Stocks rise sharply on solid corporate earnings

Stocks rallied Friday after several large U.S. companies reported solid third-quarter earnings. The Dow Jones industrial average and the Standard & Poor's 500 are set to close the week higher as hope builds that a weekend meeting will bring European leaders closer to easing the region's debt troubles.Fast-food giant McDonald's Corp. rose 3 percent after reporting a 9 percent increase in income. The results beat analysts' expectations and marked McDonalds' ninth straight quarter of gains.Harman International Industries Inc. jumped 18 percent, the most in the Standard & Poor's 500, after the audio equipment maker's income came in far ahead of analysts' expectations.The encouraging corporate news was in line with recent signs that the U.S. economy strengthened in September after a very weak summer. On Friday the government said unemployment fell last month in half of U.S. states and was unchanged in 11. That's much better than August, when unemployment rose in 26 states.The Dow was up 214 points, or 1.9 percent, to 11,755 at 2:47 p.m. Eastern time. The Dow is now up 1.5 percent from the start of 2011. Before Friday's surge, it was down for the year.The S&P 500 added 17, or 1.4 percent, to 1,231. The Nasdaq composite index gained 25, or 1 percent, to 2,624.The combination of stronger earnings, better economic news and a sense that European officials were taking the debt crisis more seriously have helped lift stocks, said Phil Orlando, chief equity market strategist at Federated Investors. "It seems like there's a greater sense of urgency to deal with Greece and the sovereign debt trouble in Europe," he said.Traders are monitoring Europe's efforts to solve the Greek debt crisis. Worries about a default by Greece have been behind much of the market's volatility in recent months.European markets closed sharply higher as investors hoped that European leaders will agree on a package of measures to address the region's debt crisis in time for a summit scheduled tentatively for Wednesday. Germany's DAX index rose 3.5 percent. France's CAC 40 and Italy's FTSE MIB rose 2.8 percent.Traders had hoped for a plan to be forged at a summit on Sunday. But talks between France and Germany this week have broken down repeatedly. European officials said Thursday there will be no deal before a second summit next week. The two countries disagree about the size of losses that private banks should take on Greek debt that they own, among other issues.Traders sold ultra-safe U.S. Treasury debt as riskier assets rose. The yield on the 10-year Treasury note rose to 2.20 percent from 2.18 percent late Thursday. Bond yields rise as demand for them falls and their prices decline.Stocks were lifted earlier this week by modestly better news about the U.S. economy. The number of people claiming unemployment benefits declined this week. Housing construction picked up last month, at least for apartment buildings. Inflation remains low.Among the companies reporting earnings late Thursday or Friday:-- General Electric Co.'s income rose 18 percent as its lending business recovered, but profit margins shrank in key business. The stock fell 2.5 percent.-- Microsoft Corp.'s income rose 6 percent and its revenue beat Wall Street estimates. The stock dropped by 0.2 percent.-- Chipotle Mexican Grill Inc. leaped 7 percent after reporting a 25-percent jump in third-quarter income. The fast-casual chain raised prices, sold more burritos and opened new stores.-- Verizon Communications Inc.'s income doubled from last year, mainly because of pension adjustments. Its adjusted earnings beat expectations. But Verizon's bottom-line result masked a weak quarter for its local phone business, which faced a major worker strike and post-hurricane repairs. The stock rose 0.3 percent.Reach Daniel Wagner at http://www.twitter.com/wagnerreports.