* State Street jumps on earnings outlook
* Crude oil rebounds on inventory optimism
* Family Dollar's forecast weighs on retailers
* Indexes up: Dow 1.9 pct, S&P 500 2.1 pct, Nasdaq 2 pct
* For up-to-the-minute market news see []
(Updates to late afternoon trading; changes byline)
By Angela Moon
NEW YORK, July 7 (Reuters) - U.S. stocks rallied on
Wednesday, rebounding from recent losses, as a bullish earnings
forecast from State Street Corp fueled optimism about the
upcoming earnings season.
The broad rally was led by banks, but investors also
scooped up industrials and technology stocks that have been
beaten down recently.
"The reason why yesterday's rally fizzled was because we
lacked solid leadership. Today, that is earnings," said Marc
Pado, U.S. market strategist at Cantor Fitzgerlad & Co in San
Francisco.
"There is some confidence now that there will be more
positive surprises than negative during the earnings season."
Institutional investor State Street <STT.N> rose 8.8
percent to $36.27 after it forecast second-quarter operating
earnings that were sharply above expectations. For details,
see []. Major quarterly earnings reports begin in
earnest next week.
The Dow Jones industrial average <> was up 184.59
points, or 1.89 percent, at 9,928.21. The Standard & Poor's 500
Index <.SPX> was up 21.53 points, or 2.09 percent, at 1,049.59.
The Nasdaq Composite Index <> was up 41.20 points, or 1.97
percent, at 2,135.08.
Major indexes rose sharply during morning trading on
Tuesday, but the rally died off by the afternoon and stocks
ended with mild gains.
The KBW bank index <.BKX> climbed 3.7 percent, while State
Street rivals Northern Trust Corp <NTRS.O> rose 5.5 percent to
$48.49 and Bank of New York Mellon Corp <BK.N> was up 5.9
percent to $26.20.
Industrial and technology stocks were also among the day's
gainers with General Electric <GE.N> up 3.9 percent at $14.50
and Cisco System <CSCO.O> up 3.8 percent at $22.15. The two
stocks were the top gainers on the Dow.
Energy shares also got a boost from August crude futures
that advanced 2.9 percent to $74.07 a barrel, sending the S&P
energy index <.GSPE> up 2.4 percent.
Crude climbed on the expectation that upcoming data would
show a drop in U.S. inventories, a positive sign for demand, as
well as weakness in the U.S. dollar. []
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For a Reuters insider video on a technical view of the S&P
http://link.reuters.com/tec36m
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UBS lowered its full-year forecast on the S&P to 1,150 from
1,350. The firm said the reduced view reflected modestly weaker
earnings growth and longer-term secular headwinds.
[]
In earnings news, Family Dollar Stores Inc <FDO.N> tumbled
8.2 percent to $36.21 after it forecast fourth-quarter earnings
below expectations. []
Among its discount retailer peers, Dollar Tree Inc <DLTR.O>
slipped 2.9 percent to $41.66 while BJ's Wholesale Corp <BJ.N>
was off 1 percent at $42.76.
BP Plc <BP.L><BP.N> Chief Executive Tony Hayward met with
officials from Abu Dhabi's investment authority as speculation
mounted the sovereign fund would make a fresh investment. BP's
U.S.-listed shares rose 1.4 percent to $32.37.
(Reporting by Angela Moon, Editing by Kenneth Barry)
