U.S. stocks rallied on Wednesday, lifted by multinational technology and industrial shares after Spain unveiled an austerity plan that further eased jitters over euro-zone debt woes.
Investors have been worried that a sovereign debt crisis in Greece could spill over to other nations with high debt loads, including Spain.
Spain revealed a plan on Wednesday to slash civil service pay and cut public-sector jobs, just a few days after EU finance ministers approved a 750-billion-euro ($1 trillion) bailout package to stem the debt crisis, cheering investors.
There was some concern about whether Spain would be serious about the measures it would have to take, so the moves it's making is a positive signal, said John Massey, portfolio manager at SunAmerica Asset Management in Jersey City, New Jersey.
Massey said cyclical companies with a lot of international exposure, including those in the tech and industrial sectors, had been especially vulnerable to the issues in Europe, adding: That's why they're having a relief rally today.
The Dow Jones industrial average <.DJI> was up 128.02 points, or 1.19 percent, at 10,876.28 The Standard & Poor's 500 Index <.SPX> was up 13.76 points, or 1.19 percent, at 1,169.55. The Nasdaq Composite Index <.IXIC> was up 37.37 points, or 1.57 percent, at 2,412.68.
International Business Machines Corp provided the top lift to the Dow, adding 3.6 percent to $131.36.
Intel Corp ranked among the Dow's biggest percentage gainers, while it was the Nasdaq's most active stock. Intel was up 3.2 percent at $23.
Heavy equipment maker Caterpillar Inc jumped 2.8 percent to $67.88.
Tech shares also got a boost from Fidelity National Information Services Inc , which jumped 3.6 percent to $29.90 after a source said a private equity group was negotiating an acquisition potentially worth about $15 billion.
On the downside, though, Dow component Walt Disney Co fell 0.6 percent to $35.54 a day after second-quarter earnings beat expectations, but analysts said results at its television network division were disappointing.
Elsewhere on the earnings front, Macy's Inc swung to a first-quarter profit and affirmed its outlook, but said it was premature to raise the forecast again for now, given the macro-economic uncertainty. Its stock rose 1.8 percent to $24.33.
Also on the downside, Morgan Stanley fell 3.3 percent to $27.45 after the Wall Street Journal reported U.S. officials were probing whether it misled investors about mortgage derivative products it helped create. The chief executive said he had no knowledge of any federal investigation.
On the economic front, the U.S. trade deficit widened in March to its highest level in more than a year as both imports and exports rose in a sign of improved U.S. and foreign demand.
The materials sector also climbed as the price of gold surged to a record high of $1,244.45 an ounce -- up nearly 20 percent since early February.
The PHLX gold and silver index <.XAU> rose 1.5 percent, while Freeport-McMoRan Copper and Gold Inc gained 3 percent to $72.32.
(Reporting by Ryan Vlastelica; Editing by Jan Paschal)