U.S. stocks rose on Thursday as investors welcomed a string of solid earnings reports, while debt-laden Greece appeared to be nearing a bailout deal, easing fears about the stability of the euro zone.
Greece's borrowing costs fell after Athens readied for austerity measures to secure funds, and Germany's finance minister said there is no alternative but to provide financial aid. That helped lift financial markets concerned about a possible default in Europe.
We have seen some of those fears subside, said Dan Cook, senior market analyst at IG Markets in Chicago. At least for today we have had some respite from this whole fear thing of the contagion of sovereign debt.
Continuing the generally favorable earnings season, Visa Inc, the world's top credit and debit card network operator, reported higher-than-expected profits and raised its revenue outlook, spurring hopes of a revival in consumer spending.
But Visa's shares slipped 0.6 percent to $93.03 after hitting an all-time high at $97.14 on Monday.
Shares of cellphone maker Motorola Inc gained 2.9 percent to $7.12 on the New York Stock Exchange and the U.S.-listed stock of China's Internet search giant, Baidu Inc, hit an all-time high of $718 on the Nasdaq after both posted upbeat results.
The Dow Jones industrial average <.DJI> gained 144.42 points, or 1.31 percent, to 11,189.69. The Standard & Poor's 500 Index <.SPX> rose 17.12 points, or 1.44 percent, to 1,208.48. The Nasdaq Composite Index <.IXIC> added 39.07 points, or 1.58 percent, to 2,510.80.
The S&P 500's percentage gain marked its largest daily advance in nearly eight weeks. After spiking sharply this week, the CBOE VIX volatility index, Wall Street's index of choice for gauging market volatility, fell 12.4 percent, its steepest drop in more than 14 months.
Boosting the Nasdaq, Palm Inc surged 25.1 percent to $5.79 after Hewlett-Packard Co agreed to buy the smartphone maker for $1.2 billion. HP slipped 0.8 percent to $52.83.
In the health sector, Aetna Inc reported better-than-expected quarterly profit and raised its forecast. The health insurer's stock rose 3 percent to $31.42, and the Morgan Stanley Healthcare Payors index <.HM0> rose 3 percent.
Also helping the health sector, Bristol-Myers Squibb joined a growing band of U.S. drugmakers predicting a hit to their company profits from the recent healthcare overhaul, but the impact on Bristol-Myers was less than investors feared, sending its shares up 5 percent to $25.54.
Higher oil prices during the quarter boosted profits for Exxon Mobil Corp and ConocoPhillips , though Exxon said its earnings were hurt by the health reform legislation.
Exxon's stock slid 0.5 percent to $68.83, but shares of ConocoPhillips gained 1.7 percent to $59.52.
In a sign more investors are starting to warm to equities, U.S. fund managers increased their already heavy investment in stocks in April and decreased bond allocations, a Reuters poll showed.
Initial claims for unemployment benefits fell slightly less than expected in the latest week, the government said, but the numbers were less than the previous week, suggesting an improving labor market. The data came a day after the Federal Reserve said it was upbeat about the economy.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of more than 3 to 1, while on the Nasdaq, about five stocks rose for every two that fell.
(Editing by Padraic Cassidy)