US STOCKS-Wall Street ends sharply higher on German stimulus optimism

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* Germany could suspend balanced budget rule to avoid
recession
-report
* U.S. Treasury yields ease off lows, boosting banks
* Nvidia jumps after results, lifts chip stocks
* Indexes up: Dow 1.20%, S&P 1.44%, Nasdaq 1.67%

(Updates to market close)
By Stephen Culp
NEW YORK, Aug 16 (Reuters) - U.S. stocks rebounded on Friday
as an ebbing bond rally and news of potential German economic
stimulus brought buyers back to the equities market, closing the
book on a tumultuous week.
While all three major U.S. stock averages ended the session
higher, they still logged their third consecutive weekly losses,
having been rattled since Monday by growing U.S.-China trade
animosity, simmering geopolitical tensions and signals from the
bond market that sparked fears of impending recession.
Germany's coalition government is willing to suspend its
balanced budget rule and take on debt, according to Der Spiegel
magazine, raising hopes that Europe's largest economy could
steer itself away from recession and cooling worries over a
global economic slowdown. "The market is looking for some positive news to take into
the weekend," said Mark Kepner, equity trader at Themis Trading
in Chatham, New Jersey.
David Carter, chief investment officer at Lenox Wealth
Advisors in New York, agreed, but added that underlying
anxieties remain.
"(It was a) great headline but further analysis may
eventually create uncertainty and weaken markets," Carter said.
"The level of uncertainty around the world is rising
significantly, with no clear end in sight."
German stimulus hopes helped the benchmark 10-year U.S.
Treasury yield rise from three-year lows, closing the book on a
fraught week which saw 10-year yields dip below those of
two-year notes, a classic recessionary red flag. Rising bond yields gave a boost to rate-sensitive banks,
sending the S&P 500 Banks index .SPXBK up 2.6%
The Dow Jones Industrial Average .DJI rose 306.62 points,
or 1.2%, to 25,886.01, the S&P 500 .SPX gained 41.09 points,
or 1.44%, to 2,888.69 and the Nasdaq Composite .IXIC added
129.38 points, or 1.67%, to 7,895.99.
All 11 major sectors of the S&P 500 closed firmly in the
black, with industrials .SPLRCI , technology .SPLRCT and
financials .SPSY enjoying the largest percentage gains.
Nvidia Corp NVDA.O jumped 7.3% after the chipmaker's
quarterly results bested analyst estimates, helping the
Philadelphia chip index .SOX gain 2.8%. Deere & Co DE.N cut its earnings forecast after missing
Street profit estimates in the face of the ongoing U.S.-China
trade war. Still, the farm equipment maker's decision to cut
costs sent the stock up 3.8%. General Electric Co GE.N surged by 9.7% after Chief
Executive Officer Larry Culp bought nearly $2 million in shares
in the wake of the conglomerate's worst one-day percentage drop
in 11 years.
The second-quarter earnings season approaches the finish
line, with 459 of the companies in the S&P 500 having posted
results. Of those, 73% beat Street estimates, according to
Refinitiv data.
Analysts now see S&P 500 second-quarter earnings growth of
2.9% year-on-year, per Refinitiv.
Advancing issues outnumbered declining ones on the NYSE by a
3.36-to-1 ratio; on Nasdaq, a 3.69-to-1 ratio favored advancers.
The S&P 500 posted 32 new 52-week highs and 8 new lows; the
Nasdaq Composite recorded 39 new highs and 106 new lows.
Volume on U.S. exchanges was 6.61 billion shares, compared
with the 7.54 billion average over the last 20 trading days.