Stocks rise after Microsoft results add to upbeat tone after 2 days of rallies

NEW YORK -- Stocks rose sharply for a third straight session Friday as investors cheered upbeat profit reports from big names like Microsoft Corp. and were reassured by word of a possible buyout of a trouble bond insurer.

Microsoft's bright forecast and earnings that outpaced expectations lent strength to a notion emerging in recent days that perhaps Wall Street had been too pessimistic in its reading of the economy.

Investors looking for reasons to buy were pleased by reports from U.K. newspapers that billionaire Wilbur Ross was in talks to acquire bond insurer Ambac Financial Group Inc. Financial woes at many U.S. bond insurers have in recent weeks caused headaches for investors worldwide who have worried that the credit crisis could worsen should one of the companies buckle under an inability to draw new business.

Word of Ross' interest follows comments this week by New York State regulators saying they would consider lending support to shore up the struggling bond insurance industry. The move helped reassure Wall Street and helped make room for stocks to rally in recent days.

In the first hour of trading, the Dow Jones industrial average rose 103.24, or 0.83 percent, to 12,481.85.

Broader stock indicators also advanced. The Standard & Poor's 500 index rose 14.58, or 1.08 percent, to 1,366.65, and the Nasdaq composite index advanced 45.61, or 1.93 percent, to 2,406.53.