Analysts said traders also were somewhat relieved to see General Electric meet earnings estimates. Unlike Yahoo, whose shares slid yesterday when the company didn't beat estimates, investors did not have inflated hopes for GE, they said.

"GE is being viewed as a positive ­ it's one of the companies that can't miss, and it didn't," said Brian Pears, head equity trader at Victory Capital Management. Pears said he thought investors' expectations were too high yesterday but seemed "more reasonable today."

The Dow Jones industrial average closed up 83.55, or 0.9 percent, at 9,119.59, according to preliminary calculations. The rise followed a two-day loss of 187 points.

The broader market also finished higher. The Nasdaq composite index advanced 18.04, or 1.1 percent, to 1,733.90. The Standard & Poor's 500 index rose 9.43, or 1 percent, to 998.13.

For the week, the three main gauges posted a second consecutive week of gains, with the Dow up 0.5 percent, the Nasdaq higher 4.2 percent, and the S&P up 1.3 percent.

GE, a Dow component, slipped 7 cents to $28.12 after the company reported quarterly earnings that were down but in line with Wall Street's estimates. It also narrowed its full-year forecast, a move that was widely expected.

Investors, meanwhile, appeared to shrug off a pair of mixed economic reports.

The Labor Department reported that its producer price index rose 0.5 percent in June, more than the 0.3 percent economists were predicting. Excluding energy and food prices, "core" wholesale prices slipped 0.1 percent, stirring some fears of deflation since analysts were expecting a small gain.

And the Commerce Department said the U.S. trade deficit rose 0.5 percent to $41.84 billion in May even though American exports posted their best gain since January. The deficit is on track to set an all-time high this year.

While stocks have rallied in recent months on expectations of an economic rebound, analysts say investors are counting on the second-quarter earnings season to provide more concrete evidence of improvement. Until then, gains will likely be limited, they said.

Subodh Kumar, chief investment strategist for CIBC World Markets, said investors have been willing to disregard mixed reports on the economy because they expect quarterly earnings to be good.

"I expect companies in the aggregate to beat expectations," he said. "Even if they just meet, the market's reaction will be that we are in a period of earnings recovery. ... There will be more satisfaction than disappointment."

Dow component Home Depot advanced 74 cents to $33.17 after Banc of America Securities raised the home improvement chain's stock rating to "buy" from "neutral."

Intel, another Dow component, gained 43 cents to $23.34 after Thomas Weisel upgraded the tech company's stock rating to "outperform" from "peer perform."