US stocks climbed modestly on Wednesday for a second straight session as energy and materials stocks made ground and investors cheered some decent results from technology bellwether Cisco.

A small pull back in oil prices and a drop in gasoline inventories helped refiners to advance, taking energy stocks to a 1.9 per cent gain.

Sunoco, Tesoro and Valero added 3.3 per cent to $43.28, 12 per cent to $17.39 and 7.3 per cent to $34.47 respectively.

Materials stocks were the day’s second biggest gainers, climbing 1.6 per cent on some analyst upgrades and a bump in certain commodity prices.

Freeport-McMoRan Copper & Gold was the outstanding performer, adding 11 per cent to $87.67.

Citigroup analyst John Hill advised clients to buy the shares, noting that they had dropped more than 35 per cent since mid-June while the company still had exposure to China, high margins and strong free cash flow.

Technology was another positive. Cisco climbed 5.7 per cent to $23.93 after posting estimate-beating fourth quarter profits.

Microsoft also received a boost after an analyst at UBS said the company could buy up to $20bn of stock back over the next three months. The shares rose 3.1 per cent to $27.02 while the broader sector added 1.3 per cent.

The benchmark S&P 500 index shrugged off early losses to close 0.3 per cent higher at 1,289.07 points. The Dow Jones Industrial Average was up 0.4 per cent at 11,656.07. The Nasdaq Composite ended the day 1.2 per cent ahead at 2,378.37.

On Tuesday stocks rose the most in four months after oil prices dropped sharply and the Federal Reserve kept its benchmark interest rate at 2 per cent. An accompanying statement seemed to reduce the likelihood of rate rises, soothing investors concerns.

In the telecoms sector, disappointing earnings news dragged the sector down 1.4 per cent on Wednesday.

Sprint Nextel posted a $344m second quarter loss due to spending on discounts and advertising to win new customers. Sales fell 11 per cent to $9.06bn and the shares dived 14.2 per cent to $7.34. Qwest Communications International said profit dropped 24 per cent to $188m and cut its annual forecast. The results were in line with estimates but the shares slipped 6 per cent to $3.45.

So far this earnings season more than 400 of the S&P 500 companies have reported results and on average, index members have seen an 18 per cent drop in profits.

Financials have had another torrid quarter. Melissa Roberts, an analyst at KBW, said: “Results continued to be disappointing across capitalisation levels [revealing] continued asset quality deterioration, revenue growth offset by mounting expense growth, and reduced profitability.”

KBW cut its earnings estimates for 2008 and 2009 by 14 per cent and 10 per cent respectively as a result.

On Wednesday, there was mixed news from the embattled sector. Freddie Mac shares plunged 19.3 per cent to $6.49 after the mortgage finance company posted its fourth loss in a row and said it would cut its dividend.

Fannie Mae, another government-sponsored entity, slumped 14.7 per cent to $11.60 on the news. Fannie reports results on Friday. Elsewhere in the financials sector the news was mixed but the sector was among the biggest losers of the morning session, dropping 0.7 per cent.

Marsh & McLennan, said second-quarter profit fell 63 per cent to $65m owing to higher staff costs and certain writedowns at its corporate security division. The insurance broker still beat analysts’ estimates and the shares rose 2.5 per cent to $30.07. Nasdaq OMX Group jumped 16.9 per cent to $30.89 after the exchange operator posted results that beat analysts’ quarterly estimates.

In the consumer staples sector, a drop in agricultural commodity prices helped offset a handful of disappointing results.

Whole Foods, the grocer, tumbled 12.6 per cent to $20.04 after it posted annual earnings that undershot analyst’s estimates.

Dean Foods dropped 5.7 per cent to $22.02 after the maker of dairy products forecast lower third-quarter profits than expected. As a whole, the consumer staples sector rose 1.1 per cent.

Profit-taking and some poor results took their toll on the consumer-discretionary sector however. It lost 0.5 per cent led down by a 7.2 per cent fall to $22.45 for restaurant chain operator Wendy’s International.