By ELLEN SIMON, AP Business Writer 22 minutes ago

NEW YORK - Stocks rose smartly Wednesday as stronger-than-expected earnings from FedEx Corp. and Morgan Stanley Inc. put investors' inflation fears on the back burner. The Dow Jones industrial average gained more than 130 points.

Morgan Stanley's second-quarter profit more than doubled from a year earlier and FedEx saw a 27 percent jump in its fiscal fourth-quarter earnings. The results quieted concerns about the possibility of an economic slowdown caused by rate hikes from the Federal Reserve.

"With the backdrop of rising interest rates, if we're still able to see good earnings for the second quarter, it will bode well for the market," said Jim Herrick, director of equity trading at Baird & Co.
Inflation jitters have been shaking stocks recently, with the major indexes swinging to losses in early June before rebounding. May was Wall Street's worst month of the year by far.

In early afternoon trading, the Dow Jones industrial average rose 138.24, or 1.26 percent, to 11,113.08.

Broader stock indicators were also higher. The Standard & Poor's 500 index rose 15.99, or 1.29 percent, to 1,256.11, and the Nasdaq composite index rose 38.67, or 1.84 percent, to 2,145.73.

Advancers led decliners by roughly 4 to 1 on the New York Stock Exchange. Small cap stocks also rallied. The Russell 2000 index of smaller companies rose 14.68, or 2.17 percent, to 692.18.
Bonds were flat, with the yield on the 10-year Treasury note at 5.15 percent. The U.S. dollar was mostly lower against other major currencies. Gold prices were higher.

Crude oil futures were higher after the U.S. Department of Energy reported that gasoline inventories grew at a slow pace last week, despite high production levels. A barrel of light crude was quoted at $70.00, up 66 cents in trading on the New York Mercantile Exchange.

Morgan Stanley, the nation's second largest securities firm, rose $2.72, or 4.8 percent, to $59.74 after its second-quarter profits jumped. The company reported record revenue driven by stronger underwriting, merger and acquisition, and trading results. The results far exceeded analysts expectations.

FedEx Corp. rose $5.11, or 4.7 percent, to $113.43, after it reported a 27 percent jump in fourth-quarter earnings, citing solid economic growth in U.S. and international markets. FedEx is the world's largest express shipping company and its results beat Wall Street expectations by a wide margin

Business software maker Oracle Corp. said Portal Software stockholders have tendered 32 million shares, or 74 percent, of the media-focused software company's outstanding stock following Oracle's May tender offer of $4.90 per share. Oracle rose 37 cents to $14.62.

Darden Restaurants Inc., operator of Red Lobster, Olive Garden and other restaurant chains, rose $1.76, or 5 percent, to $37.32, to $37.51 after reporting strong increases in fourth-quarter profits and same-store sales.

Volume on the New York Stock Exchange was 883.29 million shares, up from 768.94 million the previous session.

Overseas, Japan's Nikkei stock average fell 0.03 percent. Britain's FTSE 100 rose 0.12 percent, Germany's DAX index was up 0.18 percent, and France's CAC-40 rose 0.09 percent.
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