NEW YORK (CNNfn) - Wall Street overcame an early stumble, caused by cautious words from Alan Greenspan, and found itself heading higher at midday Wednesday, driven largely by a wave of solid corporate earnings reports.
Shortly before 11:30 a.m. the Dow Jones industrial average was 62.57 points higher at 9,417.79. Trading volume on the New York Stock Exchange stood at 360 million shares with advances leading declines 1,469 to 1,247.
The Nasdaq Composite rocketed up 55.63, or 2.3 percent, to 2,463.80. The Nasdaq's gains were largely inspired by a strong earnings report and a rally in the shares of Microsoft and came on the back of a record-breaking surge in the index Tuesday. The S&P 500 index rose 15.72 to 1,266.61. (Click here for a look at today's CNNfn market movers)
Wall Street had more than enough bullish news to trade on -- a spate of stronger-than-expected earnings from some of the market's leading performers and an upbeat State of the Union speech by President Clinton.
But it was Federal Reserve Chairman Greenspan's eagerly awaited review of the economy, delivered to the House Ways and Means Committee, that stole the spotlight for a while, causing a brief, yet abrupt turnaround in the stock market's performance.
In his testimony, which started just after 10 a.m., Greenspan said the central bank is keeping a close eye on the stock market, whose recent gains might be difficult to sustain. Moreover, suggesting the market is overvalued, the Fed chairman said stock prices seem to imply stronger corporate profit growth than has been seen lately.
Calling the performance of the U.S. economy "sparkling," Greenspan also warned that a volatile global situation has made the financial markets "fragile." The Fed chief also warned that, while the market's reaction to Brazil's handling of its economic woes has so far been "reasonably" good, the downside risk remains.
The bond market fell sharply as money moved away from Treasury securities and into stocks after a strong showing in world equity markets overnight and an upward trend on Wall Street. The benchmark 30-year Treasury bond fell 30/32 of a point in price, for a yield of 5.20 percent.
The dollar rose against the Japanese yen and the euro.
No softness for Microsoft
In the stock market, software powerhouse Microsoft (MSFT) surprised even some of the most optimistic forecasters when it reported its fiscal second-quarter earnings late Tuesday.
Microsoft's shares soared 9-15/16 to 165-9/16 a day after the company revealed its profit grew 75 percent in the latest three months, handily beating market estimates. Helping fuel the rally, Donaldson, Lufkin & Jenrette raised its target price for Microsoft to $200 a share from $150.
Microsoft's example was followed by other computer related issues, with software maker and Microsoft rival Oracle (ORCL) rising 1-3/8 to 53-1/16, Dell Computer (DELL) climbing 4-5/8 to 86-3/4, Intel (INTC) up 2-7/8 to 142-1/4.
The robust tone among technology stocks was reinforced by other positive earnings news. Texas Instruments (TXN) reported profit that exceeded Wall Street forecasts by 5 cents a share, and its stock surged 8-1/2 to 101-1/2.
Dow member IBM (IBM) climbed 5-1/16 to 197-5/16.
Several other Dow components delivered their latest performance reports. AlliedSignal (ALD) saw its shares ease 5/8 to 40-15/16 even after reporting record fourth-quarter profit that was in line with Wall Street expectations.
General Electric (GE) fell 5/8 to 100-13/16 after the mammoth also reported earnings in line with market forecasts.
But shares of General Motors (GM) rallied 2-5/8 to 90-5/8 after the automaker and Dow component reported record fourth-quarter earnings, calling the last three months of 1998 the best in its history.
Elsewhere, airline stocks were in for a rough landing, dragging the Dow transports index down 8.30 to 3,169.55 after several high-profile members of the group reported disappointing earnings.
Shares of American Airlines parent AMR (AMR) shed 2-3/4 to 61-1/2 after the company said its fourth-quarter profit fell 13 percent from a year earlier and earnings per share came in sharply below consensus estimates.
US Airways (U) also saw its stock tumble, losing 2-7/8 to 54-9/16 after the company's fourth-quarter earnings per share fell almost four times below year-earlier results and missed Wall Street estimates by 2 cents a share.
Finally, shares of Internet portal Lycos (LCOS) soared 7-7/8 to 120-13/16 as speculation swirled the company could be the next takeover target following Tuesday's record purchase of rival Excite (XCIT) by @Home (ATHM). 
-- by staff writer Malina Poshtova Zang
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