The Standard & Poor's 500 Index climbed 13.82, or 1 percent, to 1,352.42 at 2:34 p.m. in New York, paring its decline this year to 8.5 percent. The Dow Jones Industrial Average added 98.36, or 0.8 percent, to 12,368.53 and is down 6.7 percent in 2008. The Nasdaq Composite Index climbed 40.04, or 1.7 percent, to 2,356.45, still off 11 percent in 2008. About three stocks gained for every two that fell on the New York Stock Exchange.
So far, 61 percent of S&P 500 companies that reported results have topped analysts' estimates, according to Bloomberg data. Profits beat estimates at 28 of the 39 companies that released earnings since the market's close yesterday.
The unexpected drop in first-time claims for unemployment benefits to 301,000 last week eased concern that the fallout from the collapse of the subprime mortgage market will drag the U.S. into recession. China's economic expansion bolstered expectations that demand at companies that produce energy and metals will remain strong even as growth in the U.S. cools.
Gains were limited after a private report showed sales of existing homes in the U.S. fell more than forecast in December, capping the biggest yearly slump in more than a generation.