* Bank of America climbs after earnings
* Empire State manufacturing, PPI increase
* Futures up: Dow up 29, S&P up 3.8 Nasdaq up 13.25
NEW YORK, Jan 15 (Reuters) - U.S. stocks rose modestly on Wednesday, putting the S&P 500 on track to build on its biggest gain in nearly a month, after strong data and earnings from Bank of America pointed to continued improvement in the economy.
Bank of America shares climbed 2.7 percent to $17.22 as one of the biggest boosts to the S&P 500 after the second-largest U.S. bank reported stronger-than-expected quarterly profit, driven by a steep fall in provisions to cover bad loans. The S&P financial index advanced 0.7 percent.
Data showed the seasonally adjusted producer price index rose 0.4 percent last month, the biggest rise since June, although inflation pressures remained benign.
In addition, the New York Federal Reserve's "Empire State" index of general business conditions rose to its highest level in 20 months.
"That is in line with the theme the economy is slowly but surely accelerating," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.
"The knee-jerk inflation is 'oh my god higher inflation, the Fed is going to accelerate tapering,' but really this was a very minor increase and it really doesn't show the economy or inflation accelerating to a point where the Fed is ready to take its foot off the accelerator."
Investors have been concerned that stock prices may have become extended and are looking to earnings season to justify further gains in equity prices. The S&P 500's forward price to earnings ratio is at its highest level in nearly seven years. The benchmark S&P 500 surged about 30 percent in 2013.
Later in the session at 2:00 p.m. (1900 GMT), the Federal Reserve will release its Beige Book of economic conditions.
The Dow Jones industrial average rose 43.96 points or 0.27 percent, to 16,417.82, the S&P 500 gained 5.13 points or 0.28 percent, to 1,844.01 and the Nasdaq Composite added 18.313 points or 0.44 percent, to 4,201.329.
The S&P 500 rose 1.1 percent on Tuesday, its biggest climb since Dec. 18, as a strong December retail sales reading eased concerns that economic growth might be slowing and stocks may be expensive.
Fastenal Co slumped 5.6 percent to $45.06 after the industrial and construction supply company reported fourth-quarter earnings below expectations.
Other S&P 500 companies scheduled to report earnings on Wednesday include CSX Corp and Kinder Morgan Inc after the closing bell.
General Motors Co said it will pay the first quarterly dividend on its common stock in almost six years. The automaker's new executive team said while it expects a slight uptick in pretax profits this year, margins likely would remain flat until 2015. GM's shares lost 0.9 percent to $39.66.
Chelsea Therapeutics International Ltd surged 116.1 percent to $4.97 after an advisory panel to the U.S. Food and Drug Administration concluded on Tuesday a drug to treat a rare form of low blood pressure made by the company is effective enough to warrant regulatory approval.