Stocks bounce after steep selloff

NEW YORK (CNNMoney.com) -- Stocks jumped Friday morning, bouncing after the previous session's steep decline, as investors welcomed upbeat earnings from GE and IBM and geared up for the expected release of the Bush Administration's fiscal stimulus plan.

The Dow Jones industrial average (INDU) added 0.9 percent in the early going, the broader S&P 500 (INX) index gained 0.6 percent and the Nasdaq composite added 0.6 percent.

The Russell 2000 (RUT.X) small-cap index was little changed after closing Thursday at a level more than 20 percent below its all-time high hit last July, the technical definition of a bear market.

Stocks tumbled Thursday, extending the 2008 selloff on recession worries after comments from Federal Reserve Chairman Ben Bernanke, a big quarterly loss from Merrill Lynch and weak readings on housing and manufacturing.

But after such a big decline - with the Dow losing 307 points - investors were willing to scoop up some of the recently-battered shares, particularly amid the corporate news.

General Electric (GE, Fortune 500) reported higher quarterly earnings that met estimates on higher revenue that topped estimates, due to strong global demand. The diversified company also reiterated that fiscal 2008 results would meet forecasts. Shares rose 3.6 percent.

After the close Thursday, IBM (IBM, Fortune 500) reported higher quarterly sales and earnings that topped estimates. The company also issued 2008 earnings guidance that is above analysts' current estimates. Shares gained 3.7 percent Friday.

Advanced Micro Devices (AMD, Fortune 500) reported a quarterly loss - narrower than analysts had expected - on higher revenue late Thursday. Shares gained Friday.

In economic news, the University of Michigan's January consumer sentiment index rose to 80.5 versus forecasts for a drop to 74.5. Sentiment stood at 75.5 in late December.

Separately, the index of leading economic indicators (LEI), fell 0.2 percent in December after falling 0.4 percent in November. Economists thought it would fall 0.1 percent.

Treasury prices fell, raising the yield on the 10-year note to 3.65 percent from 3.62 percent late Thursday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar gained versus the euro and was little changed against the yen.

U.S. light crude oil for February delivery rose 48 cents to $90.61 a barrel on the New York Mercantile Exchange.

COMEX gold for February delivery rose $3.50 to $884 an ounce.