Dollar drop, airline news fuel rebound

NEW YORK - A decline in the dollar helped fuel a market rebound Wednesday that nearly erased a big sell-off the day before brought on by fears of a slowdown in China.

Stocks had fallen more than 1 percent Tuesday after a surprise increase in interest rates in China, the first time the country had raised rates in nearly three years. That made some traders concerned that slower growth in China might put a drag on the global economy.

Some of those concerns eased after the Shanghai Composite Index, China's main stock market benchmark, increased in overnight trading.

The fact that China raised interest rates without leading to a drop in stock prices "was a sign of strength," said Sandy Mehta, chief investment manager for Value Investment Principals, of Hong Kong.

After the bell, West Coast technology companies Netflix Inc. and eBay Inc. reported stronger-than-expected revenue. Shares of both companies were up more than 6 percent in aftermarket trading. The strong results could help shift sentiment in favor of technology companies, which took a beating Tuesday after earnings from Apple Inc. and International Business Machines Corp. did not live up to investors' high expectations.

Every segment within the Standard & Poor index rose, led by a 1.9 percent bump in S&P's index of materials companies, including aluminum-maker Alcoa Inc. and International Paper Co.

The dollar fell 1.2 percent against a broad basket of currencies as demand for safe-haven investments eased.

The Dow Jones industrial average rose 129.35, or 1.18 percent, to 11,107.97. The broader Standard & Poor's 500 index was up 12.27, or 1.05 percent, to 1,178.17, and the technology-focused Nasdaq composite index was up 20.44, or 0.84 percent, to 2,457.39.

A batch of positive corporate earnings reports from companies such as Delta Air Lines Inc., American Airlines parent company AMR Corp., and Boeing Co. helped send the market broadly higher.

Delta rose 10.85 percent after the company announced a profit driven by a 19 percent increase in passenger revenue. That helped push shares of competitors such as JetBlue Airways Corp. and Southwest Airlines Co. up more than 3.5 percent.

Boeing rose 3.35 percent after the aircraft manufacturer raised its profit forecast for the year and said that it expected to sell more commercial airplanes. Boeing was the top performer among the 30 companies in the Dow, followed closely by Caterpillar Inc. The only Dow index companies to fall were Bank of America Corp., General Electric Co., and Hewlett-Packard Co.

Financial companies within the Standard & Poor's index increased 1.1 percent as some traders saw the stocks as a bargain amid questions over how banks have been handling foreclosures.

Before the market opened, San Francisco bank Wells Fargo & Co., the parent of Wachovia Bank, the bank with the largest share of the Philadelphia banking market, announced that it beat profit forecast but missed slightly on revenue, while Morgan Stanley reported a loss of 7 cents a share on special charges. Shares of Morgan Stanley fell 1 cent to close at $25.38.

Shares of Wells Fargo were up $1.05, or 4.28 percent, at $25.60. Earlier in the day, the stock had traded as low as $23.50.

Bond prices traded in a tight range. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.48 percent from 2.46 percent late Tuesday.

Trading on the floor of the New York Stock Exchange came to 1.1 billion shares. Three stocks rose for every one that fell.