Stock indexes finished higher Wednesday following reports that China will come to the aid of Europe by investing in a financial rescue fund.
Agence France-Presse reported that China has agreed to invest in Europe's financial rescue fund, which will be used to support struggling countries and banks in the European Union. The Dow Jones industrial average jumped more than 100 points after the report came out in the early afternoon.
Stocks had been mixed for much of the day as investors weighed stronger earnings for Boeing and Corning with uncertainty about the outcome of a key meeting among European leaders.
Top European officials met in Brussels to discuss how to contain the region's debt crisis, which has festered for two years. One consideration is increasing the amount of a financial rescue fund, which Germany's parliament approved shortly before U.S. stock markets opened.
European officials announced a plan after the U.S. market closed that will require the region's banks to increase their levels of cash to better protect themselves from losses on the Greek bonds they hold. European governments have been pressing the banks to forgive significant amounts of the Greek government's debt.
"This is a total news- and rumor-driven market right now, and everyone's attention is focused on Europe," said Joe Bell, an analyst at Schaeffer's Investment Research.
The Dow Jones industrial average gained 162.42 points, or 1.4 percent, to finish at 11,869.04. Boeing Co. led the way. Its stock rose 4.5 percent after it reported a bigger profit for the latest quarter than analysts expected. It also raised its forecast for 2011 earnings.
The S&P 500 index rose 12.95, or 1.1 percent, to 1,242. The Nasdaq composite added 12.25, or 0.5 percent, to 2,650.67. Amazon.com Inc. slumped 12.7 percent after reporting a 73 percent drop in income. The retailer cited higher costs for expansion.
Strong economic reports also helped send stocks higher. Businesses ordered more heavy machinery and other long-lasting manufactured goods last month, after excluding aircraft orders, which can be volatile. That indicates businesses are still spending on equipment despite worries about a weak economy and Europe's debt problems. Sales of new homes rose in September after falling for four straight months. Lower home prices enticed buyers.
Five stocks rose for every one that fell on the New York Stock Exchange. Volume was slightly above average at 4.8 billion shares.