Stocks close higher for third day in a row

Investors drove stock prices to their highest level in a week Wednesday, encouraged by a crop of corporate earnings and reassuring U.S. and Chinese economic data.

Major U.S. stock indexes notched their third day of gains in a row. Yahoo and Delta Air Lines were among the companies posting big gains. The gains were broad; for every stock that declined, nearly four rose.

The market is coming back from a steep drop at the end of last week led by Internet and biotechnology stocks.

The market welcomed a Chinese government report showing that the world's second-largest economy grew 7.4 percent from a year earlier in the January-March quarter. A favorable report on U.S. factory production helped keep investors in a buying mood.

Unlike Monday and Tuesday, the rally didn't falter during the day. Instead, the buying gained momentum in the afternoon after the Federal Reserve said its latest survey showed economic growth picking up across most of the United States over the last two months as bitter winter weather subsided.

"Yesterday was just a crazy day. We were all over the map, and finally today we are showing some strength," said Erik Davidson, deputy chief investment officer of Wells Fargo Private Bank.

The Standard & Poor's 500 index rose 19.33 points, or 1.05 percent, to 1,862.31. All 10 industry sectors in the S&P 500 increased, led by industrial stocks, including several airlines and transportation companies.

The Dow Jones industrial average added 162.29 points, or 1 percent, to 16,424.85. The Nasdaq composite rose 52.06 points, or 1.29 percent, to 4,086.23.

The three major stock indexes are each up for the week, but remain down for the month after several days of choppy trading. The three-day rise in stock prices helped push the S&P 500 index up 0.8 percent so far this year.

Investors are closely monitoring company earnings this week as they try to assess whether the impact of a severe winter has begun to ease. Financial analysts expect first-quarter earnings for companies in the S&P 500 to fall about 1.2 percent, according to S&P Capital IQ.

Google and IBM fell sharply in after-hours trading after their quarterly results disappointed investors.

Google reported that its growth faltered as online advertising prices continued to fall. IBM said that its revenue fell from a year ago and came in below what analysts were expecting.

Technology stocks have come under selling pressure in recent weeks as investors question whether the sector has become too expensive.

Yahoo topped the gainers in the S&P 500. The stock jumped $2.14, or 6.3 percent, to $36.35.

Several airline stocks were also among the market's big risers: Delta Air Lines added $1.71, or 5.4 percent, to $33.62, while JetBlue rose 49 cents, or 6 percent, to $8.80. American Airlines rose $1.79, or 5.3 percent, to $35.51.

Among other stocks making news Wednesday:

Bank of America fell 2 percent after booking $6 billion in legal costs over its home loan practices. The stock fell 26 cents to $16.13.

CSX fell 50 cents, or 1.8 percent, to $27.79. Severe winter weather contributed to a 14 percent drop in the railroad company's first-quarter earnings.