Stocks Soar 1%, Dow Ends Up 200 on Draghi

Stocks finished sharply higher Thursday following a pair of better-than-expected economic reports and after ECB President Mario Draghi said the central bank would do whatever it takes to support the euro.

“Draghi expanded the mandate, but said nothing specific…so what does that really mean?” said Kenny Polcari, managing director at ICAP Equities. “The market’s going to stay up because people are now going to look to the Fed announcement…The information (economic reports) continues to be confusing at best so the ball is in Ben Bernanke’s court.”

S&P 500

The Dow Jones Industrial Average surged 211.88 points, or 1.67 percent, to close at 12,887.93, propelled by Home Depot and AmEx . The blue-chip index is back in the black for the week and for the month.

The S&P 500 jumped 22.13 points, or 1.65 percent, to finish at 1,360.02. The Nasdaq soared 39.01 points, or 1.37 percent, to end at 2,893.25. Both the S&P 500 and the Nasdaq snapped their four-day losing streak.

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

All 10 S&P sectors closed in positive territory, led by telecoms and energy.

“I’m a little skeptical,” said Art Cashin, director of floor operations at UBS Financial Services on CNBC’s “Squawk on the Street.” “This rally’s primarily driven by enormous bouts of short-covering in the euro. It’s a terrific move, but we’re about where we were three days ago.”

European Central Bank President Mario Draghi pledged to do "whatever it takes" to protect the euro zone from collapse, including fighting unreasonably high government borrowing costs. European shares finished sharply higherfollowing Draghi's remarks.

Hopes that the U.S. Federal Reserve will increase its efforts to stimulate a flagging economy, with some strategists saying the move will come as early as its rate-setting meeting next week, helped further soothe concerns about the economy.

“No one’s going to discount what [Draghi’s] saying, but we’re seeing people just short-covering and not buying,” said Rick Fier, director of equities trading at Conifer Securities. “This also doesn’t change the [global slowdown] problems that are out there … the one trade out there is the central banks’ coordinated-effort trade and that’s only going to work for so long and won’t be a reason to buy stocks in the end.”

Stocks also got an extra lift following a pair of better-than-expected economic reports. Weekly jobless claims fell 35,000 to a seasonally adjusted 353,000, dropping to almost a four-year low, according to the Labor Department.

And overall durable goods orders jumped 1.6 percent as demand for aircraft gained, according to the Commerce Department. Excluding transportation, however, orders dropped 1.1 percent, logging the biggest slide since January.

But pending home sales slipped 1.4 in June to 99.3, according to the National Association of Realtors.

Among earnings, ExxonMobil , posted lower-than-expected quarterly earnings as its oil and gas output sagged and its chemicals business struggled. Still, shares edged higher along with the broader market.

3M reported quarterly earnings that topped Wall Street's expectations, but revenue fell short of estimates.

And fellow Dow component United Technologies posted a less than 1 percent earnings, due to the effects of a global slowdown.

Sprint Nextel reported earnings and revenue that missed Wall Street's expectations.

Dow Chemical reported a lower-than-expected quarterly profit as demand for chlorine, plastics and electronic parts plunged around the world.

Zynga plunged almost 40 percent after social-media game maker posted quarterly results that missed estimates and handed in 2012 guidance that disappointed investors. In addition, at least three brokerages cut their price targets on the firm, while JPMorgan lowered its rating to "neutral" from "overweight."

Facebook shares tumbled following Zynga's poor results as some strategists speculated that Zynga's report points to slowing traffic for Facebook. Facebook is scheduled to report earnings for the first time as a public company after the bell. (Read More: The Next Way Facebook May Upset Wall Street)

Amazon and Starbucks are also among major companies scheduled to post earnings after the bell tonight.

Apple traded lower for a second session after the iPhone maker reported disappointing quarterly results and handed in a weak outlook. Exane BNP Paribas cut its price target on the tech giant to $690 from $730.

So far, about half of S&P 500 firms have posted quarterly results this year. Of the companies that have reported earnings, 65 percent have beat estimates while 22 percent have missed. Meanwhile, only 41 percent have topped revenue expectations, according to data from Thomson Reuters.

The government auctioned $29 billion in 7-year notes at a high yield of 0.954 percent and bid-to-cover of 2.64.

—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

Coming Up This Week:

FRIDAY: GDP, consumer sentiment, summer Olympics start, 100 days to election; Earnings from Chevron, Merck, Barclays, DR Horton

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