trading as low as $US74.91 a barrel. Brent crude on the ICE futures exchange traded flat at $US80.49 a barrel.

Gold futures remained in record territory. The most actively traded contract, for June delivery, was up $US16.10, or 1.3%, at $US1236.40 an ounce in New York.

Currencies: Pound, euro down

The pound weakened as investors focused on the UK’s budget deficit, even as a new coalition government announced belt-tightening measures to shore up the economy.

The euro also slipped against the dollar as lingering worries about euro-zone sovereign debt eclipsed news of slightly better-than-expected economic growth throughout the zone.

The euro was at $US1.2628 from $US1.2683 late on Tuesday. The dollar was at ¥93.19, up from ¥92.74, while the euro was at ¥117.68 from ¥117.88.

The UK pound was at $US1.4847, from $US1.4950.