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Citigroup, Google Fuel Stock Rally

U.S. stocks soared Friday amid renewed hope that the worst is over for financials. Solid earnings from a few Dow components also gave the market strength.

The Dow Jones Industrial Average and S&P 500 indexes were up about 2 percent, with the tech-heavy Nasdaq pushing 3 percent after strong results from Google.

The day's best performers were financials and techs, which gained 3.2 percent and 3.5 percent, respectively, according to S&P sector indexes.

Citigroup, the largest US bank, reported a loss of $5.1 billion, or $1.02 a share, its second straight quarterly loss. The results included $13 billion in writedowns. Analysts had expected a smaller loss of 96 cents a share but investors bid up the stock amid hopes that, with big banks throwing in everything including the kitchen sink this quarter, the worst may be over. Shares shot up more than 7 percent.

"The psychology right here is that the worst is over. That we're seeing the bottom, that we can identify that this is it," Gordon Charlop, managing director at Rosenblatt Securities, told CNBC. "You look at Merrill Lynch, Citigroup -- they're saying, 'yeah, we figured it out, we got it right, we're ready to move on.'"

Google reported earnings that blew past expectations. Net increased 30 percent to $1.31 billion. Excluding expenses for stock-based compensation, the Internet-search giant earned $4.84 a share, well above the $4.52 expected, according to analysts polled by Thomson Financial. Revenue and advertising revenue were strong, analysts noted, adding that "paid per clicks" jumped 20 percent.

Google shares surged more than 17 percent to $528 a share Friday, the first time the stock has been above $500 in more than a month.

Chip maker Advanced Micro Devicesreported another quarterly loss but results were in line with consensus estimates.

Solid results from a pair of blue chips also gave the market a boost, suggesting that perhaps General Electric's spectacular earnings miss a week ago may have reflected isolated problems at GE, not a broader trend.

Dow component Caterpillar reported its profit rose 13 percentto $922 million, or $1.45 a share, as strong international sales offset what the equipment maker called a "recessionary storm" in the U.S. The results surpassed the $1.33 a share analysts had expected. The world's largest maker of construction and mining equipment, which now gets two-thirds of its sales from outside the U.S., lowered its forecast for the U.S., but raised its outlook for everywhere else in the world. Overall, the company said it expects another "record year," pegging sales growth at 5 to 10 percent.

Honeywell , also part of the Dow, said its profit rose 22 percent, helped by strong demand from the aviation and commercial-construction sectors. Net income rose to $643 million, or 85 cents a share, topping analysts' estimate of 82 cents a share. The company, which is the world's largest maker of cockpit electronics, also said it expects earnings for the current quarter between 92 and 93 cents a share, in line with expectations, and raised its full-year guidance.

Elsewhere, regulators are expected to announce a settlement with former Fannie Mae executives over their alleged roles in an accounting scandal, according to published reports.

And Chrysler is on track to meet its 2008 financial targetsset by Cerberus Capital Management, CEO Bob Nardellis said to reporters at an event Thursday night.

Send comments to cindy.perman@nbcuni.com.