Stocks Gain, All 10 S&P Sectors Rise; Intel Slips

Stocks gained across the board Thursday amid signs of progress on debt deals in Europe and U.S., in addition to an encouraging report on the Fed's mid-Atlantic manufacturing survey and some robust earnings reports.

The Dow Jones Industrial Average advanced, led by Cisco and Disney , after ending lower in the previous session. The Dow is approximately 100 points away from the year's intraday high. Meanwhile, Intel was the only decliner on the blue-chip index.

The S&P 500 and the tech-heavy Nasdaq were also higher. All three major indices are now firmly in positive territory for the month.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, tumbled below 18.

All 10 key S&P sectors were higher, led by financials and energy.

Euro zone leaders met in Brussels after the ECB signaled in a policy reversal that it is willing to let Greece temporarily default under a crisis response that would involve a bond buyback, a debt swap but no new tax on banks.

The euro rose to a two-week high against the U.S. dollaras optimism surrounding a euro zone debt deal prompted short covering.

European banks including Barclays , Deutsche Bank and Banco Santander rallied sharply following the news.

However, some strategists remained skeptical that the bailout plan will put an end to the debt crisis.

“I'm negative on Europe—You have countries that have the biggest problems being subject to shrink monetary policy at a time they need more growth, so it’s a recipe for disaster,” according to Richard Campagna, managing director of 300 North Capital.

“What’s more likely is that you get another periodic blowups, or mini crises, every few months,” he added. “And this time, it’s going to center on Italy and Spain.”

Campagna said the market is going through a "mid-cycle slowdown."

"In the environment where the economy is slowing globally and where you have unresolved issues in U.S. and Europe, it’s only a matter of time before we see another one of these fear-induced crises that will take the markets back down," he said.

On the earnings front, AT&T gained after the telecom company posted a higher-than-expected revenue increase, as customer growth improved even as the firm lost exclusive U.S. rights to sell Apple's iPhone.

Morgan Stanley also rose after the financial giant reported a loss that was smaller than forecastsand revenue that beat expectations. However, S&P Equity cut its price target on the firm to $26 from $30.

The banking sector led the market for a second session, with firms such as Citigroup and BofA up more than 2 percent each.

Nokia advanced after the phone maker posted a better-than-expected quarterly profit.

Meanwhile, PepsiCo tumbled even after the beverage giant reported higher earnings.

And Travelers swung to a loss, as the property insurer suffered more than $1 billion due to the tornadoes in April and May.

On the tech front, Intel slipped after the Dow component lowered its outlook for the PC market on Wednesday afternoon. Meanwhile, analysts were mixed on the stock—Nomura reduced its price target from $23 to $18, while Barclays raised its price target to $26 from $25.

Shares of hard-drive maker Seagate Technology plunged sharply after Seagate's dismal report, which included a disappointing outlook. Rival Western Digital also tumbled.

Microsoft, AMD and Western Digital are slated to report earnings after-the-bell tonight.

On the M&A front, Express Scriptsagreed to buyrival Medco Health Solutions for $29.1 billion, combining two of the largest U.S. pharmacy benefit managers.

Oil gained for a third session, lifted by a handful of upbeat economic news and reports that the IEA will not release more emergency stocks for now. U.S. light, sweet crude rose 73 cents to settle at $99.13 a barrel, while London Brent crude climbed above $118.

President Obama and House Speaker John Boehner are discussing a possible deal that would include $3 trillion in spending cuts over 10 years to avert an unprecedented U.S. default, according to a senior Democratic congressional aide, and the potential agreement would include a promise of tax reform in 2012.

Earlier, stocks briefly spiked after the New York Times said President Obama and House Speaker John Boehner were close to a major budget deal. However, the White House denied the report.

On the economic front, factory activity in the U.S. Mid-Atlantic region bounced back in July, but still remained at a weak level. Meanwhile, the Conference Board said leading economic indicator index rose 0.3 percent in June.

Investors largely shrugged off a disappointing weekly jobless claims, which rose more than expected last week, according to the Labor Department, pointing to a employment market that is struggling to regain momentum.

European shares closed at a two-week high after a draft document showed plans for a wide-ranging response to the sovereign debt crisis at a meeting of euro zone leaders.

Coming Up This Week:

THURSDAY: Money supply; Earnings from Mircrosoft, AMD and SanDisk
FRIDAY: No major econ. news expected; Earnings from Caterpillar, GE, McDonald's, Schlumberger, Verizon, Honeywell

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