American stocks staged their biggest two-day rally since November after Xerox Corp. and Lockheed Martin Corp. reported profit that topped analysts’ estimates and lawmakers agreed on a plan to pay tax rebates to families. Xerox climbed the most in two years after the world’s largest maker of high-speed color printers increased revenue by introducing new products. Lockheed Martin, the biggest defense company, posted its steepest advance since 2003 on higher sales of computer services to the government. Freeport-McMoRan Copper & Gold Inc., Exxon Mobil Corp., and Alcoa Inc. led gains in commodities producers after China’s economy posted a fourth-straight quarter of growth above 11%.

The Standard & Poor’s 500 Index climbed 13.47, or 1%, to 1,352.07, paring its decline this year to 7.9%. The Dow Jones Industrial Average, which yesterday fell 326 points before ending the day 299 points higher, added 108.44, or 0.9%, to 12,378.61. The 30-stock gauge is still down 6.7% in 2008. The Nasdaq Composite Index climbed 44.51, or 1.9%, to 2,360.92, still off 11% in 2008.

“The earnings that have been reported for the fourth quarter have been better than expected, outside of the financial companies,” a senior investment officer at Chemung Canal Trust Co., which manages $1.8 billion in Elmira, N.Y., Tom Wirth, said. “Our economy, though it’s slowed, is still in a growth trajectory. We don’t expect a recession.”