Stocks Rebound

Hewlett-Packard and American International Group helped lead U.S. stocks' rebound from a two-day slump after a strong reading on German business confidence.

The Dow Jones Industrial Average advanced 58 points, or 0.4%, to 13939, in midday Friday trading, following a 155-point tumble the past two days.

The Standard & Poor's 500-stock index tacked on six points, or 0.4%, to 1509, though it was on pace to snap a seven-week streak of weekly gains. The Nasdaq Composite Index rose 15 points, or 0.5%, to 3146.

"Any selloff we get is going to be shallow," said Scott Wren, senior equity strategist at Wells Fargo Advisors, which manages $1.2 trillion in St. Louis. "The mentality is, 'I want to wait for the market to pull back so I can buy stocks at lower levels.' The Fed's on our side, companies are making money and the growth environment is OK."

Hewlett-Packard led the Dow higher, after the technology company late Thursday reported a quarterly profit that topped analysts' expectations and gave a better-than-expected earnings forecast.

Financial shares in the S&P 500 led gains across all 10 of the index's sectors, as insurer AIG said late Thursday that it swung to a loss but operating profit in some segments exceeded analyst expectations.

European markets were broadly higher, with the Stoxx Europe 600 up 1.3% to recover most of the losses from the previous session, after data showed German business confidence increased much more than expected in February. Germany's DAX index climbed 0.8%.

"From the U.S. perspective, Germany is a very industrial and export-oriented economy; If they're seeing optimism on their order books, then there's reason to be optimistic globally," said Wasif Latif, vice president of equity investments at USAA Investments in San Antonio. His firm manages $54 billion.

Elsewhere, Italy's FTSE MIB index advanced 1.5%. The index had fallen this week to close Thursday at a two-month low ahead of general elections in Italy this weekend. Some investors fear a new government may not continue the country's reformist path.

In Asia, China's Shanghai Composite fell 0.5% to a one-month low and declined 4.9% on the week. Hong Kong's Hang Seng Index also shed 0.5%, dropping 2.8% for the week, to near a two-month low. Investors are concerned that policy makers will implement additional tightening measures to control residential property prices.

Japan's Nikkei Stock Average gained 0.7% and climbed 1.9% on the week. The index has risen 14 of the past 15 weeks. Australia's S&P/ASX 200 added 0.8%, rebounding from losses on Thursday, but fell 0.3% on the week, snapping a five-week winning streak.

Crude-oil prices slid 0.2% to $92.68 a barrel, while gold retreated 0.4% to $1,573.10 a troy ounce. The dollar rose against the yen and the euro. The 10-year Treasury note edged up in price to yield 1.965%.

In other corporate news, Cabot Oil & Gas jumped after the natural-gas producer's earnings climbed 55% on higher production.

Texas Instruments advanced after the chip maker unveiled a 33% increase in its quarterly dividend and increased its stock-repurchase authorization by $5 billion.

Abercrombie & Fitch slipped after giving an earnings forecast that lagged behind analysts' projections and saying it expects to close 40 to 50 stores in the U.S. in 2013.

Vivus dropped after the pharmaceutical company said a European Medicines Agency committee backed an earlier decision, in which the panel recommended against approval of its weight-loss drug.

WebMD Health surged after the health-information provider's adjusted fourth-quarter earnings and revenue beat analyst estimates and its 2013 earnings outlook topped forecasts.

Write to Matt Jarzemsky at matthew.jarzemsky@dowjones.com