S&P 500 Hits Biggest Two-Day Rise in 2012

U.S. shares rose, giving the Standard & Poor’s 500 Index its biggest back-to-back advance in 2012, amid economic optimism as housing data beat estimates while investors speculated China and Europe will stimulate growth.

A gauge of homebuilders in S&P indexes climbed 3.2 percent as sales of existing home sales rose for the first time in three months. Financial shares had the biggest gain among 10 S&P 500groups as JPMorgan Chase & Co. (JPM) and Citigroup (C) Inc. added at least 4.5 percent.Ralph Lauren Corp. and Urban Outfitters Inc. (URBN) jumped more than 2.1 percent as earnings beat estimates. Facebook Inc. (FB) retreated 2.1 percent after yesterday’s 11 percent drop.

The S&P 500 advanced 0.8 percent to 1,326.87 at 11:33 a.m. New York time, rising 2.5 percent in two days. The Dow Jones Industrial Average increased 65.54 points, or 0.5 percent, to 12,570.02. Trading in S&P 500 companies was almost in line with the 30-day average at this time of day.

“There’s still a lot of good things going on,” Jack Ablin, chief investment officer of Harris Private Bank in Chicago, said in a telephone interview. His firm oversees about $60 billion. “As long as investors can pay attention to the U.S. economy, the market can advance.”

Stocks rose as purchases of previously owned houses increased to a 4.62 million annual rate, beating estimates. The China Securities Journal said the nation plans to speed up approval of infrastructure projects and allocate construction funding faster to improve growth. European leaders are scheduled to meet in Brussels tomorrow.

Today’s rally extended this year’s gain in the S&P 500 to 5.6 percent. Investors bought stocks amid better-than-estimated economic and corporate reports. About 70 percent of S&P 500 companies that reported first-quarter results beat analysts’ estimates, according to data compiled by Bloomberg.

“We’re getting some refocus back on economic news,” said Michael Strauss, who helps oversee about $27 billion of assets as the chief investment strategist at Commonfund in Wilton, Connecticut. “There’s a real turn happening in the U.S. housing sector. It seems to be a done deal that China will stimulate growth. There’s also some hope regarding the meeting taking place in Europe tomorrow.”

All 10 groups in the S&P 500 rose today as financial (S15HOME) and consumer discretionary shares had the biggest gains. The Morgan Stanley Cyclical Index of companies most-tied to economic growth added 1.1 percent. Homebuilders rallied as PulteGroup Inc. (PHM) advanced 4.5 percent to $9.26, while Lennar Corp. (LEN) increased 3.8 percent to $28.04.

The KBW Bank Index (BKX) rallied 2.3 percent as all 24 stocks advanced. JPMorgan climbed 5.1 percent, the most in the Dow, to $34.18. It had tumbled 20 percent since it announced $2 billion in trading losses on May 10. Citigroup gained 4.5 percent to $27.42. Bank of America Corp. (BAC) rose 4 percent to $7.10.

Urban Outfitters climbed 6.5 percent to $27.85. The retailer that rehired co-founder Richard Hayne as chief executive officer this year reported first-quarter profit that beat analysts’ estimates on record sales.

Ralph Lauren (RL) advanced 2.1 percent to $149.34. The retailer of its namesake brand clothing reported fourth-quarter profit that beat analysts’ estimates after sales jumped at its own stores as well as at department stores.

Best Buy Co. (BBY) adding 2.8 percent to $18.68, after swinging between gains and losses. The largest U.S. consumer-electronics retailer reported first-quarter profit that exceeded analysts’ estimates, helped by demand for smartphones. Lower demand for televisions and notebook computers reduced comparable-store sales in the quarter by 5.3 percent.

Facebook, the social networking site that raised $16 billion in an initial public offering, fell 2.1 percent to $33.31. The offering valued Facebook at 107 times trailing 12- month earnings, more than every S&P 500 member except Amazon.com Inc. and Equity Residential. The slump reinforces concern that the IPO was priced too high.

Hewlett-Packard Co. (HPQ) dropped 0.5 percent to $21.79 ahead of its results after the close of regular trading today. The computer maker will post earnings of 91 cents a share, excluding some items, according to the average analyst estimate in a Bloomberg survey. That would be 26 percent less than in the same period last year, the data show.

The stock is down 27 percent since this year’s high on Feb. 16, compared with a 2.7 percent decline for information technology companies in the S&P 500. The company in February forecast fiscal second-quarter profit of 88 cents to 91 cents a share, missing analysts’ estimates as consumers curtailed personal-computer buying. The company said sales in the PC group dropped 15 percent to $8.87 billion in the period ended in January.