U.S. stocks advanced more than 1 percent on Wednesday, rebounding from recent losses as a bullish earnings forecast from State Street Corp encouraged investors going into the earnings season.

Equities have been pressured in recent weeks, with the Dow down seven of the past eight sessions as concerns persist about the strength of the global economy.

We were deeply oversold and thus were due for a healthy bounce like this, said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

Krosby noted that markets gained more than 1 percent in Tuesday's session, though they later pared those gains to close only modestly higher.

If we end higher today, that will give us a clue as to whether this rally is just a bounce, or a prelude to more sustainable gains, she said.

Institutional investor State Street rose 9.4 percent to $36.45 after it forecast second-quarter operating earnings that were sharply above expectations. Major company quarterly earnings reports begin in earnest next week.

The KBW bank index <.BKX> climbed 3 percent, while State Street rivals Northern Trust Corp rose 4.7 percent to $48.11 and Bank of New York Mellon Corp was up 5.3 percent to $26.05.

Having a bank give this kind of preannouncement is very encouraging, and it's giving a more positive tone to the market in general, said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

The Dow Jones industrial average <.DJI> was up 145.69 points, or 1.50 percent, at 9,889.31. The Standard & Poor's 500 Index <.SPX> was up 16.22 points, or 1.58 percent, at 1,044.28. The Nasdaq Composite Index <.IXIC> was up 28.49 points, or 1.36 percent, at 2,122.37.

Energy shares were also among the day's gainers as August crude futures advanced 2.4 percent to $73.69 per barrel, sending the S&P energy index <.GSPE> up 1.9 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.

The fall in the dollar suggests that risk is coming back into the market a little bit, Krosby said.

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 tumbled 8.6 percent to $36.05 after it forecast fourth-quarter earnings below expectations.

Among its discount retailer peers, Dollar Tree Inc slipped 2.9 percent to $41.66 while BJ's Wholesale Corp was off 1.8 percent at $42.42.

BP Plc 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 2.4 percent to $32.66.

(Reporting by Ryan Vlastelica; Editing by Kenneth Barry)

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