Wall Street extends rally into February

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NEW YORK (CNNMoney) -- U.S. stocks rose Wednesday, but closed off the highs of the day, on a combination of improved economic data and easing concerns about Europe's debt crisis.

The Dow Jones industrial average (INDU) rose 83 points, or 0.6%, to end at 12,716. The S&P 500 (SPX) gained 12 points, or 0.9%, to 1,324. The Nasdaq rose 34 points, or 1.2%, to 2,848.

Wednesday's advance extends last month's strong gains. It was the best January for the S&P and Dow since 1997 and since 2001 for the Nasdaq.

Financial stocks were among the best performers, with shares of Citigroup (C, Fortune 500), Morgan Stanley (MS, Fortune 500) and Goldman Sachs (GS, Fortune 500) up between 2% and 4%.

Traders said bank stocks were supported by expectations that a highly anticipated IPO filing by Facebook could signal a rebound in capital markets activity.

Meanwhile, the technology sector was supported by strong quarterly results from chipmaker Broadcom and data storage company Seagate.

A key index of U.S. manufacturing activity came in slightly below expectations, but still signaled expansion in the sector. Earlier reports showed manufacturing activity picked up in China, Germany, France and the United Kingdom.

"Reports out of China and the U.S. today are clearly more positive," said Art Hogan, managing director at Lazard Capital Markets. "The economic data today is one of the biggest drivers."

Meanwhile, investors welcomed signs that talks in Greece are progressing on a second bailout and a write down of the nation's private-sector debt load. In the bond market, yields on Portuguese government bonds eased after the nation drew strong demand for an auction of short-term bills.

"As long as Europe doesn't implode, it seems like the market wants to go higher," said David Rovelli, managing director of U.S. equity trading at Canaccord Adams.

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The other big news Wednesday looks likely to be Facebook's long-awaited IPO filing. According to reports from outlets including the New York Times and CNBC, Facebook is seeking to raise up to $5 billion in its offering.

If that number is correct, Facebook would by far be the largest global IPO by an Internet-focused company, according to data from Dealogic. Some experts have suggested that the social network could be valued between $75 billion and $100 billion once it starts trading, which will likely happen a few months after its initial filing.

U.S. stocks traded in a narrow range Tuesday, after worse-than-expected U.S. housing and manufacturing data tempered the modest enthusiasm over Europe's progress on a new pact aimed at promoting fiscal discipline.

Economy: The ISM, a purchasing managers group, said its manufacturing index for January rose to 54.1 from 53.1 in December. The index was expected to stand at 54.5, according to economists surveyed by Briefing.com.

Meanwhile, construction spending jumped 1.5% in December versus the month prior, the U.S. government said. Economists had expected an increase of 0.4%.

A report from payroll processor ADP showed that the private sector added 170,000 jobs in January. The report was expected to show that 200,000 jobs were added last month,down from the revised gains of 292,000 the month prior.

Separately, the Obama administration detailed its latest plan to help millions of homeowners refinance their mortgages to today's historically-low rates.

Companies: NYSE Euronext (NYX, Fortune 500) announced early Wednesday that it will terminate its merger agreement with Deutsche Boerse. The proposed $10 billion takeover of the operator of the New York Stock Exchange would have created the world's largest exchange, but was quashed by European officials.

Pfizer (PFE, Fortune 500) is recalling 1 million packs of birth control pills, after the pharmaceutical giant discovered that some blister packs may contain an inexact count of inert or active ingredient tablets, and that the tablets may be out of sequence. Birth control pills typically have to be taken in sequence to be effective.

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Shares of Tupperware (TUP) fell after the company reported earnings per share that fell 3 cents short of forecasts. Hershey's (HSY, Fortune 500) shares edged higher after the chocolate maker reported earnings and sales in line with estimates.

Whirlpool (WHR, Fortune 500) shares rose 17% after the company beat Wall Street expectations on both earnings and revenue.

Broadcom's (BRCM, Fortune 500) stock also got a boost after the semiconductor firm reported slightly better results and issued a brighter outlook.

Shares of Seagate Technology (STX) surged 21% after the data storage company reported strong quarterly sales and earnings.

AOL (AOL) reported fourth-quarter earnings of 23 cents per share, down 66% compared to last year. But the better-than-expected results boosted the Internet company's stock 10%.

IAC (IACI) shares rallied after the parent of more than 50 Internet businesses reported strong quarterly results.

Shares of online retailer Amazon (AMZN, Fortune 500) plunged after the company reported quarterly revenue late Tuesday that missed analysts' estimates. But the company beat profit expectations.

Two years after its bankruptcy and U.S. bailout, Chrysler Group posted 2011 net income of $183 million, its first annual profit since 2005.

World markets: European stocks closed higher. Britain's FTSE 100 (UKX) added 1.8%, the DAX (DAX) in Germany gained 2.5% and France's CAC 40 (CAC40) rose 2%.

Asian markets ended most lower. The Shanghai Composite (SHCOMP) fell 1.1%, the Hang Seng (HSI) in Hong Kong dropped 0.3% and Japan's Nikkei (N225) was flat.

Currencies and commodities: The dollar fell against the euro, the Japanese yen and the British pound.

Oil for March delivery fell 87 cents to end at $97.61 a barrel.

Gold futures for April delivery rose $9.10 to close at $1,749.50 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 1.83% from 1.80% late Tuesday.