From CNN:

NEW YORK ( -- Stocks surged Wednesday, with all three major gauges jumping at least 3% after Intel's forecast for a second-half pickup and the Federal Reserve's improved outlook reassured wary investors.

The Dow Jones industrial average (INDU) gained 256 points, or 3.1%, according to early tallies. The S&P 500 (SPX) index added 27 points, or 3%. Both the Dow and S&P 500 post their biggest one-day point gains in two months.

The Nasdaq composite (COMP) rose 63 points, or 3.5% and posted its best one-day point gain in nearly four months.

The rally intensified after the Federal Reserve said Wednesday afternoon that the end of the recession might be on the horizon.

Intel (INTC, Fortune 500) reported profit and revenue late Tuesday that dipped from a year ago, but surpassed forecasts. Also, the chipmaker predicted better revenue growth in the third and fourth quarters thanks to improved demand for personal computers.

With corporate demand still tepid, Intel's outlook will depend on consumers continuing to buy despite rising oil and gas prices and the ongoing recession. However, even with that caveat, investors embraced the forecast.

"The good news about Intel is the forecast," said Kevin Mahn, managing director at Hennion & Walsh. "We know second-quarter results won't be very good for most companies, but we want to know the outlook is improving in the second half of the year."

S&P 500 profits are expected to have fallen around 36% in the second quarter versus a year ago, according to the latest Thomson Reuters forecast.

Worries about the corporate earnings outlook and the health of the economy have dragged on stocks over the last month -- following a three-month rally that lifted the S&P 500 by 40%.

Mahn said Intel and Goldman Sachs were the first signs since that selloff began that maybe the economy is getting back on track after all.

The day's advance was also a matter of "performance chasing," said Phil Dow, director of equity research at RBC Wealth Management. "You have record low levels of stock ownership and so on these kinds of days you see people pile in."

He said that while the start to the financial reporting period was positive, it is too early to do a victory lap regarding second-quarter results.

"So far you've seen a little better guidance," he said. "If that proves to be true through the rest of the reporting period, this could be the quarter that the economy turns around. But I don't think we're going to see that just yet."

Fed: In the afternoon, the Fed released the minutes from the last policy meeting and the forecast through 2010.

Information reviewed at the meeting showed the economy remained weak, although the pace of the decline seemed to be lessening.

In its forecast, the Fed said that the unemployment rate could top 10% this year, but it also said that the recession could soon end.

Techs rally on Intel: Intel shares jumped 7% in afternoon trading and boosted other big tech stocks.

Dow tech components Microsoft (MSFT, Fortune 500), IBM (IBM, Fortune 500) and Hewlett-Packard (HPQ, Fortune 500) all gained. Big Nasdaq tech stocks gained too, including Cisco Systems (CSCO, Fortune 500), Oracle (ORCL, Fortune 500) and Applied Materials (AMAT, Fortune 500).