NEW YORK – U.S. stocks jumped Friday on news that the unemployment rate dropped to the lowest level in three years.

Before the market opened, the Labor Department said companies hired 243,000 employees in January. That’s the strongest job growth in nine months. The increase in hiring pushed the unemployment rate down to 8.3 percent.

The surprising data gave stocks a jolt. The Dow Jones industrial average shot up 161 points in early trading before drifting lower. “In this economy only one variable matters right now and that variable is employment,” said Lawrence Creatura, an equity portfolio manager at Federated Investors.

“This report was great news. It was beyond all expectations, literally. The number was higher than even the highest forecast.”

The Standard & Poor’s 500 index added 16 points to 1,342, shortly after noon Eastern time. That’s a gain of 1.2 percent. The S&P 500 is on track to rise for the fifth straight week, the longest weekly winning streak since January of 2011. It’s up 6.7 percent so far this year.

More evidence that the economy is gaining strength followed the jobs report. A trade group said the service industry expanded at the fastest pace since last February. The government also said factory orders rose 1.1 percent in December, supported by a rebound in orders for heavy machinery.

In other trading, the Dow Jones industrial average jumped 148 points to 12,847, a rise of 1.1 percent. Bank of America Corp. led the Dow, rising 4.2 percent. Only two stocks, Merck and Procter & Gamble, were lower.

The Nasdaq composite added 42 points, or 1.5 percent, to 2,901.

Treasury prices fell lifting the yield on the 10-year Treasury to 1.93 percent. When bond prices fall, yields rise. The benchmark 10-year rate had traded below 1.79 percent earlier this week as traders bought U.S. Treasurys on renewed concern over Europe’s ongoing debt crisis.

The U.S. jobs figures helped markets in Europe rally on Friday despite further evidence that the 17-country eurozone is heading for recession. Germany’s DAX rose 1.7 percent and France’s CAC-40 gained 1.5 percent.

Among companies whose stocks are making large moves:

• Genworth Financial soared 14 percent, the best gain in the S&P 500. The insurance company reported late Thursday that it swung to a profit in the most recent quarter, helped by gains in sales of life insurance.

• Weyerhaeuser gained 3.3 percent after reporting better quarterly earnings than analysts’ forecasts. The timber and real estate company’s earnings still sank 62 percent.

• Video game maker Take-Two Interactive Software Inc. jumped 4 percent. The company reported a 65 percent drop in quarterly profits after the market closed Thursday, but Wall Street’s analysts expected much worse.

NEW YORK – U.S. stocks jumped sharply in morning trading on news that the unemployment rate dropped to the lowest level in 2 years. The Dow Jones industrial average gained more than 150 points.

Before the market opened Friday, the Labor Department said companies hired 243,000 employees in January, the strongest job growth in nine months. The increase in hiring pushed the unemployment rate down to 8.3 percent.

More evidence that the economy is gaining strength followed the jobs report. The government said factory orders rose 1.1 percent in December, supported by a rebound in orders for heavy machinery. A trade group said the service industry expanded at the fastest pace since last February.

The Standard & Poor’s 500 index added 16 points, or 1.3 percent, to 1,342, less than an hour after the opening bell. The S&P 500 is on track to rise for the fifth straight week, the longest weekly winning streak since January of 2011. It’s gained 6.5 percent so far this year.

The Dow Jones industrial average jumped 158 points to 12,864. That’s a gain of 1.3 percent. Bank of America Corp. led the Dow, rising 5.6 percent.

The Nasdaq composite added 39 points, or 1.3 percent, to 2,898.

The U.S. jobs figures helped stocks and the euro rally on Friday despite further evidence that the 17-country eurozone is heading for recession. Germany’s DAX rose 1.3 percent and France’s CAC-40 gained 0.8 percent.

Among companies whose stocks are making large moves Friday:

• Weyerhaeuser gained 4 percent after reporting better quarterly earnings than analysts’ forecasts. The timber and real estate company’s earnings still sank 62 percent.

• Video game maker Take-Two Interactive Software Inc. jumped 5 percent. The company reported a 65 percent drop in quarterly profits after the market closed Thursday, but Wall Street’s analysts expected much worse.

NEW YORK (Reuters) – Stock index futures pointed to a sharply higher open on Friday after the government reported the U.S. economy created jobs at the fastest pace in nine months, infusing optimism into markets.

