U.S. stocks rose, sending the Standard & Poor’s 500 Index to its highest level since July, as confidence among homebuilders topped economists’ forecasts, Goldman Sachs (GS) Group Inc. rallied and concern about Europe eased.
Goldman Sachs climbed 7.6 percent as earnings beat estimates amid lower compensation costs. JPMorgan (JPM) Chase & Co. and Bank of America Corp. jumped at least 3.9 percent, leading the gains in the Dow Jones Industrial Average. PulteGroup Inc. (PHM) and Lennar Corp. added more than 4.6 percent, pacing an advance in homebuilders. A measure of chipmakers rose the most in the S&P 500 among 24 industries, rallying 3.6 percent.
The S&P 500 increased 0.9 percent to 1,305.12 at 2:16 p.m. New York time. The Dow gained 76.90 points, or 0.6 percent, to 12,558.97. The Nasdaq Composite Index rose 1.3 percent to 2,762.54. The Russell 2000 Index jumped 1.3 percent to 775.64.
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“Investors need a new excuse to commit more capital,” Michael Shaoul, chairman of Marketfield Asset Management in New York, which oversees $1.3 billion, said in a telephone interview. “The acute stress of Europe has moderated. Given that we already have good economic data, the most obvious new excuse is earnings. I would expect a decent earnings season.”
At least 48 companies in the S&P 500 are scheduled to report quarterly results this week. Companies in the benchmark index, which beat profit estimates in the previous 11 quarters, probably will report a 4.6 percent increase in per-share earnings during the September-December period, analysts’ estimates compiled by Bloomberg show.
Highest Since 2007
Stocks gained as confidence among U.S. homebuilders rose in January to the highest level in more than four years. Equities extended gains as an official told reporters that Greece’s government could forge an agreement with private creditors by the end of this week after talks resumed in Athens today. The International Monetary Fund is proposing to raise its lending capacity by as much as $500 billion to safeguard the economy.
“The IMF thing is a double-edged sword,” Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, said in a telephone interview. His firm oversees $550 billion. “On the one hand, it does manage the tail risks, safeguard the economy. On the other hand, you wonder: What do they know that I don’t know?”
Eight out of 10 industries in the S&P 500 rallied as gains were led by financial and technology shares. A gauge of homebuilders in S&P indexes climbed 4.7 percent. PulteGroup added 7.6 percent to $8.07. Lennar (LEN) jumped 4.6 percent to $23.05.
Goldman Sachs rose 7.6 percent to $105.12. Chief Executive Officer Lloyd C. Blankfein, 57, cut compensation 21 percent in 2011 as he reduced costs and focused on international growth to offset a slowdown in trading, which contributes most of the firm’s revenue. Goldman Sachs’s higher-than-estimated earnings contrasted with previous reports from Citigroup Inc., which fell short of analysts’ estimates, and JPMorgan, which matched projections.
Some of the largest financial companies also climbed. JPMorgan added 4.8 percent to $36.59. Bank of America advanced 3.9 percent to $6.73.