Stocks rose sharply on Wednesday as Intel Corp's solid quarterly results and outlook reinforced hopes for an economic recovery and a rebound in technology spending.

Regional U.S. economic data underpinned the positive sentiment, with the New York Fed's Empire State index for July showing business conditions in the state at their strongest since April 2008.

Shares of Intel, a chip-maker and Dow component, rose 6.7 percent to $17.95 as its results and outlook blew past Wall Street forecasts, helped by strong consumer demand for PCs, setting the upbeat tone for the technology sector.

AMD Micro Devices , Intel's main rival, jumped about 9 percent while software giant Microsoft Corp rose 2.8 percent to $23.76.

The PHLX semiconductor index <.SOXX>, up 4.25 percent, was on track for its fifth-straight day of gains -- its longest winning streak since a six-day run-up in late May.

The market is reacting positively to Intel's ability to drive revenue, said Greg Palmer, head of equity trading at Pacific Crest Securities in Portland, Oregon.

Commentary on demand seems to indicate that the end of the world is not, in fact here, and that is probably the main take-away, he added, referring to Intel's quarterly results on Tuesday.

People are starting to feel like maybe we're coming toward the tail end and the second half (of the year) can be better.

The Dow Jones industrial average <.DJI> rose 159.01 points, or 1.90 percent, to 8,518.50. The Standard & Poor's 500 Index <.SPX> gained 16.85 points, or 1.86 percent, to 922.69. The Nasdaq Composite Index <.IXIC> jumped 44.42 points, or 2.47 percent, to 1,844.15.

The broad S&P 500 index soared as much as 40 percent from a 12-year low hit in early March, but the rally stalled in June as investors sought more convincing evidence the economy was recovering from a deep recession. The index is now up 36 percent from the March lows.

An insight on how the Federal Reserve arrived at its recent assessment of the economy's outlook is expected as minutes from the latest Fed policy meeting are due at 2 p.m. EDT.

Pacific Crest's Palmer said the Fed minutes will be a key driver for the market heading into the close.

In company news, defaults rose less than expected in June for Capital One Financial Corp , one of the largest issuers of Visa and MasterCard credit cards in the United States, and the company's shares jumped 9 percent.

The S&P financial sector index <.GSPF> rose 2.5 percent.

Commodities-related shares also rose, tracking gains in metal and oil prices. Oil futures climbed 1.5 percent to near $70 a barrel.

The U.S. dollar fell about 1 percent against a basket of major currencies <.DXY>, and the greenback's weakness gave legs to the rise in commodities.

Earlier on Wednesday, government data also showed June U.S. consumer prices rose at a slightly faster-than-expected pace, with the bulk of the increase coming from a leap in gasoline prices, but the core measure of inflation remained relatively tame.

(Editing by Padraic Cassidy)

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