NEW YORK -- Stocks climbed Wednesday, propelled skyward by major technology shares after a Goldman Sachs analyst's bullish comments about IBM, in a rally ahead of the long-awaited federal ruling in the Microsoft Corp. antitrust case.
Investors boosted computer hardware, biotech and financial shares after stepping cautiously in morning action as they awaited economic data for clues on the Federal Reserve's next interest-rate decision.But as more U.S. central bankers came forward, questioning how convincing recent signs of a slowdown really were, Wall Street turned its attention to Microsoft and corporate news.
"Wall Street has got its summertime rose-colored glasses on and is really betting on the soft landing," said Scott Bleier, chief investment strategist at Prime Charter Ltd.
"We have yet to see a trend's worth of numbers but Wall Street is banking on a soft landing engineered by the Fed," he said. "In addition, some of the uncertainty about Microsoft is coming to an end."
The Nasdaq composite gained 82.89 points, or 2.21 percent, to 3,839.26 to erase Tuesday's losses. Tech stalwarts lifted the gauge as Microsoft held its head above water.
Strength in other bellwether computer names drove the Dow Jones industrial average up 77.29 points, or 0.72 percent, to 10,812.86. International Business Machines Corp. was the Dow's clear leader, up 7-15/16 at 120-5/16 after bullish comments from Goldman Sachs.
Broader measures of the market also climbed, with the Standard & Poor's 500 index up 13.52 points, or 0.93 percent, at 1,471.36. The Wilshire 5000 index, a gauge of roughly the entire U.S. equity market, rose 151.35 points, or 1.12 percent, to 13,725.34.
"Goldman had some very positive comments on IBM and that is more than half of the Dow's gain," Bleier said. "The market got better as IBM got better."
Microsoft, up 7/8 at 70-1/2, was the most heavily traded stock on Wall Street, with 36.4 million shares traded. After the market closed, U.S. Judge Thomas Penfield Jackson issued his final order to break Microsoft, the world's biggest software maker, into two companies in hopes of preventing Microsoft from committing further antitrust violations.
Other computer stocks were also active after Goldman Sachs analyst Laura Conigliaro said IBM, the world's largest computer company, was beginning to see a return to revenue growth. The shares of Hewlett-Packard Co. climbed 4-9/16 to 122-9/16.
"We're about to get a fairly explosive anniversary in the PC complex, the biggest bang for the buck," said Arnold Berman, technology strategist at Wit SoundView, noting the rally in computer shares.
"Investor psychology could be very whipsaw for the rest of the month," said Berman, who also pointed out that concerns about interest rates should continue to shape trading.
Markets were eagerly awaiting the U.S. Producer Price Index, due for release on Friday, for clues as to what the U.S. central bank's next move on interest rates might be. Thursday brings data on weekly jobless claims.
On Wednesday, consumer credit data for April showed its smallest increase in six months.
That data came as Federal Reserve Bank of San Francisco President Robert Parry said he did not think the economic data coming out in the next few weeks would be enough to convince the Fed that the economy had shifted into a lower gear.
Parry told Reuters he sees a few indications the U.S. economy is slowing but the evidence is not yet "convincing."
Parry's comments followed talk from Fed Governor Laurence Meyer, who said the U.S. central bank may still face the task of forcing the booming economy to a much lower rate of growth to wring out any risk of higher inflation.
Bonds ended mixed. The U.S. Treasury 10-year note dipped 3/32 and its yield inched up to 6.14 percent from 6.13 percent at Tuesday's close. The 30-year bond gained 2/32, with the yield ebbing to 5.90 percent from Tuesday's close of 5.91 percent.
Among strong stock sectors, online financial stocks climbed, as well as traditional investment banks and brokerage houses.
Knight Trading gained 2-1/8 to 32-3/8 after falling back over the last two sessions amid a debate among analysts on how Merrill Lynch's purchase of Knight rival Herzog Heine Geduld could affect the Nasdaq market maker.
Airline stocks were also strong amid speculation of consolidation in the group. The American Stock Exchange's airline index gained 3.32 percent to 168.22.
In other market news, the New York Stock Exchange began talks with the Tokyo Stock Exchange, Euronext and other exchanges about forming a global equities market, chasing the Nasdaq's move to establish sister markets of its own around the world.