Nonfarm payrolls jumped by 243,000 in January, the Labor Department said, the most since April and far exceeding economists' expectations for a gain of 150,000. The unemployment rate dropped to a near three-year low of 8.3 percent.

"All I can say is 'wow,'" said Matt McCormick, a money manager at Cincinnati-based Bahl & Gaynor Inc. "This is the kind of number people wouldn't have believed until we saw it."

S&P 500 futures jumped 12 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures added 109 points, and Nasdaq 100 futures rose 23.25 points.

Recent data suggesting a slow but steady economic recovery have helped fuel a rally in stocks, with the S&P 500 up 5.4 percent so far this year and over 23 percent since lows in October. Many analysts had worried that a weak report could spark a pullback.

Tyson Foods Inc (TSN.N) rose 3.4 percent to $19.26 in premarket trading after quarterly earnings beat expectations.

Aon Corp (AON.N) also reported a higher-than-expected profit that narrowly beat estimates. Shares edged 0.5 percent higher to $49.60.

Earnings this season have been mixed, with fewer companies beating expectations than in recent quarters. However many technology names, including Qualcomm Inc (QCOM.O) and Apple Inc (AAPL.O), have posted blowout quarters.

In other economic news, December factory orders are seen rising 1.5 percent, while the Institute for Supply Management's January non-manufacturing index is expected to come in at 53.0, a repeat of the revised December number. Both reports are due at 10 a.m. EST.

Investors largely took a wait-and-see approach on Thursday as U.S. stocks ended little changed ahead of the payrolls report.

(Reporting by Ryan Vlastelica; editing by Jeffrey Benkoe)

SHANGHAI – Asian stocks were mostly higher Wednesday despite a lackluster day on Wall Street, as improved manufacturing data from China offered reassurance over its economic slowdown.

Tokyo’s Nikkei 225 rose 0.3 percent to 8,826.79, helped by news of rebounding industrial production and household spending. Hong Kong’s Hang Seng gained 0.2 percent to 20,424.24 and Seoul’s Kospi added 0.3 percent, to 1,961.77.

An unexpected drop in U.S. consumer confidence dragged stocks down on Wall Street, where the Dow Jones industrial average finished down 20.81 points, or 0.2 percent, at 12,632.91. The S&P slipped 0.60 point to 1,312.41 while the Nasdaq composite index rose 1.90 points to close at 2,813.84.

But overall the U.S. markets had their best start for stocks in 15 years, thanks to a modest improvement in the economy. Sentiment was further buoyed by hopes of progress in Europe after leaders there agreed on the broad outlines of a deal to tie the countries that use the euro closer together and on hopes that Greece is close to a debt-reduction deal with private creditors.

China’s benchmark Shanghai Composite Index climbed 0.1 percent to 2,294.67 following the release of a key manufacturing index that showed conditions improving in January for a second straight month, though only by a modest margin.

Peng Yunliang, an analyst based in Shanghai, said strong demand for food and beverages kept manufacturing demand better than expected.

“I expect the market will keep on rising in the short term,” he said.

Shares in Singapore and Australia weakened, while Taiwan, Indonesia and New Zealand gained ground.

European markets rebounded Tuesday amid hopes for progress on handling Greece’s debt. Under a tentative agreement, investors holding 206 billion euros ($272 billion) in Greek bonds would exchange them for bonds with half the face value. The replacement bonds would have a longer maturity and pay a lower interest rate. When the bonds mature, Greece would have to pay its bondholders only 103 billion euros.

France’s CAC-40 gained 1 percent while Britain’s FTSE 100 and Germany’s DAX both gained 0.2 percent.

Benchmark oil for March delivery gained 31 cents to $98.79 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 30 cents to end at $98.48 per barrel in New York on Tuesday.

In currencies, the euro fell to $1.3064 from $1.3084 late Tuesday in New York. The dollar fell to 76.15 yen from 76.20 yen.

NEW YORK (Reuters) – Stocks rising, bulls rampant are motifs you might pick if designing a coat of arms for Wall Street at the moment. But the motto should read: Caveat emptor. Yes, buyer beware.

The S&P 500, a broad measure of the market valuation of the biggest U.S. publicly traded companies, is up 20 percent from its October closing low. It keeps climbing on a mixed bag of fourth-quarter earnings, improving U.S. economic data, and easing credit conditions in Europe. It now stands at its highest level since early last August.

We have already seen what is probably the first upgrade of a target level for the index this year courtesy of Credit Suisse.

