The incremental rise the Nasdaq posted Tuesday proved to be a test run for a solid Wednesday rally led by software maker Oracle and chip behemoth Intel. The Dow Jones Industrial Average followed suit, posting a modest gain after a slow start.
Shares of Oracle, which surged Tuesday after beating analysts' expectations, continued their upward trajectory. The stock climbed 76 cents, or 4.53 percent, to $17.52 in heavy volume. Intel was up 82 U.S. cents, or 3.1 percent, to $27.49.
Comments by U.S. Federal Reserve Chairman Alan Greenspan suggesting the economy could tolerate more interest rate cuts without generating inflation also buoyed stocks.
The Nasdaq, finishing near the session high, ended the day up 38.58 points, or 1.94 percent, at 2031.24. The Dow advanced 50.66 points, or 0.48 percent, to 10647.33. The broad Standard & Poor's 500 jumped 10.56 points, or 0.87 percent, to 1,223.14. The Industry Standard 100 was up 12.62 points, or 3.49 percent, to 374.29.
Media giant AOL Time Warner, which told Reuters that advertising revenues looked steady, rose $2.96, or 5.94 percent, to $52.80. The company also said it is on track to meet its financial targets for the year.
Shares of online auction site eBay soared after investment bank Merrill Lynch lifted its earnings estimates for the quarter. The stock was up $6.35, or 10.06 percent, to $69.50.
Telecommunications, however, continued to take a beating. Communications gear maker Tellabs dropped $5.16, or 24.34 percent, to $16.04 after issuing an earnings warning.
Qwest Communications International also felt the pain, losing $1.25, or 4 percent, to close at $30.02. The carrier's stock fell when Morgan Stanley Dean Witter & Co. downgraded the company, citing a variety of reasons, including questionable accounting practices. Qwest issued a statement calling the allegations "misleading."
Greenspan, who spoke before the Senate banking committee, said inflation is still not a threat to the U.S. economy. Investors now feel that the Fed will move an aggressive 50 basis points at its next meeting, making it the sixth cut of the year.
Investors kept on punishing some out-of-favor tech shares. JDS Uniphase Corp. fell 84 cents, or 7.75 percent, to $10. Nortel Networks Corp. fell more than 4 percent.