Tech earnings lift stocks

NEW YORK (CNNMoney) -- U.S. stocks posted solid gains on Thursday, as positive earnings in the technology sector offset ongoing concerns related to Japan and spreading unrest in the Middle East.

The Dow Jones industrial average (INDU) gained 85 points, or 0.5%, to 12,171; the S&P 500 index (SPX) edged up 12.1 points, or 0.9%, to 1,310; and the Nasdaq Composite (COMP) jumped 38 points, or 1.4%, to 2736.

The biggest gainer in the S&P 500 was Red Hat (RHT) -- a major Linux vendor -- with shares surging 18%. The company reported stellar earnings and raised its forecast.

Semiconductor maker Micron Technologies (MU, Fortune 500) also helped lift the tech sector, after it reported results well ahead of estimates. Shares were up 8%. Chip maker Nvidia (NVDA) followed Micron's lead, rising 8% as well.

Investors cheered the news out of the tech sector, noting it could be a positive sign for the upcoming earnings season starting in two weeks.

"This market doesn't want to sell heading into what is going to be a pretty good earnings season," said Marc Pado, chief market strategist with Cantor Fitzgerald. "

Despite positive corporate earnings, investor concerns over what's going on overseas remain at the forefront.

As the civil war in Libya rages on, uprisings and violence are spreading across the Middle East.

"Without being cynical about it, I don't think the market really expected this week to produce a gold-plated solution to all of these problems," said Philip Isherwood, equities strategist at Evolution Securities.

Here in the U.S., there are some signs investors' fears have eased. The VIX (VIX), commonly known as Wall Street's fear gauge, has fallen nearly 30% in the past five days.

"With bond yields too low and geopolitical unrest abroad, U.S. stocks have almost become a safe-haven play," said Nick Atkeson with Delta Investment Management.

Despite the gains, volume was light in Thursday's session with 4 billion shares changing hands at the New York Stock Exchange. An average mid-week session is usually closer to 5 billion shares.

U.S. stocks finished higher Wednesday, thanks to a late-day advance, as investors shrugged off jitters about turmoil in the Middle East and Japan's nuclear issues.

Companies: Walgreen Co. (WAG, Fortune 500) said early Thursday it will buy online retailer Drugstore.com (DSCM) for $409 million. Shares of Drugstore.com soared more than 113% on the news.

Best Buy (BBY, Fortune 500) shares fell 5% despite the company reporting earnings that squeaked past analyst estimates.

Shares of Oracle (ORCL, Fortune 500) were relatively flat in after-market trading following the software company's results that were mostly in line with expectations. Oracle said it earned 54 cents a share versus the 50 cents analysts were looking for. The company also raised its quarterly dividend to 6 cents a share.

Research in Motion (RIMM) shares plunged 8% in after-market action after the BlackBerry maker gave a weak first-quarter guidance.. RIMM's earnings were $1.78 per share versus the $1.75 a share analysts had expected.

Economy: Before the start of trade, the government reported weekly filings for first-time unemployment benefits that were roughly in line with expectations.

The Commerce Department reported durable goods orders fell 0.9% in February, compared with a 3.6% rise posted in January. Economists were expecting a 1.1% rise in February.

World markets: European stocks closed higher, shrugging off downbeat reports from Portugal and Spain. Britain's FTSE 100 added 1.5%, the DAX in Germany gained 1.9% and France's CAC 40 rose 1.4%.

Portugal's Prime Minister Jose Socrates resigned early Wednesday, after parliament rejected his administration's latest proposal for austerity measures, according to published reports. The government's plan was aimed at avoiding a bailout.

Meanwhile, ratings agency Moody's downgraded its debt ratings of 30 Spanish banks, saying the outlook remains weak.

Asian markets ended mixed. The Shanghai Composite fell less than 0.1%, the Hang Seng in Hong Kong closed 0.4% higher and Japan's Nikkei fell 0.2%.

Currencies and commodities: The dollar lost ground versus the euro, but it gained against the Japanese yen and the British pound.

Oil for May delivery fell 59 cents, or 0.6%, to $105.17 a barrel.

Gold futures for April delivery fell $3.10, or 0.2%, to $1,439.90 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 3.39% from 3.26% late Wednesday.