The CBOE Volatility Index, or VIX (.VIX), a measure of what investors are paying to protect themselves against the risk of losses, is at its lowest level in seven months.

So it raises the question: Is this another Jackson Hole moment for risk assets?

At the Wyoming retreat in late August 2010, Federal Reserve Chairman Ben Bernanke sparked what was the second major leg of the stock market's rally from bear market lows the year before.

Is this the start of the third?

FRIENDLIER FOOTING FOR STOCKS

For Andrew Garthwaite, the Credit Suisse analyst behind the firm's more bullish stance, there are big changes afoot that are creating a more benign environment for stocks.

First, the European Central Bank's long-term repo operations are succeeding in reducing stresses in the region's banking sector. This week, three-month dollar Libor, the cost at which European banks can borrow dollars, marked its ninth straight day of declines.

Analysts say heavy cash infusions from the European Central Bank since late last year and signs of revived willingness to lend by U.S. investors in the new year show the banking system is flush with cash.

The U.S. economy is looking stronger than thought, with notable movement in the long-dormant housing market, where sales of previously owned homes just rose to an 11-month high.

In China, the engine of global growth whose manufacturing sector has been showing worrying signs of slowing, policymakers have demonstrated willingness to make conditions easier by lowering banks' reserve requirements.

"As we approach our year-end target two weeks into January, we have to ask ourselves the following questions: What has changed? Will equities rally further?," Garthwaite said in a research note.

His answer to the second question was yes. Credit Suisse raised its year-end S&P 500 target to 1,400 from 1,340. Critically, however, the firm did not overweight equities, saying the risks of a more severe recession in Europe and a slowdown stateside were still there.

HEALTHY DOSE OF SKEPTICISM

For Nicholas Colas, chief market strategist at the ConvergEx Group in New York, the rally remains largely untested. More scary headlines from Europe or any signs that the global economy is deteriorating could spark a sharp reversal.

Heading into the weekend, Greece was closing in on an initial deal with private bondholders that would prevent it from tumbling into a chaotic default. Creditors faced to 70 percent of the loans they have given to Athens.

"It's a confidence-based rally with the overhang of several still meaningful events to come," Colas said. "It is all well and good to say that the Greek default is well understood, but we haven't gone through it."

Outside the United States, there are mixed signals from the global economy, too.

China's factory activity likely fell for a third successive month in January. The HSBC flash manufacturing purchasing managers index (PMI), the earliest indicator of China's industrial activity, stood below 50.

The Baltic Exchange's main sea freight index (.BADI), which tracks rates to ship dry commodities and can be a useful gauge of economic activity, fell to its lowest level in three years on Friday on a growing surplus of vessels and a slump in cargo demand.

That is at odds with the work of RBC technical analyst Robert Sluymer. He sees growing outperformance of industrial metal copper to the safe-haven bet of gold as well as an upturn in a basket of Asian currencies as a bullish sign for the economy.

The caution generated by the mismatches in the various data points is perhaps reflected in by U.S. interest rates.

The yield on the U.S. 10-year Treasury note has hovered at 2 percent or just below for the last month despite a brief spike in mid-December. That suggests bondholders are not eagerly embracing the improving economy thesis for the moment.

"There is still a lot of skepticism about recovery, about moving into risk assets, about a lot of things," Colas said.

"If you really wanted to believe this about incrementally economic certainty and expansion … I would have thought you'd expect to see the 10-year back over 2 percent."

EARNINGS, DATA AND THE FED

A blitz of earnings and economic indicators next week will provide an important gauge of the economy's health.

What's more, the Federal Reserve's policymakers will convene their first meeting of the year with a two-day session that starts on Tuesday. The Federal Open Market Committee, the Fed's rate-setting panel, will release its policy statement on Wednesday. No fireworks are expected, but a decision to release individual policymakers' interest-rate forecasts could alter expectations for rates on the margins.

Monday will start one of the two most hectic weeks of the earnings season. Marquee names due to report earnings on Monday include Texas Instruments Inc (TXN.O) and Halliburton Co (HAL.N), followed by Apple Inc (AAPL.O), DuPont (DD.N), Johnson & Johnson (JNJ.N), McDonald's Corp (MCD.N), Verizon Communications (VZ.N) and Yahoo! Inc (YHOO.O) – all on Tuesday.

