Wall Street up on earnings, stimulus bets

NEW YORK (Reuters) - Stocks rose on Wednesday as corporate profits from bellwethers including Intel and Honeywell continued to defy the downward trend of economic growth.

Corporations nonetheless are cautious about a slowing economy, pushing traders to bet on further stimulus from the U.S. Federal Reserve. That expectation is seen as giving the market support as it discourages bets against market gains.

Federal Reserve chairman Ben Bernanke repeated in Congressional testimony Wednesday and Tuesday the Fed's pledge to act if needed as he underscored his concerns over the economy's weakness.

Honeywell Inc profits topped consensus views amid what it called a "tough macroeconomic environment" and its 6.7 percent advance to $58.17 led gains on the S&P industrial sector.

Top chipmaker Intel Corp reduced its growth forecast also on macro concerns but gross margins were healthy and the stock rose 2.8 percent to $26.08 and boosted technology shares. The PHLX semiconductor index jumped 3 percent a day after hitting its 2012 low.

"The theme coming out in earnings is companies are coming in short in revenue but still beat on earnings. Analysts have moved their targets (lower) and companies still are lean and mean and are able to generate profit," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

She said the market "really, really wants QE3," or more monetary stimulus from the Fed. "Bernanke is painting a dire picture and the bulls in the market are holding out for more Fed action."

Data storage equipment maker EMC Corp also boosted tech shares with an 9.1 percent gain to $25.01 after it replaced the head of its VMware Inc unit and reported a preliminary second-quarter profit. VMWare shares gained 9.9 percent to $88.20.

The Dow Jones industrial average rose 66.30 points, or 0.52 percent, to 12,871.84. The S&P 500 Index gained 6.39 points, or 0.47 percent, to 1,370.06. The Nasdaq Composite added 26.51 points, or 0.91 percent, to 2,936.55.

Financials underperformed the broad S&P 500, with the sector slipping 0.3 percent. Bank of America Corp lost 2.4 percent to $7.73 after it posted a decline in revenue.

Vivus Inc shares jumped 16.4 percent to $30.80 after regulators approved the company's weight-loss drug.

Groundbreaking on new U.S. homes rose in June to its fastest pace in over three years, lending a helping hand to an economy that has shown worrisome signs of cooling.

(Reporting by Rodrigo Campos)