Wall Street keeps riding high

Blowout results from Research in Motion and news that Merrill Lynch may sell stake in firm to foreign investor leave indexes sharply higher.

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By David Ellis, CNNMoney.com staff writer

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NEW YORK (CNNMoney.com) -- Stocks maintained their early gains Friday as Wall Street enjoyed a wave of encouraging corporate news, including impressive earnings from BlackBerry maker Research in Motion and a report that banking giant Merrill Lynch may sell a stake to a foreign fund.

The Dow Jones industrial average (INDU) gained about 1.3 percent more than two hours into the session.

The broader S&P 500 index (SPX.X) climbed nearly 1.2 percent, while the tech-fueled Nasdaq (COMPX) rose about 1.3 percent.

Research in Motion (RIMM) said late Thursday that it more than doubled its third-quarter results, helped by robust demand for its BlackBerry smart-phones. Shares gained nearly 11 percent on the Nasdaq.

"I think the market was waiting for something positive like the RIMM report to get going and that carried through tech and rest of the market," said Joseph Saluzzi, co-head of equity trading at Themis Trading.

Also spurring the rise was news that Merrill Lynch (MER, Fortune 500), one of the investment banks hardest hit by the credit crisis, is in talks to nab a $5 billion investment from Singapore's state investment firm, Temasek Holdings, The Wall Street Journal reported. Such a sale would provide encouragement to investors worried about the health of the financial sector.

Wall Street also enjoyed some encouraging news about the health of the U.S. consumer as spending posted its biggest gain in three-and-a-half years during the month of November, the Commerce Department reported.

Personal income also came in higher than expected, according to the government report, but a key reading on inflation provided a mixed picture.

The core PCE reading, which strips out volatile food and energy costs and is favored by the Federal Reserve as a measure of inflation, rose 0.2 percent during the month, as expected. But for the year, core inflation is now running at 2.2 percent, higher than the 2 percent expected.

Treasury prices retreated sending the yield on the benchmark 10-year note to 4.07 percent from 4.03 percent in the previous session.

The Federal Reserve said Friday it was lending another $20 billion to banks at an interest rate of 4.67 percent as part of its continuing effort to fire up the credit markets.

The central bank said it received bids for $57.7 billion worth of loans, illustrating strong demand by banks that need short-term funds. The Fed added that it planned to conduct such biweekly auctions for as long as necessary to help alleviate the credit crunch.

In other corporate news, Philips (PHG) of the Netherlands said it has agreed to acquire Respironics (RESP), which specializes in ways to combat sleep disorders, for $5.1 billion.

Consumer electronics retailer Circuit City (CC, Fortune 500) reported a wider-than-expected third-quarter loss blaming the dismal results on ongoing store reorganization and double-digit sales declines of gadgets like camcorders and DVD players. Shares of the retailer plunged 24 percent in morning trading.

And insurance broker Marsh & McLennan (MMC, Fortune 500) said it is looking to replace its chief executive after concerns over the company's recent financial performance.

Commodity prices were higher Friday as U.S. light crude for February gained 88 cents to $91.94 a barrel on the New York Mercantile Exchange.

COMEX gold for February rose $10.80 to $814 an ounce.

Overseas, Asian markets finished higher, while European stocks followed in late afternoon trading.

The dollar was lower versus the euro but gained against the yen. To top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.