By Riva Gold 

U.S. stocks climbed Friday, recouping much of their earlier week losses, as some positive earnings results and a report that the Federal Reserve will maintain a larger portfolio of Treasury securities than expected helped boost investor sentiment.

Encouraging corporate results have helped offset downbeat readings on the world economy from earlier in the week Of the S&P 500 companies that reported fourth-quarter earnings through Thursday, 75% beat analyst expectations, according to Refinitiv.

Adding to the upbeat mood was a report from The Wall Street Journal that the Fed may end its portfolio wind-down sooner than previously expected. That means it would end up holding more U.S. Treasurys and mortgages, which would be supportive to the U.S. economy and markets.

The Dow Jones Industrial Average rose more than 170 points, or 0.7%, putting it on track for a weekly gain of about 0.1%. The S&P 500 rose 0.6%, on pace for a weekly loss of 0.4%.

The moves mark a bounceback for the indexes, which started the week with losses after four straight weeks of advances. Weighing on stocks earlier this week was data on Monday that showed China's economy grew at the slowest pace in nearly three decades last year, while Germany's Ifo Institute on Friday showed the country's business sentiment deteriorated sharply in January.

"We've got slowing in China, some issues in Europe, and Brexit in the U.K., but the overall environment is still a reasonably good one, and I think you're beginning to see that when these companies come out and report earnings," said Peter Heilbron, a senior investment officer at Northern Trust Wealth Management. "You're still seeing positive growth, just not as robust as we'd hoped for."

Late Thursday, Starbucks reported that sales were up at U.S. cafes around the end of the year, beating expectations for the quarter. Shares of the coffee giant gained 3.7% in recent trading. Western Digital shares were up 8.8% after releasing results.

Not all corporate earnings were upbeat. Shares of Intel, sometimes considered a barometer for the global economy, fell nearly 7% after it warned on slowing demand for data-center chips in 2019, just a day after semiconductor stocks enjoyed their best session in years.

Friday's gains extended to major indexes around the world.

The Stoxx Europe 600 was up 0.7% in afternoon trading after narrowly snapping a three-day losing streak in the previous session. Markets in Japan, Hong Kong and South Korea closed at least 1% higher .

Most of Friday's gains in Europe and Asia came from more economically sensitive corners of the market including banks, autos, industrials, and energy companies, which have also been at the forefront of January's rebound in stocks.

That came after very steep falls in those sectors in the final weeks of 2018 as investors rapidly grew pessimistic about the global economic outlook.

With positioning on stocks very light going into the start of the year, particularly in these sectors, a rebound was due to happen even if the economic data failed to improve, some analysts said.

"I think what you've seen [in the last four weeks] is the low-hanging fruit going -- the easy bounce. From now on, what you need to see is earnings," said Christopher Mahon, director of asset allocation research at Barings. "Anyone who is bullish is going to be hanging their hat on the earnings reports, and anyone bearish is going to follow the purchasing managers' indexes down," he said.

In Asian trading, Japan's Nikkei rose 1% Friday to end the week 0.5% higher, while Hong Kong's Hang Seng Index jumped 1.65% Friday and 1.8% for the week, supported by gains in tech companies. Index heavyweight Tencent Holdings rose over 4% after China cleared some of its pending game approvals following the end of a regulatory freeze.

The Shanghai Composite Index rose 0.4%, erasing its loss for the week.

Despite recent shaky data, "We're still positioned as if the fundamentals haven't materially changed," said Christopher Peel, chief investment officer at Tavistock Investments, who favors both U.S. and Chinese stocks in his portfolios. "The global growth outlook is slowing, but it's pretty marginal," he said.

--Corrie Driebusch contributed to this article.

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

January 25, 2019 10:27 ET (15:27 GMT)

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