Stocks rally on banks, China

Stocks surged Friday as investors weighed China's gross domestic product growth against U.S. bank earnings and economic data.

The Dow Jones Industrial Average ($INDU) was up 181 points at 12,754. The S&P 500 ($INX) was up 18 points at 1,353. The Nasdaq Composite ($COMPX) was up 33 points at 2,899.

JPMorgan Chase (JPM) reported second-quarter earnings of $1.21 a share on revenue of $22.9 billion, topping the average expectation for 70 cents a share on revenue of $21.8 billion.

Second-quarter results included a $4.4 billion pretax loss, amounting to 69 cents a share, from bad derivatives trades and a $1 billion pretax benefit, equaling 16 cents a share, from securities portfolio gains. The bank's chief financial officer said the bank also lost an additional $1.4 billion in the first three months of the year from the trading blunder, bringing the total derivatives trading loss to $5.8 billion, or nearly triple the original estimate of $2 billion.

JPMorgan also said it's restating its first-quarter earnings lower to reflect the impact of attempts to mask the extent of its trading losses.

China's year-over-year economic growth fell to 7.6% in the second quarter, the slowest rate since the first quarter of 2009, marking the sixth straight quarter of declines, as expected, and stirring hopes for economic stimulus. Capital spending and domestic consumption helped promote growth, but exports weighed down the overall figure.

"However, the official report contained a piece of good news, which was that quarterly growth quickened to 1.8% quarter over quarter from 1.6% in Q1, which was stronger than median expectations," said Klaus Baader, a senior economist at Societe Generale. "While not too much emphasis should be placed on this, it may be a sign that growth has already bottomed in Q1."

In U.S. economic news, the Labor Department reported that the producer price index rose 0.1% in June after falling 1% in May, which was better than the decline of 0.5% that economists were expecting, easing some worries about deflationary pressures and perhaps buying the Federal Reserve some time on more monetary easing.  The core figure rose 0.2%, as expected, after increasing by the same amount previously.

And a preliminary read of Thomson Reuters/University of Michigan's July consumer sentiment index came in at 72, its lowest level since December 2011, CNBC reported. Economists had expected a reading of 73.4, according to a Reuters poll, versus 73.2 in the final June report.

Bedford, Mass., data delivery technology company Acme Packet (APKT) said its board has approved the buyback of up to $200 million worth of its common stock over the next year.

New York & Co. (NWY) expects its second-quarter results to exceed previous expectations. The company now sees an operating loss of $5 million to $7 million for the quarter vs. a loss of $15.1 million in the same period a year earlier.

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