Boeing (BA.N), ConocoPhillips (COP.N) and United Technologies (UTX.N) are set to release results on Wednesday. Thursday's earnings line-up includes 3M Co (MMM.N), AT&T Inc (T.N), Starbucks (SBUX.O) and Time Warner Cable Inc (TWC.N). On Friday, earnings are expected from Chevron Corp (CVX.N), Honeywell International (HON.N) and Procter & Gamble Co. (PG.N)

In the coming week, economic indicators to watch will include December pending home sales data, a key measure of the housing market, on Wednesday as well as the latest weekly claims for jobless benefits on Thursday. December durable goods orders and new home sales for December also will be released on Thursday.

The week will wrap up with the Commerce Department's first look at fourth-quarter U.S. gross domestic product and the final reading for January on consumer sentiment from Reuters and the University of Michigan.

In terms of companies beating expectations, fourth-quarter earnings season has not been as good as previous ones. Of the approximately 70 companies in the S&P 500 that have reported earnings so far, 60 percent have exceeded analysts' estimates, according to Thomson Reuters data.

In comparison, in the third quarter at this early point in the reporting cycle, 68 percent had beaten Wall Street's forecasts – well below the 78 percent in that category in the second quarter, Thomson Reuters data showed.

There have also been some high-profile misses on both revenue and earnings.

General Electric Co's (GE.N) fourth-quarter revenue fell short of Wall Street's expectations, with Europe's weakening economy and weak appliance sales the main culprits.

On the other hand, banks' earnings have served as a positive catalyst for the stock market so far. The sector has been one of the market's leaders despite mixed earnings, a sign that investors' worst fears did not materialize.

(Reporting By Edward Krudy; Editing by Jan Paschal.)

NEW YORK (Reuters) – Stocks rising, bulls rampant are motifs you might pick if designing a coat of arms for Wall Street at the moment. But the motto should read: Caveat emptor. Yes, buyer beware.

The S&P 500, a broad measure of the market valuation of the biggest U.S. publicly traded companies, is up 20 percent from its October closing low. It keeps climbing on a mixed bag of fourth-quarter earnings, improving U.S. economic data, and easing credit conditions in Europe. It now stands at its highest level since early last August.

We have already seen what is probably the first upgrade of a target level for the index this year courtesy of Credit Suisse.

The CBOE Volatility Index, or VIX (.VIX), a measure of what investors are paying to protect themselves against the risk of losses, is at its lowest level in seven months.

So it raises the question: Is this another Jackson Hole moment for risk assets?

At the Wyoming retreat in late August 2010, Federal Reserve Chairman Ben Bernanke sparked what was the second major leg of the stock market's rally from bear market lows the year before.

Is this the start of the third?

FRIENDLIER FOOTING FOR STOCKS

For Andrew Garthwaite, the Credit Suisse analyst behind the firm's more bullish stance, there are big changes afoot that are creating a more benign environment for stocks.

First, the European Central Bank's long-term repo operations are succeeding in reducing stresses in the region's banking sector. This week, three-month dollar Libor, the cost at which European banks can borrow dollars, marked its ninth straight day of declines.

Analysts say heavy cash infusions from the European Central Bank since late last year and signs of revived willingness to lend by U.S. investors in the new year show the banking system is flush with cash.

The U.S. economy is looking stronger than thought, with notable movement in the long-dormant housing market, where sales of previously owned homes just rose to an 11-month high.

In China, the engine of global growth whose manufacturing sector has been showing worrying signs of slowing, policymakers have demonstrated willingness to make conditions easier by lowering banks' reserve requirements.

"As we approach our year-end target two weeks into January, we have to ask ourselves the following questions: What has changed? Will equities rally further?," Garthwaite said in a research note.

His answer to the second question was yes. Credit Suisse raised its year-end S&P 500 target to 1,400 from 1,340. Critically, however, the firm did not overweight equities, saying the risks of a more severe recession in Europe and a slowdown stateside were still there.

HEALTHY DOSE OF SKEPTICISM

For Nicholas Colas, chief market strategist at the ConvergEx Group in New York, the rally remains largely untested. More scary headlines from Europe or any signs that the global economy is deteriorating could spark a sharp reversal.

Heading into the weekend, Greece was closing in on an initial deal with private bondholders that would prevent it from tumbling into a chaotic default. Creditors faced to 70 percent of the loans they have given to Athens.

"It's a confidence-based rally with the overhang of several still meaningful events to come," Colas said. "It is all well and good to say that the Greek default is well understood, but we haven't gone through it."

