"The market looks like it's in its Santa Claus suit this morning as it is happy and jolly, even with the larger-than-expected loss from Bear Stearns," said Elliot Spar, analyst at Stifel Nicolaus.
The Dow Jones Industrial Average gained 57 points to 13,268, receiving a lift from its technology components -- IBM and Microsoft -- and its financial components, such as AIG and J.P. Morgan Chase .
Financials saw early strength, having been battered over the past few months as a meltdown in the U.S. mortgage market turned into a full-blown global credit crisis.
Bear Stearns gained 2.3% after posting its first-ever quarterly loss as the company's mortgage-related write-down grew to $1.9 billion.
The S&P 500 index gained 8.2 points to 1,461, while the Nasdaq Composite rose 26.2 points to 2,627.
Leading tech shares, Oracle jumped 8% after reporting a 35% rise in fiscal second-quarter profit, topping Wall Street's expectations.
NetSuite , of which Oracle CEO Larry Ellison held 61% at the end of November, priced its IPO at $26, above the target range of $19 and $22. The company initially pitched its IPO at $13 to $16, then raised its range to between $16 and $19.
Investors also bought shares of Research in Motion Ltd. , which reports earnings after the close.
FedEx fell 0.5% after it reported a 6% profit fall, hit by rising fuel costs and weakness in the U.S. economy, and issued murky third-quarter guidance.
But the market also received a boost after the government said the U.S. economy grew at a 4.9% annual pace in the third quarter, the fastest growth in four years. The 4.9% final estimate was unrevised from the previous estimate and was in line with expectations.
The core personal consumption expenditure price index -- the Federal Reserve's favored gauge -- rose at a 2% annual rate in the quarter, not the 1.8% previously reported
Seasonally adjusted initial jobless claims rose 12,000 to 346,000 in the week ended Dec. 15, the government also reported.
Still to come will be the November leading economic indicators from the Conference Board and the December Philly Fed survey.
Also, the Federal Reserve will hold its second auction of $20 billion in 28-day funds.
Overseas, the People's Bank of China increased its interest rate to 7.47% from 7.29% to combat inflation, while the Bank of Japan held interest rates at 0.5% and said downside risks to the Japanese economy are growing.
The dollar rose against the euro but fell a touch vs. the Japanese yen. Crude-oil futures fell 12 cents to $91.12 a barrel.
The Nikkei 225 ended virtually flat in Tokyo. In London, the FTSE 100 rose 0.6%.
U.S. stocks on Wednesday ended mixed after a volatile day that featured mixed signals on the credit crisis, with a potential downgrade of bond insurers dulling a mostly positive auction of funds to banks by the Federal Reserve. The Dow industrials fell 25 points, the S&P 500 slipped nearly 2 points while the Nasdaq Composite rose nearly 5 points.
Accenture rose 7.8% after the consulting group posted a 34% profit rise and upped its 2008 earnings outlook. Rival Capgemini rose in Paris trading.
Nike rose 4% after the world's biggest sneaker maker reported a 10% profit rise, topping analyst forecasts.
Ruth's Chris Steak House dropped 7.6% after blaming a weaker economy for a lower of its earnings outlook.
On the M&A front, Eaton Corp. said it's buying two firms valued at as much as $2.8 billion to boost its electrical business.
General Motors may sell its medium-duty truck unit to Navistar International, The Wall Street Journal repored.
U.K. platinum specialist Johnson Matthey rose after a report in the Financial Times suggested that Dow Chemical may make an offer.
By Nick Godt