Stocks snap five-day losing streak

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NEW YORK (CNNMoney) -- U.S. stocks closed higher Wednesday, bouncing back after a string of five down days, as concerns about Europe eased and hopes for a better-than-expected earnings season rose.

The Dow Jones industrial average (INDU) gained 89 points, or 0.7%, to end at 12,805. The S&P 500 (SPX) added 10 points, or 0.7%, to 1,369. The Nasdaq (COMP) rose 25 points, or 0.8%, to 3,016.

Alcoa (AA, Fortune 500) led gainers on the Dow after the aluminum producer reported a surprise first-quarter profit late Tuesday, lifting hopes for corporate earnings as the quarterly reporting period gets underway.

Stocks in Europe rallied as investors welcomed declining yields on Spanish and Italian bonds. The yield on the 10-year Spanish bond briefly topped 6% before retreating to 5.88%; Italian 10-year yields fell to 5.51% from 5.69%.

"Europe has come back today, and we've followed it," said Ben Schwartz, chief market strategist at Lightspeed Financial. Despite the rebound, Schwartz said trading volumes were low and the market remains "vulnerable."

It's been a rough stretch lately for U.S. stocks, with the major indexes down more than 3% this month.

But stocks are still priced at attractive levels, and with yields on many U.S. Treasuries trading below inflation, investors have few other alternatives, said Tim Courtney, chief investment officer at Exencial Wealth Advisors.

"There's no good place to park the money that's exited the market over the last few days, so its coming back in," he said.

Meanwhile, investors will be looking for reason to reverse the recent losses as they shift their focus to the upcoming batch of corporate results.

Google (GOOG, Fortune 500) will report its quarterly results after the closing bell Thursday, while JPMorgan's (JPM, Fortune 500) will come Friday morning.

Overall, the companies in the S&P 500 are expected to report earnings growth of less than 1% for the first quarter, according to S&P Capital IQ.

"Earnings may not be growing at the same same clip," said Courtney. "But they are still coming in relatively strong."

Economy: Prior to the opening bell, the Bureau of Labor Statistics reported that U.S. import prices advanced 1.3% in March, while exports rose 0.8%.

The Federal Reserve released the April edition of its Beige Book, a summary of outlooks from the 12 district banks across the country. The Fed said economic activity continued to expand at a "modest to moderate pace" from mid-February through late March.

Companies: U.S.-listed shares of Nokia (NOK) fell 16% after the company lowered its first-quarter outlook. Nokia cited "competitive industry dynamics," the macroeconomic environment, and gross margin declines in its smart devices unit, in explaining the revision.

The U.S. Department of Justice brought a lawsuit against Apple (AAPL, Fortune 500) and several publishing companies over a scheme to fix e-book prices.

The suit likely stems from the 2010 release of the iPad, when Apple reached an agreement with five publishers to release books on its then-new iBookstore.

Shares of residential construction companies rose after a Wells Fargo (WFC, Fortune 500) survey of homebuilders' sales expectations rose to a new high. Pulte Home (PHM, Fortune 500), Lennar Corp. (LEN) and DR Horton (DHI, Fortune 500) all rallied.

World markets: European markets closed higher. Britain's FTSE-100 (UKX) gained 0.7%, the DAX (DAX) in Germany climbed 1%, and France's CAC 40 (CAC40) rose 0.6%.

In Asia, Japan's Nikkei (N225) dropped by 0.8%, while Hong Kong's Hang Seng (HSI) slipped 1.1% and the Shanghai Composite (SHCOMP) gained 0.1%.

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

Oil for May delivery climbed $1.68 to settle at $102.70 a barrel.

Gold futures for April delivery fell 5 cents to end at $1,659 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 2.03% from 1.99% late Tuesday.