Outside the United States, there are mixed signals from the global economy, too.

China's factory activity likely fell for a third successive month in January. The HSBC flash manufacturing purchasing managers index (PMI), the earliest indicator of China's industrial activity, stood below 50.

The Baltic Exchange's main sea freight index (.BADI), which tracks rates to ship dry commodities and can be a useful gauge of economic activity, fell to its lowest level in three years on Friday on a growing surplus of vessels and a slump in cargo demand.

That is at odds with the work of RBC technical analyst Robert Sluymer. He sees growing outperformance of industrial metal copper to the safe-haven bet of gold as well as an upturn in a basket of Asian currencies as a bullish sign for the economy.

The caution generated by the mismatches in the various data points is perhaps reflected in by U.S. interest rates.

The yield on the U.S. 10-year Treasury note has hovered at 2 percent or just below for the last month despite a brief spike in mid-December. That suggests bondholders are not eagerly embracing the improving economy thesis for the moment.

"There is still a lot of skepticism about recovery, about moving into risk assets, about a lot of things," Colas said.

"If you really wanted to believe this about incrementally economic certainty and expansion … I would have thought you'd expect to see the 10-year back over 2 percent."

EARNINGS, DATA AND THE FED

A blitz of earnings and economic indicators next week will provide an important gauge of the economy's health.

What's more, the Federal Reserve's policymakers will convene their first meeting of the year with a two-day session that starts on Tuesday. The Federal Open Market Committee, the Fed's rate-setting panel, will release its policy statement on Wednesday. No fireworks are expected, but a decision to release individual policymakers' interest-rate forecasts could alter expectations for rates on the margins.

Monday will start one of the two most hectic weeks of the earnings season. Marquee names due to report earnings on Monday include Texas Instruments Inc (TXN.O) and Halliburton Co (HAL.N), followed by Apple Inc (AAPL.O), DuPont (DD.N), Johnson & Johnson (JNJ.N), McDonald's Corp (MCD.N), Verizon Communications (VZ.N) and Yahoo! Inc (YHOO.O) – all on Tuesday.

Boeing (BA.N), ConocoPhillips (COP.N) and United Technologies (UTX.N) are set to release results on Wednesday. Thursday's earnings line-up includes 3M Co (MMM.N), AT&T Inc (T.N), Starbucks (SBUX.O) and Time Warner Cable Inc (TWC.N). On Friday, earnings are expected from Chevron Corp (CVX.N), Honeywell International (HON.N) and Procter & Gamble Co. (PG.N)

In the coming week, economic indicators to watch will include December pending home sales data, a key measure of the housing market, on Wednesday as well as the latest weekly claims for jobless benefits on Thursday. December durable goods orders and new home sales for December also will be released on Thursday.

The week will wrap up with the Commerce Department's first look at fourth-quarter U.S. gross domestic product and the final reading for January on consumer sentiment from Reuters and the University of Michigan.

In terms of companies beating expectations, fourth-quarter earnings season has not been as good as previous ones. Of the approximately 70 companies in the S&P 500 that have reported earnings so far, 60 percent have exceeded analysts' estimates, according to Thomson Reuters data.

In comparison, in the third quarter at this early point in the reporting cycle, 68 percent had beaten Wall Street's forecasts – well below the 78 percent in that category in the second quarter, Thomson Reuters data showed.

There have also been some high-profile misses on both revenue and earnings.

General Electric Co's (GE.N) fourth-quarter revenue fell short of Wall Street's expectations, with Europe's weakening economy and weak appliance sales the main culprits.

On the other hand, banks' earnings have served as a positive catalyst for the stock market so far. The sector has been one of the market's leaders despite mixed earnings, a sign that investors' worst fears did not materialize.

(Reporting By Edward Krudy; Editing by Jan Paschal.)

NEW YORK (Reuters) – Stocks rising, bulls rampant are motifs you might pick if designing a coat of arms for Wall Street at the moment. But the motto should read: Caveat emptor. Yes, buyer beware.

The S&P 500, a broad measure of the market valuation of the biggest U.S. publicly traded companies, is up 20 percent from its October closing low. It keeps climbing on a mixed bag of fourth-quarter earnings, improving U.S. economic data, and easing credit conditions in Europe. It now stands at its highest level since early last August.

We have already seen what is probably the first upgrade of a target level for the index this year courtesy of Credit Suisse.

