Really big day on Wall Street

NEW YORK (CNNMoney.com) -- The Dow industrials surged to an all-time high near midday Friday, thanks to a wave of upbeat earnings reports that also lifted the S&P 500 and Nasdaq to more than 6-year highs.

The Dow Jones industrial average (up 103.70 to 12,912.33, Charts) gained around 100 points roughly 2-1/2 hours into the session, briefly hitting a record trading high of 12,949, before pulling back.

The broader S&P 500 (up 7.67 to 1,478.40, Charts) index added 0.5 percent and hit a fresh six-and-a-half-year high. The Nasdaq (Charts) composite added 0.5 percent and hit a fresh 6-year high.

The Dow closed at a record for a second straight day Thursday despite a mixed broader market. But the tone Friday morning was much more positive, with all the major gauges jumping on the earnings news from Google, American Express, Caterpillar and others.

Beyond the earnings, the advance marked a broader recovery for Wall Street from the big late February selloff, when slumping Shanghai markets triggered a global stock decline on worries about growth. On that day, the Dow slumped 416 points - its biggest one-day loss since the day the markets reopened after the Sept. 11 attacks.

That threw a wrench into eight straight months of gains for stocks, part of the broader 4-1/2-year-old bull market. Trading grew more volatile as investors started worrying about economic growth and how the then-emerging fallout in the subprime mortgage market would scar the broader economy. Analysts also began lowering earnings estimates.

But slowly, confidence seems to have returned, thanks to some encouraging economic news and the positive start to the earnings period.

"A lot of negativity had built up, with people finding a cloud in every silver lining, and so now you're seeing a reversal from that," said Douglas Roberts, managing principal at Channel Capital Research.

Roberts said that both the recent economic news and outlook from the Federal Reserve - and Chairman Ben Bernanke - seems to be that growth is slowing, but not at a pace to suggest a recession. Also, the fallout from subprime seems to be contained, he said.

"The so-called goldilocks scenario that Ben Bernanke laid out seems to be developing," Roberts said, referring to the not-too-cold, not-too-hot middle ground for the economy that stock investors prefer.

Nonetheless, stocks are likely to remain volatile in the months ahead, particularly in the typically difficult summer months.

With just over a fifth of the S&P 500 having reported, earnings are on track to grow 4.2 percent from a year ago, according to the latest Thomson Financial figures. That's a blended number that combines reported and expected results.

Of the companies that have reported so far, 65 percent have topped estimates, 17 percent have met forecasts and 17 percent have missed. Although the early results have been mostly better than expected, earnings are still on track to grow at the slowest pace in 3-1/2 years.

Among the latest to report, Google (up $11.94 to $483.59, Charts, Fortune 500) reported higher quarterly sales and earnings that beat estimates late Thursday, sending shares 3.7 percent higher Friday morning.

American Express (up $1.63 to $60.58, Charts, Fortune 500), a Dow component, also reported higher quarterly sales and earnings that topped forecasts late Thursday, and it rallied 3 percent Friday.

Friday brought earnings from four Dow components including Caterpillar (up $3.29 to $71.91, Charts, Fortune 500), which posted earnings and sales that beat forecasts and boosted its 2007 financial outlook. The stock jumped 5 percent.

Fellow Dow stock Honeywell (up $1.53 to $50.59, Charts, Fortune 500) reported higher quarterly sales and earnings that topped estimates and boosted its 2007 financial forecast. Honeywell climbed 3 percent.

McDonald's (down $0.57 to $48.21, Charts, Fortune 500) reported higher quarterly sales and earnings that met estimates and also said it will take a $1.6 billion charge in the second quarter. Shares lost 1.5 percent.

Pfizer (down $0.13 to $26.94, Charts, Fortune 500) reported lower quarterly profit, but adjusted earnings topped Wall Street estimates. Shares also edged lower.

Advanced Micro Devices (down $0.35 to $13.94, Charts, Fortune 500) reported a bigger-than-expected quarterly loss late Thursday, due to lower prices and unit shipments. Shares fell Friday morning.

Market breadth was positive and volume was improved from recent days. On the New York Stock Exchange, winners topped losers 3 to 1 on volume of 980 million shares. On the Nasdaq, advancers topped decliners by more than 2 to 1 on volume of 1.06 billion shares.

U.S. light crude oil for May delivery rose 98 cents to $62.81 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery rose $8.10 to $696.40 an ounce.

Treasury prices slipped, pushing the yield on the benchmark 10-year note to 4.68 percent from 4.67 percent late Thursday. Bond prices and yields move in opposite directions.

In currency trading, the dollar recovered a bit after hitting a two-year low versus the euro and inched higher versus the yen.