U.S. stocks jumped on Wednesday as optimism about the economic recovery rose on a wave of strong earnings and profit outlooks.

Tech stocks led the charge higher after Intel Corp forecast quarterly revenues well above Wall Street's estimates, easing fears the world's largest chipmaker is struggling as growth in personal computer sales slows.

The PHLX Semiconductor index <.SOX> jumped 3.6 percent, the largest percentage move in seven months.

Yahoo Inc advanced 5.5 percent to $17 after the Internet company said an important partnership with Microsoft Corp is taking longer than expected to pay off, but the company posted quarterly earnings that topped Wall Street targets.

VMware Inc surged 11.5 percent to $95.87 after the computer virtualization company beat Wall Street earnings estimates for the first quarter and indicated its margins would expand this year as it landed some big new clients using its software for 'cloud computing', or online access to data and computing power.

What you've seen over the last couple of days is some very good news that has come out on the earnings front -- you are starting to see much sounder beats as it relates to companies, said Burt White, managing director and chief investment officer, LPL Financial in Boston.

Right now, it is pretty good news. The question is whether or not this is what earnings really will look like the rest of the way or we've just hit a couple of really good earnings.

The Dow Jones industrial average <.DJI> gained 185.35 points, or 1.51 percent, to 12,452.10. The Standard & Poor's 500 Index <.SPX> rose 18.25 points, or 1.39 percent, to 1,330.87. The Nasdaq Composite Index <.IXIC> climbed 55.80 points, or 2.03 percent, to 2,800.77.

Sales of previously owned U.S. homes rose more than expected in March, a trade group said on Wednesday, suggesting the housing market's downward trend may be close to hitting a bottom.

The PHLX housing sector index rose 2.1 percent. Forest products maker and homebuilder Weyerhaeuser Co gained 2.1 percent to $22.70.

United Technologies Corp rose 4.6 percent to $86.17 after the diversified manufacturer posted a 16.9 percent rise in quarterly profit and raised its outlook for the year, boosted by strong demand for Carrier air conditioners.

But IBM slipped 0.3 percent to $164.98 after reporting a drop in signings of new business at its global services division during the first quarter. However, IBM's profit and revenue came in above analysts' projections.

The S&P information technology sector <.GSPT> advanced 2.3 percent.

(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)