Wall Street gains 1 percent on results, data; small caps down

By Caroline Valetkevitch

NEW YORK (Reuters) - Major U.S. stock indexes climbed more than 1 percent in late afternoon trading on Friday following a batch of solid earnings reports that offset concerns about the impact of weak global demand on U.S. growth and businesses.

But small caps turned negative after three days of strong gains. The Russell 2000 index was down 0.1 percent after posting Thursday its longest streak of more than 1 percent gains since July 2012.

Despite Friday's gain, the S&P index was still on track for its fourth straight weekly decline, its longest streak in more than three years, and is down nearly 6 percent from its record high following recent worries over the health of the global economy and spread of the Ebola virus.

Among the day's biggest positive influences, General Electric shares rose 2.7 percent to $24.91 after the company third-quarter earnings topped analyst expectations, pushing the S&P industrial sector up 1.8 percent.

Honeywell shares gained 5 percent to $90.66 after its quarterly results, to help send the S&P industrials sector up 2.3 percent as the best performing S&P sector.

Housing shares were among the day's best performers after a Wall Street Journal report that Fannie Mae and Freddie Mac are close to an agreement that could boost mortgage lending. Shares of D.R. Horton rose 5.7 percent to $21.46, while shares of Toll Brothers gained 3 percent to $31.38.

Also lifting the housing sector was data showing U.S. housing starts and permits rose in September.

"We have managed to avoid a technical correction of ten percent, though we got very close, and now the market is going to look to build a positive narrative for asset allocation into equities that is predicated upon relatively cheap valuations," said Peter Kenny, chief market strategist at Clearpool Group in New York.

The S&P energy index was up 1 percent, helped by shares of Schlumberger, which rose 4 percent to $94.21 after the world's largest oilfield services company's third-quarter profit beat estimates.

At 3:20 p.m., the Dow Jones industrial average rose 270.58 points, or 1.68 percent, to 16,387.82, the S&P 500 gained 25.04 points, or 1.34 percent, to 1,887.8 and the Nasdaq Composite added 44.29 points, or 1.05 percent, to 4,261.68.

The largest percentage gainer on the S&P 500 was Textron, which rose 9.8 percent, after the company raised its profit forecast, while the largest percentage decliner was Urban Outfitters, down 14.6 percent, which warned on its sales.

Advancing issues were outnumbering declining ones on the NYSE by 2,063 to 964, for a 2.14-to-1 ratio on the upside; on the Nasdaq, 1,483 issues were rising and 1,160 falling for a 1.28-to-1 ratio favoring advancers.

S&P 500 earnings growth now is estimated at 6.9 percent in the third quarter, according to Thomson Reuters data through Friday, while revenue growth is seen at 3.8 percent.

(Additional reporting by Chuck Mikolajczak; Editing by Bernadette Baum and Nick Zieminski)