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The markets raced higher Wednesday in a broad advance amid optimism uncertainty in Italy won't tip Europe back into crisis mode. The Dow tacked on 175 points in its second triple-digit rally in a row -- hitting its highest level since October 2007.
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The Dow Jones Industrial Average surged 175 points, or 1.3%, to 14076, the S&P 500 gained 19.1 points, or 1.3%, to 1516 and the Nasdaq Composite rose 32.6 points, or 1%, to 3162.
Every major sector ended in the green, led by industrial, materials and consumer discretionary stocks. Traditional defensive stocks, like utilities, consumer staples and telecommunications, came out of favor. Still, traders continued bidding up U.S. Treasury bonds.
European Worries Cool
The upbeat sentiment Wednesday began in European markets, where Italy held a successful bond auction. Rome sold $5.2 billion in 10-year debt, meeting its target. However, the yield jumped to 4.83% -- the highest the country has had to pay since October, according to Reuters. Borrowing costs for the same period moved up 0.08-percentage point on the secondary market to 4.91%.
Market participants pay very close attention to debt auctions in Italy because its bonds are held widely by European banks. In the past, fears about the country's debt and political situation have prompted speculation that it could get locked out of borrowing on the public markets -- which would imperil the bonds.
Analysts at Barclays wrote in a note to clients that the debt sale should "reassured the markets for now." Still, the bank warns that downside risks to European risky assets -- like equities -- remains.
Dan Greenhaus, chief global strategist at market-maker BTIG, said clients have grown fatigued of the big euro-fueled swings that have happened in recent years. He said that while traders are still concerned about events in countries like Italy, unless the situation reaches a boiling point, they "go about their day."
Housing Data Top Expectations; Goods Orders Mixed
On the U.S. front, the Commerce Department said orders for long-lasting goods fell 5.2% in January from December, a bigger slide than the 4.4% expected. Excluding the transportation segment, durable goods orders rose 1.9%, a much larger jump than the 0.2% expected and the biggest increase since December 2011.
"Say what you will about government dysfunction, the sequester, the fiscal cliff and the budget debate but the fact remains that capital spending appears to be holding up very well," Dan Greenhaus, chief global strategist at BTIG wrote in an email. "In fact, it appears to be accelerating."
The National Associate of Realtors reported U.S. pending home sales rose 4.5% in January from December, outpacing the 1.5% gain expected, according to the National Association of Realtors.
Fed chief Bernanke testified before the U.S. House of Representatives as well. He once again reiterated his dovish stance, helping renew hopes the central bank will keep up its asset buying program past the middle of the year.
In commodities, oil prices inched higher. The benchmark U.S. contract gained 23 cents, or 0.21%, to $92.84 a barrel. Wholesale New York Harbor gasoline climbed 0.32% to $2.991 a gallon. Gold dropped $9.30, or 0.58%, to $1,606 a troy ounce.
In corporate news, Apple (NASDAQ:AAPL) is set to hold an investor meeting on the day. Speculation the world's biggest technology company might unveil a stock split pushed shares higher in the previous session.
The Euro Stoxx 50 gained 0.52% to 2583, the English FTSE 100 rose 0.26% to 6288 and the German DAX climbed 0.26% to 7617.
In Asia, the Japanese Nikkei 225 dropped 1.3% to 11253 and the Chinese Hang Seng inched up 0.25% to 22577.