NEW YORK (AP) — U.S. stocks logged their best day in two months Friday as Greece appeared to move closer to securing a bailout deal that will enable it to avoid bankruptcy and keep the country in the euro.
Greece and its creditors appeared to be narrowing their differences after Athens offered reform proposals in order to secure a third bailout of around 53 billion euros ($59.5 billion). A final decision could be made on Sunday.
A second day of gains for Chinese stocks also encouraged investors. U.S. stocks had fallen sharply on Wednesday, in part on concern that a monthlong slump in China's stock market could crimp growth in the world's second-largest economy.
"This is a giant collective exhaling," said Kristina Hooper, U.S. investment strategist at Allianz Global Investors. The Greek deal "is not done, but we're closer than we have been in a while."
The Standard & Poor's 500 index rose 25.31 points, or 1.2 percent, to 2,076.62. The Dow Jones industrial average climbed 211.79 points, or 1.2 percent, to 17,760.41. The Nasdaq composite gained 75.30 points, or 1.5 percent, to 4,997.70.
The gains pushed the S&P 500 back into positive territory for the year.
On Friday, stocks in China jumped before the U.S. market opened. China's Shanghai Composite Index jumped 4.5 percent, paring its losses for the month to 24 percent.
The Chinese market is only recovering after the government intervened heavily and about half of the companies listed in mainland China suspended trading in their stocks.
That's making some investors cautious.
"The policy makers appear to have some success in stabilizing values, but fifty percent of Chinese stocks are not currently trading," said Jim McDonald, chief investment strategist at Northern Trust.
Back in the U.S., airline stocks rallied after American Airlines, the nation's largest carrier, signaled that it was cutting back on its growth plans this year amid signs that average fares are declining. American said it expects to increase passenger-carrying capacity by 1 percent this year, down from an earlier forecast of 2 percent. American Airlines rose $1.54, or 3.9 percent, to $41.21. Delta Air Lines jumped $1.91, or 4.7 percent, to $42.46.
Investors also followed a speech by Federal Reserve Chair Janet Yellen on Friday.
Speaking in Cleveland, Ohio, Yellen said that the Fed is on track to start raising interest rates later this year, but expressed concerns over headwinds that are still holding back the U.S. economy, in particular lingering weakness in the labor market and new potential threats overseas.
David Kelly, chief global strategist at JPMorgan Asset Management, said after the speech that he expected the Fed to lift interest rates in September, provided that Greece reaches a deal with its creditors and there were no major financial crises between now and then.
Investor start focusing on second-quarter earnings next week as the pace of company reporting picks up.
Among the companies reporting are banks, including JPMorgan, Bank of America and Wells Fargo, as well as Delta, Netflix and Intel.
"Earnings will be adequate, we don't expect them to blow out the lights," said Allianz's Hooper. "It will be a subdued, but mildly positive earnings environment."
Companies in the S&P 500 are forecast to report that earnings shrank by 4.5 percent on average. While that would be the first contraction in earnings in almost six years, the figures are distorted by a big drop in energy company earnings following the collapse in the oil price last year.
In bond trading, prices fell. The yield on the 10-year Treasury note climbed to 2.40 percent from 2.32 percent on Thursday. The euro surged against the dollar, climbing 0.7 percent to $1.1151. The dollar rose 0.7 percent against the Japanese currency, to 122.80 yen.
The price of oil declined slightly and ended the week down 7 percent on concerns about economic growth in Europe and China as well as robust production from U.S. drillers. Benchmark U.S. crude fell 4 cents to close at $52.74 a barrel in New York. It ended last week at $56.93 a barrel. Brent crude, a benchmark for international oils used by many U.S. refineries, rose 12 cents Friday to close at $58.73 a barrel in London.
In metals trading, silver rose 12 cents to $15.47 an ounce. Gold dropped $1.30 to $1,157.90 an ounce. Copper fell 1.3 cents to $2.55 a pound.
In other futures trading on the New York Mercantile Exchange:
— Wholesale gasoline fell 2.8 cents to close at $2.017 a gallon.
— Heating oil fell 0.4 cent to close at $1.740 a gallon.
— Natural gas rose 4.4 cents to close at $2.770 per 1,000 cubic feet.