NEW YORK -- U.S. stocks gained Wednesday, driving the Nasdaq market higher for the first time in more than a week, as Intel, the world's biggest computer chipmaker, said it would boost production amid strong demand.
The gains in the computer-related and consumer products sectors more than offset a drop in retailers and leading financial issues.
"I love it. This is absolutely phenomenal," said Charles Payne, head analyst at independent market research firm Wall Street Strategies. "Intel definitely is helping."
Intel's (INTC) stock surged 7-1/2 to 117-3/8 after it said it would spend $2 billion over the next three years to boost the number of chips it can make at its New Mexico plant, reflecting continued growth in the industry.
"Business is good and they are significantly constrained on capacity," said analyst Mark Edelstone at Morgan Stanley Dean Witter.
The Nasdaq Composite Index rose 106.05 points, or 3.35 percent, to 3,270.60, flying back from a 3 percent drop at midday and marking its first gain since May 16. The gauge lost 199 points on Tuesday and briefly threatened to cross down through the 3,000 mark, a level not seen since November.
The blue-chip Dow Jones industrial average ended up 113.08 points, or 1.08 percent, at 10,535.35, while the broader Standard & Poor's 500 index gained 25.19 points, or 1.83 percent, to 1,399.05.
Among the technology issues to gain were the world's largest maker of computers, IBM (IBM), which rose 2-1/4 to 109-5/8, and software giant Microsoft (MSFT), which added 2-3/8 to 65-9/16.
During the day, the judge in the company's antitrust trial raised the possibility of splitting Microsoft into three companies, a solution that would go beyond the government proposal to cleave the company in two.
A rise in volume compared with recent days was seen as a positive by analysts.
"Volume's better and it feels that way," said Adam Weisman, managing director at Wit SoundView. "That's good because people are obviously not wanting to be outside. People really want to get in again. The sellers are getting done what we want them to get done, but that's creating a lot of values."
The news from Intel inspired a rally in the entire chip sector, bringing the Philadelphia Stock Exchange's semiconductor index up 5.23 percent.
Still, this was far from a broad-based rally.
Warehouse club Costco Wholesale (COST) ended down 8-3/4 at 31-7/8 after hitting a new intraday low of 25-15/16. The company missed analysts' earnings targets and trimmed fourth-quarter expectations.
Other retailers also weakened amid growing concern about a slowdown in consumer spending growth, exacerbated by the Costco announcement.
Home improvement retailer Home Depot (HD), a member of the Dow industrial average, lost 2-5/16 to 46-3/8.