The CBOE Volatility Index, or VIX (.VIX), a measure of what investors are paying to protect themselves against the risk of losses, is at its lowest level in seven months.

So it raises the question: Is this another Jackson Hole moment for risk assets?

At the Wyoming retreat in late August 2010, Federal Reserve Chairman Ben Bernanke sparked what was the second major leg of the stock market's rally from bear market lows the year before.

Is this the start of the third?

FRIENDLIER FOOTING FOR STOCKS

For Andrew Garthwaite, the Credit Suisse analyst behind the firm's more bullish stance, there are big changes afoot that are creating a more benign environment for stocks.

First, the European Central Bank's long-term repo operations are succeeding in reducing stresses in the region's banking sector. This week, three-month dollar Libor, the cost at which European banks can borrow dollars, marked its ninth straight day of declines.

Analysts say heavy cash infusions from the European Central Bank since late last year and signs of revived willingness to lend by U.S. investors in the new year show the banking system is flush with cash.

The U.S. economy is looking stronger than thought, with notable movement in the long-dormant housing market, where sales of previously owned homes just rose to an 11-month high.

In China, the engine of global growth whose manufacturing sector has been showing worrying signs of slowing, policymakers have demonstrated willingness to make conditions easier by lowering banks' reserve requirements.

"As we approach our year-end target two weeks into January, we have to ask ourselves the following questions: What has changed? Will equities rally further?," Garthwaite said in a research note.

His answer to the second question was yes. Credit Suisse raised its year-end S&P 500 target to 1,400 from 1,340. Critically, however, the firm did not overweight equities, saying the risks of a more severe recession in Europe and a slowdown stateside were still there.

HEALTHY DOSE OF SKEPTICISM

For Nicholas Colas, chief market strategist at the ConvergEx Group in New York, the rally remains largely untested. More scary headlines from Europe or any signs that the global economy is deteriorating could spark a sharp reversal.

Heading into the weekend, Greece was closing in on an initial deal with private bondholders that would prevent it from tumbling into a chaotic default. Creditors faced to 70 percent of the loans they have given to Athens.

"It's a confidence-based rally with the overhang of several still meaningful events to come," Colas said. "It is all well and good to say that the Greek default is well understood, but we haven't gone through it."

Outside the United States, there are mixed signals from the global economy, too.

China's factory activity likely fell for a third successive month in January. The HSBC flash manufacturing purchasing managers index (PMI), the earliest indicator of China's industrial activity, stood below 50.

The Baltic Exchange's main sea freight index (.BADI), which tracks rates to ship dry commodities and can be a useful gauge of economic activity, fell to its lowest level in three years on Friday on a growing surplus of vessels and a slump in cargo demand.

That is at odds with the work of RBC technical analyst Robert Sluymer. He sees growing outperformance of industrial metal copper to the safe-haven bet of gold as well as an upturn in a basket of Asian currencies as a bullish sign for the economy.

The caution generated by the mismatches in the various data points is perhaps reflected in by U.S. interest rates.

The yield on the U.S. 10-year Treasury note has hovered at 2 percent or just below for the last month despite a brief spike in mid-December. That suggests bondholders are not eagerly embracing the improving economy thesis for the moment.

"There is still a lot of skepticism about recovery, about moving into risk assets, about a lot of things," Colas said.

"If you really wanted to believe this about incrementally economic certainty and expansion … I would have thought you'd expect to see the 10-year back over 2 percent."

EARNINGS, DATA AND THE FED

A blitz of earnings and economic indicators next week will provide an important gauge of the economy's health.

What's more, the Federal Reserve's policymakers will convene their first meeting of the year with a two-day session that starts on Tuesday. The Federal Open Market Committee, the Fed's rate-setting panel, will release its policy statement on Wednesday. No fireworks are expected, but a decision to release individual policymakers' interest-rate forecasts could alter expectations for rates on the margins.

Monday will start one of the two most hectic weeks of the earnings season. Marquee names due to report earnings on Monday include Texas Instruments Inc (TXN.O) and Halliburton Co (HAL.N), followed by Apple Inc (AAPL.O), DuPont (DD.N), Johnson & Johnson (JNJ.N), McDonald's Corp (MCD.N), Verizon Communications (VZ.N) and Yahoo! Inc (YHOO.O) – all on Tuesday.

