NEW YORK (CNNMoney.com) -- Stocks jumped Thursday, with the blue-chip Dow index ending more than 120 points higher, as investors reacted to a rise in Exxon Mobil earnings and brushed off concerns about European debt problems.
The Dow Jones industrial average (INDU) gained 122 points, or 1.1%, to end at 11,167.32. The S&P 500 index (SPX) added 15 points, or 1.3%, to settle at 1,206.77. The Nasdaq composite (COMP) rose 40 points, or 1.6%, to end at 2,511.92.
Gains were broad based, with 27 of the 30 Dow components ending higher. Financial shares led the advance, and the tech sector got a boost after Hewlett-Packard (HPQ, Fortune 500) said late Wednesday it will buy struggling smart phone maker Palm (PALM) for $1.2 billion, although HP's stock ended 0.8% lower.
"The market is enjoying one of the best earnings seasons in recent history," said Art Hogan, chief market strategist at Jefferies & Co. "It's more than enough to shift focus from Europe and shed concerns about their debt."
On Wednesday, the Dow rose back above 11,000 after the Federal Reserve left interest rates unchanged and said the economy is improving. The central bank's pledge to keep interest rates low helped investors turn their focus away from the debt issues in Europe.
European concerns easing: On Tuesday, rating agency Standard and Poor's downgraded the sovereign debt ratings of Greece to junk status and lowered Portugal's investment grade status. On Wednesday, S&P also downgraded its investment grade rating of Spain's long-term debt.
Worries about Greece have abated recently as European officials seem to be nearing agreement on a rescue package for the debt-laden nation.
"We already knew part of this story months ago," Hogan said. "Maybe the ratings agencies took time actually to downgrade, but we've known these countries are in trouble."
Greece's economy is one of the smaller ones in the euro zone, Hogan noted, so its debt rating is not as much of a concern as that of a larger country like Spain or Italy. Even though Spain was downgraded Wednesday, the move was not major because it remains investment grade, Hogan said.
As long as a country's debt is investment grade -- which means it can still be used as collateral -- any downgrades are considered merely "warning shots," Hogan said. Unless a major economy's debt is downgraded to junk status, euro zone concern should remain contained, he added.
Earnings: Several big corporations reported their quarterly results before the opening bell Thursday.
"Four times a year we forget about everything but earnings," Hogan said. "This is the biggest day of the busiest week for earnings, and luckily the stream has been good."
Exxon Mobil (XOM, Fortune 500) reported a surge in earnings but still missed Wall Street expectations. The oil giant said it earned $1.33 per share in the first quarter, which fell short of the $1.41 per share forecast by a consensus of analyst opinions from Thomson Reuters. The stock closed 0.9% lower.
Aetna (AET, Fortune 500) managed to beat expectations when it reported operating earnings of 98 cents per share for the first quarter, compared to 96 cents in the prior year. Excluding certain charges, EPS was 77 cents, the insurer said. Analysts had forecast EPS of 68 cents.
Procter & Gamble (PG, Fortune 500) reported a profit for its third quarter that managed to edge above expectations. The company reported earnings of 83 cents per share, which was slightly lower than its year-earlier EPS of 84 cents. Analysts expected EPS of 82 cents.
Viacom (VIA) reported a surge in profit for the quarter, with diluted earnings of 40 cents per share. That was a 38% jump from 29 cents per share in the year-earlier quarter.
Economy: The Senate officially started debate of Wall Street reform late Wednesday, after three days of standoff and three failed votes to move forward. Republicans waived their right to block the bill, after it became clear Democrats had clinched the 60 votes needed to end the filibuster.
The government released its weekly report on initial claims for unemployment benefits before the opening bell Thursday. The number of first-time filers fell 11,000 to 448,000 in the week ended April 24. Analysts expected a drop to 445,000 new claims.
Also on Thursday morning, the House Financial Services committee held a hearing on potential implications of the Greece crisis.
Outlook: "Earnings never happen in a vacuum," said Hogan, the analyst at Jefferies. "This is a very busy reporting day, but by next week it will begin tapering off."
But Hogan noted economic data "generally have been positive lately," with good news outweighing the lingering bad.
He added: "What should we should think about when buying stocks is: What's this company's ability to earn money?"
World markets: European shares, including Britain's FTSE 100, the CAC 40 in France and Germany's DAX, ended higher.
But Asian markets continued to struggle. The Shanghai Composite tumbled 1.1% and the Hang Seng in Hong Kong fell 0.8%. Japan was closed for a holiday.
The dollar and commodities: The dollar declined 0.2% against the euro and 0.8% against the British pound, but rose 0.1% against the Japanese yen.
U.S. light crude oil for June delivery rose $1.95 to settle at $85.17 a barrel.
COMEX gold for June delivery fell $3 to end at $1,168.80 an ounce.
Bonds: Treasury prices inched up, with the yield on the benchmark 10-year note falling to 3.74%. Bond prices and yields move in opposite directions.
Market breadth was positive. On the New York Stock Exchange, winners topped losers almost four to one on volume of 1.4 billion shares. On the Nasdaq, advancers beat decliners three to one, on volume of 3 billion shares.
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