Stocks keep on climbing

NEW YORK (CNNMoney.com) -- Stocks continued to move higher Tuesday afternoon as Wall Street got a much-needed reprieve from credit market fears, while the tech sector helped prop up stocks.

The tech-heavy Nasdaq Composite index (up 55.54 to 2,617.14, Charts) led the charge, gaining nearly 2.1 percent with 2-1/2 hours remaining in the session.

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The Dow Jones industrial average (up 115.51 to 13,619.81, Charts) gained over 130 points, or about 1 percent, while the broader S&P 500 (up 20.81 to 1,497.52, Charts) climbed 1.3 percent.

"I think what we are seeing is a little relaxing of fears about the credit contagion spreading in a broader way," said Fred Dickson, chief market strategist at D.A. Davidson & Co. "The Fed's action to take no action was sort of a backhanded reinforcement of that idea."

Federal Reserve officials left a key short-term interest rate unchanged at their policy meeting Tuesday, leaving interest rates at 5.25 percent where it has remained since last summer.

Investors speculated prior to the meeting that tougher conditions in the credit markets, which have roiled stocks recently, the Fed would come to the rescue by cutting interest rates.

Instead, their accompanying statement, which was scrutinized by Wall Street, suggested that the Fed wasn't panicking about turmoil in credit markets, but that inflation remained its main concern.(Read the Fed statement).

Investors around the world have been rattled by signs of tougher conditions in credit markets, since tighter credit could raise the cost of borrowing for companies, hurting corporate earnings and slowing the recent buyout boom.

Stocks got a lift at the start of Wednesday's session from the tech sector as Cisco Systems (Charts, Fortune 500) reported higher-than-expected earnings late Tuesday on stronger quarterly sales. Shares of the computer networking company climbed 5.4 percent in midday trade on the Nasdaq.

Financials were among the advancers Wednesday, including Bear Stearns (up $7.56 to $124.45, Charts, Fortune 500), whose shares climbed over 5 percent following reports that the battered Wall Street bank raised $2.25 billion in capital, soothing recent credit market fears.

On the economic front, the National Association of Realtors said Wednesday it expected home sales will continue to slow this year, but noted that home prices will drop far less than originally expected.

Shares of homebuilders such as Pulte Homes (up $2.47 to $22.85, Charts, Fortune 500) and Beazer Homes USA (up $3.12 to $15.15, Charts, Fortune 500) jumped on the news. Even shares of Toll Bros. (up $1.73 to $24.68, Charts, Fortune 500), which issued a revenue warning earlier Wednesday, jumped nearly 8 percent.

In other corporate news, Sprint Nextel (Charts, Fortune 500), the No. 3 U.S. wireless service, posted lower quarterly profit on Wednesday but beat analysts' average forecast as it added new subscribers.

McDonald's (Charts, Fortune 500), the world's largest fast-food chain, reported a strong 6.5 percent jump in its global sales in July, helped by the addition of new breakfast menu items.

Burlington Northern Santa Fe Corp. (up $2.66 to $83.91, Charts, Fortune 500) shares climbed over 3 percent after Warren Buffett's Berkshire Hathaway (up $510.00 to $113,200.00, Charts, Fortune 500) revealed it increased its stake in the railroad firm.

The markets opened as scheduled despite disruptions of the New York transportation system due to severe weather.

Oil prices retreated on a surprise decline in gasoline inventories in the weekly U.S. inventory report. U.S. light crude for September delivery fell 31 cents to $72.11 a barrel on the New York Mercantile Exchange.

Treasury prices slumped as investors poured into the stock market, lifting the yield on the benchmark 10-year note to 4.847percent, up from 4.77 percent late Tuesday. Bond prices and yields move in opposite directions.

The dollar eased against the euro and climbed versus the yen.

COMEX gold for December climbed $4.10 to $686.40 an ounce.

In overseas trading, both European and Asian markets finished higher.