Stocks Rally 1%, Led by Energy, Materials

Stocks rallied off a lower open Thursday as news of a Greek bailout and a sharp drop in jobless claims helped calm jittery investors — and put them in the mood to take some risks.

The Dow Jones Industrial Average gained 105.81, or 1.1 percent, to close at 10,144.19. The S&P 500 added 1 percent and the Nasdaq shot up 1.4 percent.

The market had a rocky start after European President President Herman Van Rompuy confirmed an agreement to bail out Greece, and investors scrambled for details. But, investors worked up their risk for appetite by midday, encouraged by the fact that there was a plan in place to stem the fallout, and stocks rallied to the close.

Upbeat economic data also gave the market a boost: Jobless claims fell by 43,000 last week and the 30-year fixed mortgage rate fell below 5 percent again last week, Freddie Mac reported.

Plus, encouraging news out of China: Lending improved and inflation slowed, setting the stage for growth.

The market has swung with every twist and turn in the recovery and Greek debt stories, making this a traders' market. As a result, today's best performers were, not suprprisingly, laggards in recent sessions — energy, materials and tech. Financials were the day's worst performers.

Caterpillar , Alcoa and MMM were the top three gainers on the Dow.

The only decliners were Bank of America and Wal-Mart .

MMM also benefited from an analyst upgrade: Sanford Bernstein raised its rating on the stock to "outperform" from "market perform," citing better margins and an improved growth rate at the company, which makes everything from Post-It notes to medical equipment.

AIG shares rose as the bailed-out insurer launched a new system for ranking employeesbased on performance and awarding incentive pay.

The Treasury's 30-year auction today was met with weak demand: The bid-to-cover ratio was 2.36, well below the 2.48 average in recent auctions, and the high yield was 4.625 percent.

In earnings action:

Media conglomerate Viacombeat expectationsas cost-cutting efforts helped offset a drop in ad sales at its cable unit.

And PepsiCohit its earnings target, helped by strong growth in Asia, and backed its outlook but North American drinks volume declined.

AutoNation, the largest car dealership in the US, posted a profit of 29 cents per share that beat analyst estimates. Hotel chain Marriott also surpassed forecasts.

Wednesday's after-the-bell reports provide a few stocks to watch this morning, including videogame maker Activision Blizzard, which beat estimates and declared its first dividend, and insurer Allstate, which also topped expectations.

McAfee is among the notable names reporting after the bell today.

Volume was light, with about 1.08 billion shares changing hands on the New York Stock Exchange. Advancers outpaced decliners, roughly 7 to 2.

As of today's close, the S&P is now down around 6 percent from its Jan. 19 peak.

Wednesday's snowstorm, that virtually shut down Washington, caused a few delays on the economic calendar: The usual Thursday report on natural gas inventories will be out tomorrow morning at 10:30 am ET. January retail sales and December business inventories have been pushed to tomorrow as well. The Treasury budget is expected to be released next week.

Still to Come:

FRIDAY: Retail sales, consumer sentiment; crude and natural gas inventories; business inventories; Treasury budget; Winter Olympics starts

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