--U.S. stocks gain after two-day drop
--German business confidence tops expectations
--H-P, AIG rally after reporting quarterly results
By Matt Jarzemsky
Blue-chip stocks flirted with their third triple-digit point gain of the year, as Hewlett-Packard and American International Group rallied on earnings and a reading on German business confidence topped expectations.
The Dow Jones Industrial Average advanced 100 points, or 0.7%, to 13977, in midafternoon Friday trading, reversing much of a 155-point slide the past two days.
The Standard & Poor's 500-stock index tacked on nine points, or 0.6%, to 1512, though it was on pace to snap a seven-week streak of weekly gains. The Nasdaq Composite Index rose 23 points, or 0.7%, to 3155.
"Any selloff we get is going to be shallow," said Scott Wren, senior equity strategist at Wells Fargo Advisors, which manages $1.2 trillion in St. Louis. "The mentality is, 'I want to wait for the market to pull back so I can buy stocks at lower levels.' The Fed's on our side, companies are making money and the growth environment is OK."
Hewlett-Packard rallied 13%, leading the Dow higher, after the technology company late Thursday reported a quarterly profit that topped analysts' expectations and gave a better-than-expected earnings forecast.
AIG rose 2.3% after saying late Thursday that it swung to a loss but operating profit in some segments exceeded analyst expectations.
European markets were broadly higher, with the Stoxx Europe 600 up 1.3% to recover most of the losses from the previous session, after data showed German business confidence increased much more than expected in February. Germany's DAX index climbed 1%.
"From the U.S. perspective, Germany is a very industrial and export-oriented economy; If they're seeing optimism on their order books, then there's reason to be optimistic globally," said Wasif Latif, vice president of equity investments at USAA Investments in San Antonio. His firm manages $54 billion.
Elsewhere, Italy's FTSE MIB index advanced 1.4%. The index had fallen this week to close Thursday at a two-month low ahead of general elections in Italy this weekend. Some investors fear a new government may not continue the country's reformist path.
In Asia, China's Shanghai Composite fell 0.5% to a one-month low and declined 4.9% on the week. Hong Kong's Hang Seng Index also shed 0.5%, dropping 2.8% for the week, to near a two-month low. Investors are concerned that policy makers will implement additional tightening measures to control residential property prices.
Japan's Nikkei Stock Average gained 0.7% and climbed 1.9% on the week. The index has risen 14 of the past 15 weeks. Australia's S&P/ASX 200 added 0.8%, rebounding from losses on Thursday, but fell 0.3% on the week, snapping a five-week winning streak.
Crude-oil prices slid 0.1% to $92.93 a barrel, while gold retreated 0.4% to $1,572.60 a troy ounce. The dollar rose against the yen and the euro. The 10-year Treasury note edged up in price to yield 1.965%.
In other corporate news, Cabot Oil & Gas jumped 9.5% after the natural-gas producer's earnings climbed 55% on higher production.
Texas Instruments advanced after the chip maker unveiled a 33% increase in its quarterly dividend late Thursday and increased its stock-repurchase authorization by $5 billion.
Abercrombie & Fitch slipped 7.7% after giving an earnings forecast that lagged behind analysts' projections and saying it expects to close 40 to 50 stores in the U.S. in 2013.
Vivus dropped 3.9% after the pharmaceutical company said Thursday that a European Medicines Agency committee backed an earlier decision, in which the panel recommended against approval of its weight-loss drug.
WebMD Health surged 27% after the health-information provider's adjusted fourth-quarter earnings and revenue beat analyst estimates late Thursday and its 2013 earnings outlook topped forecasts.
Write to Matt Jarzemsky at [email protected]