Stocks rallied to the finish line to make it two for two Thursday as investors were encouraged by decent demand fof a $24 billion auction of seven-year Treasury notes and some better-than-expected earnings.
Coming off the heels of a disappointing auction the day before, investors cheered the turnout for the Treasury auction.
The Dow Jones Industrial Average jumped 174.75, or 2.3 percent, to close at 7,924.56, while the S&P 500 advanced 2.3 percent to close at 832.86.
The Nasdaq shot up nearly 3.8 percent after a big surge in the final minutes of trading, and is now positive for the year!
The Nasdaq is up 0.6 percent since the new year began, while the Dow is down 9.7 percent and the S&P is off 7.8 percent.
The Dow has a ways to go to turn it around for the year but is on track for its first positive month since August.
Economic news still painted a bleak picture of the economy but came in better than expected.
The final reading on fourth-quarter GDP showed the economy shrank at a 6.3 percent rate, but that was better than the 6.2-percent pace expected. And jobless claims posted a small rise last week.
"Obviously the tide is shifting. We've gone from every piece of news being incrementally bad to not as bad as expectations," Stephanie Giroux, Chief Investment Strategist at TD Ameritrade told Reuters. "The fact that collectively we are starting to see things less negative is very significant."
Homebuilders rocketed higher as mortgage rates dropped to their lowest level ever. Interest rates on 30-year fixed mortgages fell to a record 4.85 percentin the week ending today, Freddie Mac reported.
Hovnanian and Beazer Homes were up 14 percent and 17 percent, respectively.
General Motors was the biggest percentage gainer on the Dow, up 14 percent, amid anticipation that the Obama administration's auto task force is preparing to approve a round of loans for the big automakers that will avert bankruptcy.
General Electricwas among the most actively traded for the day, gaining 3.9 percent as the conglomerate and CNBC parent looked to assure investors that it is addressing problems with its financing unit.
There were only two decliners on the Dow: Citigroup and Bank of America, which lost 4.8 percent and 1.6 percent, respectively. JPMorgan had been lower for much of the day but squeaked out a 1.9-percent gain.
Testimony from Treasury Secretary Tim Geithner before the House Financial Services Committee had little effect on the market. Geithner outlined an expansion of federal oversighton the financial markets. Stocks traded in a tight range during the morning an investors appeared to be unfazed by the Geithner testimony.
The SEC is close to reinstituting the uptick rule for trading. The rule prohibits short-selling stocks until after they have a move higher and is regarded as a stop-gap against trader assaults on particular companies. Financials have been particularly hard hit by short selling and are expected to benefit from the rule.
And, as U.S. employees of AIG start returning some or all of their bonus payments that have generated so much outrage, it was a much different story in Europe. Executives there said returning their bonuses amounts to "blackmail" and some have even threatened they would resign.
In another sign that the global flight from risky assets has continued, Man Group, the world's largest listed hedge fund firm, said funds under management fell 11 percent from end-December to $47.7 billion, down, as clients pulled out assets in the face of falling markets.
Techs turned in a strong showing, helping the Nasdaq outperform both the Dow and S&P.
Google rose 2.7 percent after the search giant announced plans to cut about 200 sales and market positions.
American depositary shares of Research In Motion rose 4.9 percent as Goldman Sachs backed its "buy" rating on the stock, expecting the BlackBerry maker to hit its fourth-quarter earnings target, and as the company is planning to launch a full-length television service for the BlackBerry platform.
Intel gained 5.9 percent as investors seemed to applaud IBM's rumored acquisition of Sun Microsystems, at least for its impact on Intel. The company supplies servers for both IBM and Sun.
Sun rose 4.5 percent and IBM gained 0.9 percent.
Other chip stocks also posted solid gains, with AMD up 12 percent and Micron Technology up 14 percent.
Retailers also enjoyed robust gains, with Macy's up more than 10 percent and Sears , which has been under fire since a downgrade from Moody's earlier this week, up 8.9 percent.
Electronics retailer Best Buy also helped create momentum after reporting earnings that beat analyst expectations. Its shares jumped more than 12 percent.
In other earnings, ConAgra reported falling profits but not as much as Wall Street had expected, sending shares higher as the company reaffirmed its 2009 earnings forecast. Its shares gained 9.2 percent.
And shares surged 15 percent for Dr. Pepper Snapple Group as the soft drink maker posted earnings of 39 cents a share, slightly ahead of Wall Street estimates even as the company forecast weakening demand for its high-end brands.
Still to Come:
FRIDAY: Personal income/spending; Consumer confidence; Obama meets with bankers
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