NEW YORK (TheStreet) -- Stocks closed higher Friday, buoyed by strong U.S. economic data and the eurozone's newest plan to address its debt crisis.

The Dow Jones Industrial Average rose 186.6 points, or 1.6%, to close at 12,184. Among the biggest gainers on the index were financial stocks Bank of America ( BAC), JPMorgan Chase ( JPM) and American Express ( AXP).

The only component to lose ground on the Dow was DuPont ( DD) , which lowered its 2011 full-year earnings guidance because of slower-than-anticipated growth in the fourth quarter. The company reduced its profit guidance to $3.87 to $3.95 a share, down from its July estimate of $3.90 to $4.05 a share due to global economic uncertainty. Shares finished off 3.2% to $45.04.

The S&P 500 added 20.8 points, or 1.7%, at 1255 and the Nasdaq gained 50.5 points, or 1.9%, at 2647.

European leaders showed signs of progress on resolving the debt crisis at their summit in Brussels. 17 nations of the eurozone have agreed to a new pact to deepen the integration of their national budgets. The breakthrough is significant, even though some European Union countries including the U.K. are not on board. The opposition means that the new rules will be enforced through an intergovernmental agreement instead of a change to the treaty among European Union countries.

The countries have agreed to limit their budget deficits in the future and transfer some of their sovereignty on their own budget policy over to the European Court of Justice. However, details of the pact remain thin.

To address the short term pressures of the crisis, the leaders will cap the current bailout fund at 500 billion euros, and nations in the European Union will provide up to 200 billion euros in loans to the IMF.

"To me, the whole thing is a little remarkable. You clear up Europe and you get a whole new view on everything," said Jim Cramer on RealMoney. "Instead of thinking Europe's in a recession and we'll have to sell the steels and the machinery companies and the DuPont-like enterprises, we say that a recession will be avoided and it's time to buy them."

Cramer added that losses experienced during Thursday's late afternoon swoon were "predicated on nothing happening at all" and would likely be recovered today. That said, he warned that investors should not forget that Europe will continue to face difficulties. "The rose-colored glasses have a habit of falling off a couple of days after they have been put on. So don't let them get too snug."

Carl Weinberg, chief economist with High Frequency Economics, notes that politicians still have not announced how they plan to fund the bailout fund. "The leaders make no mention about where the 500 billion euros in 'firepower' is going to come from, or when," he adds. "The banking system remains vulnerable today, naked against the risk that an institution may fall."

"The bar is pretty low, so if Europe can come up with thoughtful constructive plan to deal with the crisis, maybe we'll see a rally in the year end," said Jeff Layman, chief investment officer at BKD Wealth Advisors. "The stock market has been encouraged by a large portion of European countries coming on board with how to move forward. I don't look at it as being all in the clear, but we're more optimistic than pessimistic," he added.

Germany's DAX closed up 1.9% while London's FTSE was 0.8% higher. Overnight, Asian stocks dropped as economic reports suggested weakening economic growth in Japan and South Korea. Japan's Nikkei Average settled 1.5% lower, and Hong Kong's Hang Seng Index closed down 2.7%.

Consumers were more upbeat in December than economists expected. The University of Michigan's preliminary reading on consumer sentiment rose to 67.7 from 64.1 in November. Economists were looking for a December reading of 65.1.

October's trade deficit narrowed to $43.5 billion, the lowest since December 2010. Economists had predicted a slight widening to a deficit of $44 billion. September's deficit was upwardly revised to $44.2 billion from $43.1 billion.

Texas Instruments ( TXN) cut its financial forecast for the fiscal fourth quarter, saying business is bad everywhere except for wireless processors. The chip company said it now sees earnings of 21 cents to 25 cents a share for the quarter ending in December, with revenue expected to range from $3.19 billion and $3.33 billion. The company's previous outlook was for fourth-quarter earnings of 28 cents to 36 cents a share on revenue of $3.26 billion to $3.54 billion in the quarter. Shares closed up 5.1% to $28.49.

Toyota ( TM) cut its earnings forecast for the fiscal year ending in March because of a strong yen and massive flooding in Thailand that disrupted parts supplies. Japan's No. 1 automaker, expects fiscal-year profit of 180 billion yen ($2.3 billion), down 54% from projections of 390 billion yen it made during the summer. It also expects to sell 7.38 million vehicles worldwide this year instead of a prior projection of 7.6 million cars. Shares gained 1.6% to $68.25.

Altera ( ALTR) lowered its revenue outlook for its fiscal fourth quarter, citing widespread weakness from both small and large customers and across all geographies except North America. The chipmaker said it now sees a sequential revenue decline of 13% to 16% in the quarter ending in December, a deeper drop than its prior projection of 7% to 11% from the third-quarter total of $522.5 million. Shares rose 0.4% to $35.90.

Coinstar's ( CSTR) Redbox is reportedly teaming with Verizon ( VZ) on a "Netflix-killer." Reports first surfaced earlier this week that Verizon was working on a service outside of its FiOS cable network area to take on Netflix ( NFLX) in online streaming. According to TechCrunch, a Verizon-RedBox service would offer streaming of movies and TV shows in both standard and high definition to a number of devices, with a launch planned for May 2012. Verizon shares added 1.5% to close at $38.41.

January oil futures settled $1.07 higher at $99.41 a barrel, and February gold futures settled up $3.40 to $1716.80.

The benchmark 10-year Treasury was down 26/32, raising the yield to 2.065%, and the U.S. dollar was falling 0.25% against a basket of currencies.

-- Written by Chao Deng and Ross Tucker in New York.

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