Stocks hold strong rally

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NEW YORK (CNNMoney) -- Hope for a real solution to Europe's ailing economy lifted U.S. stocks Thursday, after European Central Bank president Mario Draghi said the central bank would do whatever it takes to preserve the euro.

The Dow Jones industrial average rose 212 points, or 1.7%, the S&P 500 added 22 points, or 1.7% and the Nasdaq gained 39 points, or 1.4%.

Speaking at an investment conference in London,Draghi's comments suggest the ECB may start buying bonds again in an effort to help bring down skyrocketing borrowing costs.

"His comments were a bit of a game changer because they put the power back in the ECB to buy Spanish and Italian bonds," said Paul Zemsky, chief investment officer for ING Investment Management. "That caused a great turnaround in sentiment."

Analysts also said Draghi's comments signify that another long-term refinancing operation -- the ECB's cheap lending program aimed at preventing a credit crunch -- is back on the table.

But some analysts caution that this initial excitement may wear off, since Draghi didn't definitively outline new measures.

"This wasn't exactly a plan. It was a statement," said Kim Caughey Forest, senior equity analyst for Fort Pitt Capital Group. "It's more words, not a whole lot of action."

Europe's debt crisis remains a significant headwind for global markets, as investors have been growing increasingly convinced that Spain will need a sovereign bailout.

The country's borrowing costs remain unsustainably high, with Spain's 10-year yield hovering near 7%, after touching an all-time high of 7.75% Wednesday.

And with bailouts on the table for both Spain and Italy, investors are worried about the odds of a Greek exit. Citigroup analysts said there's a 90% chance that Greece will leave the euro currency in the next 12 to 18 months, since the new government hasn't been able to effectively put an austerity plan in place.

While Draghi was driving Thursday's rally, investors also had a fresh batch of corporate earnings to contend with, with the most anticipated numbers of the day coming after the close, when Facebook (FB) reports its first set of quarterly results as a public company.

The Of the 264 S&P 500 companies that have reported so far, about 66% have beat Wall Street's expectations, according to S&P Capital IQ. Analysts are currently expecting overall S&P 500 second-quarter earnings to decline 0.65%, which mark the end of ten-quarter winning streak.

World markets: European stocks closed sharply higher following Draghi's comments. Britain's FTSE 100 rose 1.4%, the DAX in Germany added 2.8% and France's CAC 40 surged 4%.

Asian markets ended mixed. The Shanghai Composite lost 0.5%, while the Hang Seng in Hong Kong ticked up 0.1% and Japan's Nikkei rose 0.9%.

Economy: The number of people filing for initial jobless claims fell 35,000 to 353,000 in the latest week, according to the Labor Department. Analysts were expecting a reading of 381,000 unemployment claims.

The Census Bureau reported that durable goods orders rose 1.6% in June, far better than the 0.3% increase economists were expecting.

Mortgage rates reached all-time lows this week for both 30-year and 15-year fixed-rate loans. The average rate for a 30-year mortgage fell to 3.49%, according to the weekly survey by Freddie Mac, and the 15-year dipped to 2.80%.

Not all news out of the housing market was positive though. Pending home sales slipped 1.4%, according to the National Association of Realtors. Economists had been expecting growth of 0.9%, according to Briefing.com.

Companies: Exxon Mobil's profit surged 49% to $15.9 billion during the second quarter. The massive number -- which would be by far the highest quarterly profit ever for any company -- included a special gain for divestitures. Shares of Exxon (XOM, Fortune 500) edged higher.

Zynga's (ZNGA) stock plunged 40% Thursday, a day after the online-gaming company badly missed earnings expectations. Shares of Facebook, which earns roughly 18% of its revenue from users who play Zynga games on its platform, were also down sharply in premarket trading.

Shares of Sprint Nextel (S, Fortune 500) rallied after the wireless carrier reported higher revenues for the second quarter.

Dow component 3M (MMM, Fortune 500) reported better-than-expected earnings, but the company's revenue fell short of estimates.

Shares of Whole Foods (WFM, Fortune 500) were up sharply after the organic grocery store chain's earnings surpassed Wall Street's expectations and the company raised its forecast for the year.

Currencies and commodities: The euro popped in response to Draghi's comments, rising more that 1% versus the dollar. The greenback was down versus the British pound, but up against the Japanese yen.

Oil for September delivery rose 43 cents to $89.40 a barrel.

Gold futures for August delivery gained $7.00 to $1,615.10 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 1.43% from 1.41% late Wednesday.