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Stocks rebound after plunge, Facebook helps drive Nasdaq surge

Stocks jumped on Thursday, rebounding from a plunge the day before, as companies including Facebook reported better-than-expected quarterly results and data showed the economy expanding in the fourth quarter as consumer spending gained traction.

The Dow Jones Industrial Average, which fell nearly 200 points on Wednesday, closed 109 points ahead.

The S&P 500 climbed 19 points, or 1.1 percent, and the tech-heavy Nasdaq added 71 points, or 1.7 percent, mostly due to Facebook's surge.

"Today the market is focused on the good news, or the developed world," Bill Stone, chief investment strategist at PNC Wealth Management, said of economic growth in the U.S. and other industrialized nations. And, "when you cut through all the clutter of the earnings news, it's pretty darn good, at least relative to expectations," he said.

"At the moment it seems like emerging markets are our new Europe, that's our headline risk," Stone added of the trouble spots that roiled Wall Street on Wednesday, helping push the Dow industrials down.

Facebook ended the day 14.1 percent ahead following a 63 percent jump in revenue in the fourth quarter, beating Wall Street expectations and Google rose 2.5 percent after Lenovo Group agreed to acquire its Motorola mobile-phone business for $2.91 billion.

But Exxon Mobil shares fell 1.1 percent after the oil company reported a 16 percent decline in quarterly profit. Visa tallied a 9-percent rise in quarterly profit as more consumers used its cards.

Before the markets opened, the Commerce Department reported the U.S. economy expanded 3.2 percent in the fourth quarter, with consumer spending rising 3.3 percent.

Also, the Labor Department reported weekly jobless claims rose 19,000 to 348,000 last week more than had been expected while a report had pending-home sales in December falling 8.7 percent in December.

With Friday closing out the month, Wall Street is on track for a poor start to the year, with the S&P 500 down 3.3 percent for January, which some people feel is an indicator of how the rest of the year will play out.

But the notion is not the brightest one, according to Dan Greenhaus, chief strategist at BTIG, who says the theory is easily refuted by data. "Twelve of the 21 Januarys since 1960 in which stocks traded lower have seen the subsequent 11 months trade higher including four of the last five instances," Greenhaus wrote in emailed research.

"If you do not think 2014 brings a recession, then one should go ahead and feel relatively comfortable purchasing equities. How's that for a January barometer?" he concluded.

The dollar advanced against the currencies of major U.S. trading partners and the yield on the 10-year Treasury note rose 2 basis points to 2.704 percent.

Crude prices jumped 87 cents, or 0.9 percent, to $98.23 a barrel and gold prices fell $19.70, or 1.6 percent, to $1,242.50 an ounce.

On Wednesday, U.S. stocks finished steeply lower after the Federal Reserve opted to stick with its plan to continue to reduce its monthly bond purchases, now down to $65 billion, regardless of recent distress in emerging markets.