Investors have been worried that recent data indicate a slowing economy, which would cut into profit growth at some of the nation's biggest companies. But, results so far have shown that earnings are, for the most part, coming in within expectations.
Citigroup, the nation's biggest bank, encouraged investors because there were no surprises in its report. The New York-based bank posted a $5.1 billion loss during the first quarter because of poor bets on mortgages and leveraged loans - still significantly less than the $10 billion loss suffered in the previous quarter.
Late Thursday, Google posted first-quarter earnings and revenue growth that easily surpassed analysts' predictions. There had been some speculation on Wall Street that the search engine would turn in sluggish results because of slower online advertising revenue.
In the first hour of trading, the Dow Jones industrial average jumped 175.02, or 1.39 percent, to 12,795.54.
Broader stock indicators also rose. The Standard & Poor's 500 index increased 19.48, or 1.43 percent, to 1,385.04, and the Nasdaq composite index rose 43.61, or 1.86 percent, 2,385.44.
Oil prices slipped below $114 a barrel amid thin trading volumes as the U.S. dollar held its ground against the euro. Light, sweet crude fell $1.17 to $113.69 per barrel on the New York Mercantile Exchange.
Gold prices rose, and the dollar was mixed against other major currencies.
Investors will also be monitoring speeches from several Federal Reserve officials, including Richmond Fed President Jeffrey Lacker. Philadelphia Fed President Charles Plosser said in prepared remarks that it is reasonable to worry about rising prices.
After posting the stronger-than-expected results, Citigroup rose $1.32, or 5.5 percent, to $25.35, while Google surged $80.53, or 18 percent, to $530.07.
In other corporate news, Xerox Corp. said a litigation charge left it with a loss of $244 million in the first quarter. But, its results excluding the one-time item matched Wall Street expectations.
Heavy equipment maker Caterpillar Inc. said demand for its global mining and energy products pushed its first-quarter earnings up 13 percent, and affirmed 2008 guidance. The results surpassed Wall Street projections. Caterpillar rose $3.38, or 4.3 percent, to $81.97.
Schlumberger Ltd. rose $1.80 to $97.10 after reporting its first-quarter net income rose nearly 14 percent from a year ago.
Advancing issues outnumbered decliners by about 4 to 1 on the New York Stock Exchange, where volume came to 375.4 million shares.
The Russell 2000 index of smaller companies rose 8.98, or 1.27 percent, to 717.04.
Overseas, Japan's Nikkei stock average rose 0.58 percent. Britain's FTSE 100 added 1.25 percent, Germany's DAX index rose 2.26 percent, and France's CAC-40 rose 1.96 percent.