Stocks advanced on Wednesday, with the S&P 500 inching up for a sixth day in a row, as stronger-than-expected profits at IBM and Google helped alleviate investor concerns about the tech sector.
IBM's and Google's earnings, released after Tuesday's close, come on the heels of stronger U.S. economic data, which have pushed the Dow and S&P 500 to five-year highs, and as worries about tackling the U.S. budget deficit have been put off for now.
Shares in IBM Corp , the world's largest technology services company, climbed 4.9 percent to $205.65, in their largest advance since July, providing the biggest boost to the Dow.
Also helping the tech sector was a 6.2 percent jump in Google Inc to $746.69. The Internet search company reported its core business outpaced expectations and revenue was higher than expected.
The S&P technology sector <.SPLRCT> rose 1.3 percent.
Worries about the profit potential in the tech sector had grown on concerns of waning demand for Apple Inc's products and a weak outlook from Intel Corp last week.
"Company fundamentals are improving, but no one wants to be too aggressive. It's like we're waiting for another shoe to drop with earnings, but the shoe isn't dropping," said David Porter, managing partner at Baystate Financial in Boston.
LED maker Cree Inc jumped 22.8 percent to $41.11 after it forecast a higher-than-expected third-quarter profit, and reported results above analysts' estimates.
The Dow Jones industrial average <.DJI> rose 71.61 points or 0.52 percent, to 13,783.82, the S&P 500 <.SPX> gained 2.62 points or 0.18 percent, to 1,495.18 and the Nasdaq Composite <.IXIC> added 12.68 points or 0.4 percent, to 3,155.86.
The S&P 500 index is on track to rise for a sixth straight day and is nearing 1,500, a level last reached December 12, 2007.
Thomson Reuters data through Wednesday showed that of the 99 S&P 500 companies that have reported earnings so far, 67.7 percent have topped expectations, above the 65 percent average beat over the past four quarters.
McDonald's edged up 0.6 percent to $93.52 after reporting a rise in fourth-quarter earnings, lifted by an increase in same-store sales. Fellow Dow component United Technology Corp's earnings fell from the prior year, hurt by large restructuring charges. Its shares rose 0.6 percent to $87.99.
Upscale leather goods maker Coach Inc plunged 15.7 percent to $51.18 as the S&P's worst performer after reporting sales that missed expectations.
After the market closes, investors will scour Apple's results, with the options market bracing for a big move in Apple shares after its earnings amid a dramatic plunge in recent weeks of shares of the world's most valuable publicly traded company. Apple shares rose on Tuesday 1.1 percent to $510.54.
Overall, S&P 500 fourth-quarter earnings rose 2.8 percent, according to Thomson Reuters data. That estimate is above the 1.9 percent forecast at the start of earnings season.
Clearing a market hurdle, the U.S. House of Representatives passed a Republican-led plan to extend the country's borrowing authority until May 19. This delays a confrontation in Congress similar to one in 2011, which generated a stalemate that triggered the first ever U.S. debt rating downgrade.
(Reporting by Rodrigo Campos, additional reporting by Ryan Vlastelica; Editing by Kenneth Barry)