Stocks rallied Wednesday, as investors welcomed a narrower-than-expected trade deficit and an upbeat profit report from Applied Materials ahead of the latest from the Federal Reserve. The Dow Jones industrial average (INDU) gained 117 points, or 1.3%, less than an hour into the session. The S&P 500 (SPX) index rose 11 points, or 1.1%. The Nasdaq composite (COMP) advanced 28 points, or 1.4%.

Investors scooped up financial, technology and other shares knocked down in a two-day selloff. Gains were broad-based, with 27 of 30 Dow components rising. Stocks slipped Monday and Tuesday, with bank shares leading the selloff, as investors backed off in anticipation of the Fed meeting. Investors were also retreating in the aftermath of a big rally. With the exception of a pullback in late June, the S&P 500 has basically been on the rise for five months. Since bottoming in early March, the index has gained 50% through the end of last week.

Federal Reserve meeting: The central bank concludes its two-day policy meeting Wednesday with an announcement expected at around 2:15 p.m. ET. The Fed is expected to hold rates steady at historic lows near zero percent. In the closely-watched statement, the bankers are likely to say that they see economic activity picking up, but remain cautious about the outlook. The Fed is not expected to say much about what its exit strategy may be after putting so much stimulus into the financial system.

Economy: The trade gap widened to $27 billion in June, the Commerce Department reported. The deficit stood at $26 billion in May, a 10-year low. The deficit was expected to widen to $28.7 billion in June, according to a consensus of economists surveyed by Briefing.com.

The Treasury budget is also on tap for Wednesday afternoon.

Company news: After the close Tuesday, Applied Materials (AMAT, Fortune 500) reported a fiscal third-quarter loss versus a profit a year ago on weaker revenue. However, the results were better than what analysts were expecting. The chipmaker also said it would at least break even in the fiscal fourth quarter and potentially post a profit of up to 4 cents per share. Analysts expect the company to post a loss of 5 cents per share. AMAT shares gained 4% Wednesday.

Bonds: Treasury prices inched higher, lowering the yield on the benchmark 10-year note to 3.65% from 3.67% late Tuesday. Treasury prices and yields move in opposite directions.

The government is auctioning $75 billion in debt this week as part of its efforts to reduce the deficit and fuel its recovery efforts. Treasury’s Tuesday auction of $37 billion in three-year notes saw stronger demand than other recent auctions. On Wednesday, the government auctions $23 billion in 10-year notes, with results expected around 1:00 p.m. ET. On Friday, it sells $15 billion in 30-year bonds.

Oil and gold: U.S. light crude oil for September delivery rose $1.40 to $70.85 a barrel on the New York Mercantile Exchange.

COMEX gold for December delivery rose $2.70 to $950.30 an ounce.

Other markets: In global trading, European markets rallied in the afternoon. Asian markets tumbled.