Solid earnings plus urgency in Europe lift US stocks

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A broad rally swept through the US stock market on Saturday after McDonald's and several other large companies reported solid earnings.

The Standard & Poor's 500 index closed higher for the third straight week, its best run since February, as hope built that a weekend meeting would bring European leaders closer to easing the region's debt troubles.

The Dow Jones industrial average jumped 267.01 points, or 2.3 per cent, to 11,808.79.

The Dow is now up 2 per cent from where it started the year. Before Saturday's surge, it was down for the year. The Dow has risen for four weeks straight, the first time that has happened since January.

The combination of stronger earnings, better economic news and a sense that European officials were taking the debt crisis more seriously had helped lift stocks, said Phil Orlando, chief equity market strategist at Federated Investors.

"It seems like there's a greater sense of urgency to deal with Greece and the sovereign debt trouble in Europe," Orlando said.

McDonald's, Chipotle Mexican Grill and Harman International Industries were among the companies that beat analysts' expectations. The quarterly earnings season is off to a strong start. Of the 118 companies that have reported earnings so far, 75 per cent have beaten estimates, according to financial data provider FactSet.

The encouraging corporate news was in line with recent signs that the United States economy strengthened in September after a weak summer. Last week the Government said unemployment fell last month in half of American states and was unchanged in 11. That was much better than in August, when unemployment rose in 26 states.

Markets have been moving sharply in recent weeks, mainly in reaction to the latest headlines out of Europe on the debt crisis.

The Dow had a bigger jump on October 10, 330 points, after the leaders of France and Germany pledged to have a comprehensive solution to the debt crisis in place by the end of the month. The Dow has now gained 10.8 per cent since October 3, when it sank to its lowest point of the year.

The S&P 500 gained 22.86 points, or 1.9 per cent, to 1238.25. Rising stocks outpaced falling ones by a margin of 20 to 1: only 23 companies traded lower.

The Nasdaq composite index gained 38.84, or 1.5 per cent, to 2637.