Investors caught sight of a glimmer of hope when the second quarter earnings season got off to a positive start with better than expected results and optimistic forecasts from high-profile market sector leaders, Johnson & Johnson, Intel Corp and Goldman Sachs Group Inc. Investor optimism was reflected in activity on Wall Street resulting in the Dow Jones industrial average gaining 3.1 percent, or 256.72 points, finishing at 9,616.2, while the Standard & Poor’s 500 index rose 3 percent, or 26.84 points, to 932.68, and the Nasdaq Composite index climbed 3.5 percent, or 63.17 points to 1,862.9 at closing time.

Results reported by Intel late Tuesday noted that while profit and revenue had dipped in comparison to the same period a year ago, it had nevertheless surpassed forecasts. Moreover, Intel has predicted improved revenue growth in the third and fourth quarter due to an increased consumer demand for personal computers. While acknowledging that the vast majority of U.S. consumers are cash-strapped at present, investors were encouraged by Intel's forecast.

Dire forecasts from the U.S. Federal Reserve that the U.S. unemployment rate could very well top 10 percent this year, were countered to some degree by the Fed’s gauge of New York manufacturing and industrial output being better than anticipated, igniting optimism that the end of the recession is not too far off. The minutes from the Fed’s last policy meeting noted that, while the economy remained weak, the pace of the decline appeared to be slowing down.

JP Morgan Chase will be releasing its financial report before start of trading on Thursday, with the CIT Group in the spotlight during the day. There is also likely to be news of a possible Fed bailout for the struggling small-business lender. Other reports to be released during the day include the Philadelphia Fed monthly manufacturing report and RealtyTrac's foreclosure filings report. Google and IBM’s results will be released after the market closes on Thursday.

While the start of the second quarter reporting season was heartening, continued reporting over the next few weeks will reveal more about the state of the economy and where it is headed, and will no doubt be of great interest to investors.