* Retail sales rise more than expected in December
* Google up after Nest purchase; Tesla rallies on deliveries
* JPMorgan edges up after results; Wells Fargo dips
* Indexes up: Dow 0.6 pct, S&P 1 pct, Nasdaq 1.6 pct
By Rodrigo Campos
NEW YORK, Jan 14 (Reuters) - U.S. stocks rose on Tuesday, erasing much of the previous session's steep drop, as a strong December retail sales reading cut concerns about a slowdown in earnings and the economy.
Google rose 2.5 percent to $1,150.58, giving a large boost to the outperforming Nasdaq, a day after the technology giant announced plans to acquire Nest Labs Inc, scooping up a promising line of products and a prized design team for $3.2 billion in cash.
Core U.S. retail sales increased 0.7 percent in December, flying past the 0.3 percent gain expectation. Fourth-quarter growth prospects were further boosted by a second report showing retail inventories, excluding autos, increased 0.6 percent in November.
The data followed Friday's payroll report that was sharply below expectations.
"Retail sales numbers for December sort of calmed everyone down," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
"Numbers indicate the economy is most likely moving forward at a nice pace despite an errant jobs number last Friday."
The Dow Jones industrial average rose 93.95 points or 0.58 percent, to 16,351.89, the S&P 500 gained 17.45 points or 0.96 percent, to 1,836.65 and the Nasdaq Composite added 64.871 points or 1.58 percent, to 4,178.175.
Tuesday's gains followed the largest drop in two months on the S&P 500, and market participants say they are gearing up for a more volatile 2014 after a year that constantly saw U.S. stocks go higher.
Intel Corp shares jumped 4.1 percent to $26.54 after JPMorgan upgraded the stock to "overweight" from "neutral."
Electric car maker Tesla said deliveries of its Model S sedan in the fourth quarter blew past the company forecast, sending shares up 13 percent to $157.50.
Both JPMorgan Chase & Co and Wells Fargo & Co posted earnings that beat expectations, though upside was limited with Wells Fargo near all-time highs and JPMorgan highest since 2000.
JPMorgan gained 0.4 percent to $57.91 while Wells Fargo dipped 0.1 percent at $45.51. The S&P financial index advanced 0.7 percent.
With just 5 percent of the S&P 500 companies having reported, 53.8 percent have beaten earnings expectations, according to Thomson Reuters data, below the 63 percent historical average. About 62 percent have beaten on revenue, above the long-term 55 percent average.
Bank of America Corp, Citigroup, Goldman Sachs and Morgan Stanley will post results later in the week. General Electric Co and Intel are also on tap.
Both GameStop Corp and Stratasys Ltd slumped after giving outlooks that were weaker than expected. GameStop lost 20.2 percent to $36.18, while 3D printer maker Stratasys slid 9.4 percent to $117.73.
In contrast, Intuitive Surgical advanced 6.9 percent to $420.13 after the surgical equipment maker gave a strong fourth-quarter outlook.
Charter Communications Inc offered to buy Time Warner Cable for $37.3 billion. TWC shares gained 2.8 percent to $136.06.