The fact that there was no economic news released today left traders to focus on their disappointment with the Fed statement and a so-so auction of five-year notes did nothing to improve their spirits. Indirect buyers, which are heavily relied on for buying support, snapped up only 21 percent of the offering. And futures contracts are already pointing to a 25-basis-point increase in the Fed funds target at the May 10 meeting.

Sky-high Treasury yields forced mortgage lenders who use yields as a guide to set rates to increase them on many mortgage products. The rate on the popular 30-year fixed mortgage is edging toward 6.25 percent, its highest level since May 2004.

Stocks go wild

Stocks apparently overdid it on selling Tuesday, so they made up for it today, posting big gains across the board, with the Nasdaq closing at a five-year high. Oil added only 3 cents a barrel to close at $66.40, with buyers slowing a bit thanks to a large stock of crude. Gasoline prices rose, however, as inventories were far lower than predicted.

Only a handful of the 30 Dow Jones industrials closed in negative territory, while gainers ruled. Disney headed the list with a 2.9 percent increase, followed by Boeing, up 2.2 percent, and Alcoa, which rose 1.9 percent. An upgrade of 3M pushed its shares up 1.7 percent, and Hewlett-Packard, which lost 3.14 percent yesterday, rebounded with a 2 percent increase. Also heavy on the plus side was Verizon, which gained 1.4 percent. Intel and Altria posted gains on the sunny side of 1 percent.

GM is back in negative territory after confirming that it will have to restate almost four years of GMAC results. This sent the stock down 2.6 percent. And Caterpillar slid on a downgrade, giving up 1.6 percent.

The Nasdaq posted its biggest one-day gain in three months, handily recouping yesterday's losses and then some. Gains were broad-based, due to upgrades, announcements and sector moves. Sun Microsystems, a widely held tech stock, rose 4.4 percent on an upgrade, while Apple climbed 6 percent after making free software upgrades for volume control available for iPods. Google continued its march back to $400 a share, adding 5.4 percent today, and chips made a good run, sending the Philadelphia semiconductor index up 12 points. JDS Uniphase rose 1.7 percent, and Intel and Oracle each gained in excess of 1 percent.

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