NEW YORK (CNNMoney.com) - Stocks rallied Wednesday, as falling oil prices, lower Treasury bond yields and a moderate read on inflation helped spark a broad advance.

The Nasdaq composite (up 20.21 to 2,283.17, Charts) added around 0.9 percent. The Dow Jones industrial average (up 68.11 to 11,137.17, Charts) added 0.6 percent and the Standard & Poor's 500 (up 9.63 to 1,292.67, Charts) index added 0.8 percent.

Special Reportfull coverage Oil climbs above $77 on inventory decline Oil rises on surprise inventory drop Exxon's drilling juggernaut Oil climbs above $74 Oil pares gains, settles lower Oil rises on weaker dollar

The major gauges began the session in positive territory and managed to build on that throughout the session.

The combination of the in line inflation report and retreat in oil helped fuel the advance Wednesday, said Jack Ablin, chief investment officer at Harris Private Bank. While the move was positive, it also demonstrated how much the market right now is reacting to the day-to-day events.

"The bottom line is we have a data dependent Federal Reserve, which means we have a data dependent market," Ablin added. "It's going to bounce around day-to-day based on how investors perceive the news."

Although the Federal Reserve has indicated that its interest-rate hiking campaign is nearing an end, the question of when remains. Investors are scouring the daily economic reads for hints about this.

In addition to a reaction to the news, Wednesday's advance was also part of a broader shift, after a tough two weeks, said Chris Johnson, market strategist at Schaeffer's Investment Research.

"We've seen a buildup of pessimism over the last few weeks, which tells us that some people had sidelined themselves," Johnson said. "Right now, I think we're seeing the windfall of that, with the money getting put back to work."

He said the factors supporting this included relatively good corporate news this week -- Wal-Mart Stores' profit warning notwithstanding -- and the fact that oil has not risen much since falling below $60 last week, which is impressive considering the concerns about Nigeria and Iran.

After the close of trade Wednesday, Viacom (Research) reported lower quarterly profit and issued fiscal 2006 earnings guidance below current estimates. Shares inched higher in after-hours trade.

Also after the close, Internet service provider Earthlink (up $0.22 to $11.86, Research) issued a mixed 2006 profit outlook that seemed to displease investors. Shares fell almost 8 percent in after-hours trade.

Falling Treasury yields were good news for rate-sensitive sectors like the financial arena.

Dow financials American Express (up $0.98 to $54.84, Research), Citigroup (up $0.71 to $46.88, Research) and JP Morgan Chase (up $0.71 to $41.41, Research) all added more than 1.5 percent.

The broader bank sector gained as well, with the Philly/KBW Bank (up 2.26 to 107.33, Charts) sector index adding around 2.2 percent.

Healthcare stocks rose, including Dow components Merck (up $0.33 to $35.92, Research) and Pfizer (up $0.55 to $26.19, Research).

Dow components Boeing (up $1.34 to $74.39, Research) and Honeywell (up $0.61 to $42.03, Research) gained too.

A notable decliner was Intel (down $0.47 to $20.15, Research), which fell 2.3 percent after brokerage ThinkEquity downgraded the chipmaker to "sell" from "accumulate" and cut its 12-month price target.

The brokerage said Intel is losing market share -- especially in servers -- and could be hurt by pricing cuts that it will likely pursue in order to counter the losses in market share.

However, other chip stocks rose, with the Philadelphia Semiconductor (up 7.01 to 530.78, Charts) index, or the SOX, adding 1.3 percent.

Homebuilders rose, with Toll Brothers (up $1.72 to $32.49, Research) and Hovnanian Enterprises (up $2.78 to $48.83, Research) leading the way.

Toll Brothers reports earnings Thursday. Meanwhile, Hovnanian said Wednesday that first-quarter earnings should meet or modestly beat its recently lowered forecast.

The Dow Jones Home Construction (up $35.43 to $930.00, Research) index added 4 percent.

On the downside, the decline in oil prices weighed on oil stocks, with the Amex Oil (down 15.73 to 1,042.28, Charts) index losing 1.5 percent.

Market breadth was positive. On the New York Stock Exchange, winners topped losers two to one on volume of 1.61 billion shares. On the Nasdaq, advancers topped decliners three to two on volume of 1.85 billion shares.

The consumer price index (CPI) failed to rile up inflation fears. While the overall index for January rose more than expected, the so-called "core" CPI, which excludes volatile food and energy, rose 0.2 percent, in line with estimates.

That sent Treasury prices higher and the yields lower. The 10-year note added 12/32, pushing the yield down to 4.52 percent from 4.56 percent late Tuesday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar was little changed versus the euro and lower versus the yen.

COMEX gold for April delivery added 20 cents to $556.80 an ounce.

U.S. light crude oil for April delivery fell $1.73 to settle at $61.01 a barrel on the New York Mercantile Exchange, a decline of 2.8 percent. Crude jumped 2 percent Tuesday.

_______________

Click here for the latest business news.