Oil and global stocks rallied on Friday after results at Ford Motor Co and others showed companies are weathering the recession while reassuring U.S. and German economic news offset more bleak economic data.
Oil jumped above $51 a barrel on rising equity optimism, a weaker dollar and government data showing the inventory of U.S. homes for sale plummeted at a record pace in March.
Finance leaders from the world's largest economies, meeting in Washington, said recent data suggest that the pace of decline has slowed and some signs of stabilization are emerging.
The U.S. data "is adding some encouragement to the idea that maybe the economy is flattening out here at the bottom," said Kim Rupert, managing director of global fixed-income analysis at Action Economics LLC in San Francisco.
The Nasdaq eked out a seventh straight week of gains, but the S&P 500 pulled back from a rally of more than 2 percent late in the session, snapping a six-week winning streak, ending up 1.68 percent.
Rising stocks nipped the safe-haven appeal of government debt as investors worried about a spate of U.S. debt supply next week. But euro zone government bonds rose after Britain's economy posted its sharpest first-quarter decline in 30 years.
The unemployment rate in Spain soared to above 17 percent, also helping European debt prices to rise.
U.S. stocks held gains as a much-anticipated concept paper on the government stress tests for the 19 biggest U.S. financial institutions was released. Results from the stress tests are scheduled for release on May 4.
Ford (F.N) posted a smaller-than-expected loss and the struggling automaker said it was on track to at least break even in 2011. Ford also said it does not expect to seek government loans. Its stock rose 11.4 percent.
A 21 percent surge in American Express (AXP.N) provided the biggest boost to the Dow, a day after aggressive cost-cutting helped its results beat expectations.
"The earnings news last night as well as this morning in general appears to be relatively positive," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.
"At the core, the durable goods orders this morning also provided further indication that the manufacturing sector is showing tentative signs of improvement," he said.
March durable goods orders slipped less than expected.
Inventories of new homes last month contracted more strongly than expected, raising hopes the economic cycle may have bottomed.
A 5.2 percent monthly change in inventories of new U.S. homes was the largest drop in more than 45 years, while the year-on-year plunge of 33.7 percent was the largest on record.