Boeing (BA.N), ConocoPhillips (COP.N) and United Technologies (UTX.N) are set to release results on Wednesday. Thursday's earnings line-up includes 3M Co (MMM.N), AT&T Inc (T.N), Starbucks (SBUX.O) and Time Warner Cable Inc (TWC.N). On Friday, earnings are expected from Chevron Corp (CVX.N), Honeywell International (HON.N) and Procter & Gamble Co. (PG.N)

In the coming week, economic indicators to watch will include December pending home sales data, a key measure of the housing market, on Wednesday as well as the latest weekly claims for jobless benefits on Thursday. December durable goods orders and new home sales for December also will be released on Thursday.

The week will wrap up with the Commerce Department's first look at fourth-quarter U.S. gross domestic product and the final reading for January on consumer sentiment from Reuters and the University of Michigan.

In terms of companies beating expectations, fourth-quarter earnings season has not been as good as previous ones. Of the approximately 70 companies in the S&P 500 that have reported earnings so far, 60 percent have exceeded analysts' estimates, according to Thomson Reuters data.

In comparison, in the third quarter at this early point in the reporting cycle, 68 percent had beaten Wall Street's forecasts – well below the 78 percent in that category in the second quarter, Thomson Reuters data showed.

There have also been some high-profile misses on both revenue and earnings.

General Electric Co's (GE.N) fourth-quarter revenue fell short of Wall Street's expectations, with Europe's weakening economy and weak appliance sales the main culprits.

On the other hand, banks' earnings have served as a positive catalyst for the stock market so far. The sector has been one of the market's leaders despite mixed earnings, a sign that investors' worst fears did not materialize.

(Reporting By Edward Krudy; Editing by Jan Paschal)

STRONG BANK EARNINGS: Bank of America rose 2.4 percent and Morgan Stanley rose 5 percent after both banks reported results that were better than analysts were expecting.

GOOD START TO 2012: The stock market is building up a strong start to the year after a tumultuous 2011. The Dow Jones industrial average is up 3.3 percent, and other indexes are up even more: The S&P is already up 4.5 percent and the Nasdaq is up 7 percent.

STEADY AS SHE GOES: The gains have been small, but consistent. The S&P 500 has risen on 12 of the 14 trading days so far this year. It has moved more than one percent on only two of those days.

NEW YORK (Reuters) – Stocks mostly rose for a second straight day on Tuesday as a rebound in consumer confidence and soothed fears over Europe whetted investors' appetite for risky assets.

In a positive sign for the euro zone, Italian bond yields fell from session highs, though they were still at record high rates. In the auction, Italy's government sold 7.5 billion euros of three- and 10-year bonds, close to the upper end of its target range.

In addition, investors also eyed a meeting of European officials in hopes they will make a step forward in resolving the region's debt crisis.

"It is a great sign that the auction was oversubscribed, suggesting that we seem to be moving forward with progress there," said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management.

"That said, the yields remain quite high, so we're not sounding an all-clear just yet," added Zemsky, who helps oversee $445 billion.

The Conference Board, an industry group, said its index of consumer confidence jumped to its highest level since July, handily topping economists' forecasts.

"I don't know how long the impact will last, but it (consumer confidence data) did give us a nice pop, especially coming on the growing optimism that a European deal will be done," said Phil Flynn, senior market analyst with PFG Best in Chicago.

The Dow Jones industrial average (.DJI) rose 68.46 points, or 0.59 percent, at 11,591.47. The Standard & Poor's 500 Index (.SPX) added 6.16 points, or 0.52 percent, to 1,198.71. The Nasdaq Composite Index (.IXIC) slipped 5.27 points, or 0.21 percent, to 2,522.07.

Weakness in some large-cap Internet stocks forced the Nasdaq to give up its morning gains. Amazon.com Inc (AMZN.O) fell 2.3 percent to $189.62 while eBay Inc (EBAY.O) was off 1.9 percent at $29.11. Both names rallied on Monday following a record Thanksgiving weekend for sales.

Despite the pullback, retailers remain optimistic about the holiday shopping season after the strong Black Friday and Cyber Monday shopping days.

Among other Internet names, Netflix Inc (NFLX.O) tumbled 5.5 percent to $66.13 and U.S.-listed shares of Ctrip.com (CTRP.O) were off 3.4 percent at $26.05.

AMR Corp (AMR.N) plunged 79 percent to about 34 cents a share after the parent of American Airlines filed for bankruptcy protection and named a new chairman and chief executive. The stock was halted more than a dozen times throughout the day.

