Dow's two-day rally, the first since June, lifts stocks including BP

U.S. stocks completed their first back-to-back winning days since mid-June on Wednesday, as the Dow Jones industrial average recorded a 275-point surge and cracked back through the 10,000 level.

Tuesday's bargain hunters yielded to Wednesday's optimistic buyers, who are anticipating strong second-quarter earnings in the coming days. Financial services company State Street, which caters mostly to institutional investors, kicked off the Wednesday rally when it forecast second-quarter earnings that exceeded Wall Street's expectations. That lifted other banking stocks and led the financial sector of the Standard & Poor's 500-stock index to a 4.4 percent gain.

The Dow closed up 2.8 percent at 10,018.28, with all 30 blue-chip stocks finishing in positive territory. The Dow is up for July but still down 3.9 percent for the year. The broader S&P 500 closed up 32.21, or 3.1 percent, at 1060.27, while the tech-heavy Nasdaq closed up 65.59, or 3.1 percent, at 2159.47. The last time stocks enjoyed two winning days in a row was June 18-19.

Even shares of beleaguered energy giant BP joined the party. The stock rose 4 percent, largely on news that company chief executive Tony Hayward met with Abu Dhabi's crown prince on Wednesday, fueling speculation that the United Arab Emirates might buy a substantial BP stake.

The question now is whether stocks can string together a rally that lasts more than two days, as the doldrums of summer settle in and the wobbly economic recovery appears to be slowing down.

History would suggest not, as July has tended to be a highly volatile month on Wall Street. And the U.S. economy is struggling with 9.5 percent unemployment and a private sector that is reluctant to create jobs. Analysts, having seen the Dow drop 15 percent since its peak in April -- a 20 percent drop would indicate a bear market -- sounded the same cautious refrain on Wednesday: Two good days does not a lasting rally make.

Some were even more bearish. "The fall-back position of the economic cheerleaders is that, while the March 2009 low was a major long-term low, a future retest of those same levels cannot be ruled out," wrote Walter Zimmermann, chief technical analyst at United-ICAP brokerage.

But strong corporate earnings could change a lot. Bloomberg is predicting that profit for companies in the S&P 500 will rise 34 percent this year, an increase over a March estimate, which put the yearly profit growth at 27 percent.

Next week will bring a slew of earnings reports from big companies, including Bank of America, railroad company CSX and Yum Brands, which owns KFC, Taco Bell and other restaurants.