The Dow advances sharply after forecast by IBM Corp.

Good news from IBM raises hopes about fourth-quarter earnings reports.

NEW YORK (AP) — Wall Street advanced sharply Monday, with solid preliminary results from IBM encouraging investors to go back into the stock market after last week’s rout.

International Business Machines Corp., one of the 30 Dow Jones industrials, released preliminary earnings estimates for the fourth quarter that were 24 percent above year-earlier levels.

After falling nearly 250 points on Friday, the Dow rose more than 170 points Monday.

“The market was pretty oversold,” said Richard E. Cripps, chief market strategist for Stifel Nicolaus. “We were due to bounce back, and the IBM news didn’t hurt.”

IBM’s news, coming before as earnings season is about to get under way in earnest, did raise some hopes that fourth-quarter results might not be as bad as feared.

Investors also moved back into financial services stocks ahead of Citigroup Inc. earnings today and Merrill Lynch & Co.’s report on Thursday. It is expected both companies will announce further capital injections to stanch bigger-than-feared mortgage-related losses.

According to preliminary calculations, the Dow gained 171.85, or 1.36 percent, to 12,778.15. IBM was the biggest gainer in the Dow, rising $5.26, or 5.4 percent, to $102.93.

Broader stock indicators also rose. The Standard & Poor’s 500 index added 15.23, or 1.09 percent, to 1,416.25 and the Nasdaq composite index shot up 38.36, or 1.57 percent, to 2,478.30.

With no major economic data on the calendar, investors focused on corporate and commodities news. Gold futures hit a record, briefly venturing above $913 an ounce as the dollar tumbled against other major currencies. The euro reached a new high above $1.49.

Other commodities were higher, too. Crude oil rose $1.51 to settle at $94.20 a barrel on the New York Mercantile Exchange.

Peter Dunay, investment strategist at Leeb Capital Management, believes the run in commodities prices will continue as Wall Street eyes what the Federal Reserve will do at its Jan. 29-30 meeting. Chairman Ben Bernanke has convinced investors the central bank will cut rates, and the expectation of cheaper money also bolstered sentiment Monday.