Tiffany & Co (TIF.N) sank 7 percent to $66.60 after the luxury retailer gave a holiday quarter profit outlook that missed Wall Street's expectations, a sign that its recent pace of sales gains was slowing.

In other economic data, U.S. single-family home prices declined in September, highlighting the fragility of a market that is struggling to get back on its feet, according to the S&P/Case-Shiller composite index.

On Monday, U.S. stocks rebounded sharply from seven days of losses, with the S&P closing up nearly 3 percent.

(Reporting by Ryan Vlastelica; Editing by Jan Paschal)

(Reuters) – After a blockbuster performance over the long Thanksgiving weekend, U.S. retailers now must replicate the robust results in order to see profitable sales gains for the rest of the holiday season.

Record numbers of shoppers spent billions of dollars in stores and online over the weekend on discounted televisions, toys and other goods. Stores opening earlier than ever, the usual deep discounts and more free shipping offers helped millions of shoppers shrug off economic concerns.

Best Buy Co Inc (BBY.N), Macy's Inc (M.N) and Wal-Mart Stores Inc (WMT.N) were seen by some analysts as strong performers over the big weekend. Best Buy and Macy's shares rose in premarket trading while Wal-Mart shares were flat.

Nice weather across much of the country also helped. It was the warmest Black Friday weekend in five years, with the least snowfall since 1999. In terms of rainfall, it was the driest Black Friday in five years, according to Planalytics.

"Favorable weather may have pulled spending forward while also shifting the mix of sales from online to stores," said Credit Suisse analyst Gary Balter.

On Monday, the spotlight shines on online sales. "Cyber Monday" is the biggest online shopping day of the year. Based on the growth seen over the weekend, it is expected to be another banner year online. On Black Friday itself, U.S. online retail sales jumped 26 percent, comScore data showed.

Overall, Thanksgiving weekend sales soared 16.4 percent to $52.4 billion, the National Retail Federation, an industry trade group, said on Sunday.

Investors will get a more detailed reading of results later this week, when some chains including Costco Wholesale Corp (COST.O), Macy's and Target Corp (TGT.N) issue their monthly sales tallies.

"I presume we're going to see strong numbers for November," said Sterne, Agee & Leach analyst Kenneth Stumphauzer.

Brian Sozzi, an independent analyst who follows retail stocks, said he expects many of those stocks to trade higher on Monday, but warned that discounts could come at a price for retailers.

"You have to remember that these were promotionally driven sales and there are still some margin issues," he said.

Wal-Mart was one of the clear winners, he said, along with Best Buy and even Wal-Mart rival Target.

"It's not an all Wal-Mart kind of world," Sozzi said.

Analysts cautioned that there could be a prolonged lull in sales until closer to Christmas.

Sozzi said he was looking beyond chains to other companies that likely benefited from retailers' sales, such as underwear and T-shirt maker Hanesbrands Inc (HBI.N).

"If Wal-Mart had such a strong performance in basic apparel … you look at something like a Hanesbrands."

Black Friday deals are meticulously planned for months, but extended discounts were found across a wide range of apparel chains, which may suggest that early sales were coming in below plan, said Janney Capital Markets analyst Adrienne Tennant.

Chains such as Aeropostale (ARO.N), Gap Inc's (GPS.N) Banana Republic, bebe (BEBE.O), Charlotte Russe, Children's Place (PLCE.O), New York & Co (NWY.N), Pacific Sunwear (PSUN.O) and Chico's FAS Inc's (CHS.N) White House Black Market pushed their early deals throughout Friday, Tennant said.

At 9:30 a.m. on Friday, the Aeropostale store at Pennsylvania's big King of Prussia mall gave out makeshift coupons on paper, extending a 1:00 p.m. deadline for an additional 20 percent off to 5:00 p.m., and then that deadline was extended for the remainder of the day, Tennant noted.

Home Depot Inc (HD.N) may have had the upper hand among home improvement chains, as Balter noticed people shopping across the store, while at Lowe's Cos Inc (LOW.N) they appeared to concentrate on the doorbusters such as $99 drills.

Both Home Depot and Lowe's shares moved higher in premarket trade.

The NRF expects sales for the November-December holiday shopping season to rise 2.8 percent, slower than the 5.2 percent jump seen in 2010 and roughly in line with the average growth of 2.6 percent seen over the past decade.

(Reporting by Jessica Wohl and Brad Dorfman in Chicago, with reporting by Phil Wahba in New York; editing by John Wallace)