Stocks bounced back Thursday after a drop in the previous session as the latest batch of earnings reports beat expectations.
All 30 Dow components were up in early trading, led by Alcoa, Bank of America and GE.
Merck and Walmart were at the bottom of the pack.
In the morning's economic news, initial jobless claims dropped by 14,000 last week, more than expected. And mortgage rates ticked higher, with the average on the 30-year fixed up to 4.99 last week, from 4.96 in the previous week.
A hearing got underway at 10am on the Fed's exit strategy, featuring testimony by Chairman Ben Bernanke.
The U.S. economy still needs help from the Fed's low-interest-rate policy but the central bank is prepared to begin removing its extraordinary stimulus measuresas economic expansion "matures," Bernanke told the panel, according to prepared testimony. (Watch a live-streaming video of the hearing.)
Earlier, Cleveland Fed President Sandra Pianalto said at a speech in Florida that "Right now it makes sense to keep our rates low," the latest in a long line of Fed speakers in the past few weeks who have clarified that rates must stay low now but policy makers are prepared to begin removing the stimulus when the times is right.
Solid company performance helped set the tone early on, with Best Buy shares surging after the company smashed fourth-quarter earnings expectations.
This came after Adobe and General Mills delivered results earlier this week that also beat expectations.
Qualcomm shares jumped more than 8 percent after the company, which makes chips for cellphones and other gadgets, raised its sales and earnings forecast for the second quarter, citing strength from licensing revenue among the reasons.
And Campbell Soup CEO Douglas Conant offered some upbeat comments on the soup market. Conant told the Wall Street Journal soup sales are picking up thanks to the company's promotional efforts.
US-traded shares of Lululemon shot up more than 10 percent after the Canadian athletic-clothing retailer delivered strong results, with revenue up 55 percent, helped by its growing line of running gear.
Oracle shares rose ahead of the software giant's earnings, due out after the closing bell.
ConAgra, however, fell after matching estimates.
(Check CNBC's Earnings Central for all the latest earnings news.)
Earnings season gets into full swing in a couple of weeks. Art Hogan, the chief market analyst at Jefferies, notes that right now is typically when companies issue profit warnings and the fact that there haven't been many warnings is a good sign for earnings — and the market.
"I really feel like this market is on a path higher in the near term," Hogan said. "The first quarter is about to wrap up and there are virtually no preannouncements from Corporate America — that means earnings are are going to be much better," Hogan said.
"I think there's another 10 percent to the upside by year end," Hogan said.
As the health-care bill heads back to the Housefor a few, ahem, corrections, companies are starting to talk about how much the new legislation is going to cost them.
Farm equipment maker Deere said it expects its after-tax expenses to jump by $150 millionthis year due to a one-time charge related to its retiree benefits. This followed a similar warning by Caterpillar and AKSteel . Essentially, the health-care legislation will now tax a federal subsidy on retiree health benefits. Industrial companies may be the hardest hit as they tend to have the most retirees.
MGM shares pushed higher as the Journal reported that debt holders may delay the sale of the movie studio because they are unhappy with the size of the bids received so far.
Google and its China controversy are in the news once again, with the Financial Times reporting that China Unicom will remove Google's search function from new handsets.
Investors will also be watching events overseas, with European Union leaders divided on Greek aid ahead of a summit to be held in Brussels.
Still to Come:
THURSDAY: Toyota class-action hearing; Bernanke testifies before House panel on exit strategy; seven-year auction; Earnings from Oracle after the bell
FRIDAY: Final read on Q4 GDP; consumer sentiment; Fed's Warsh, Bullard speak
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