Citigroup Inc. and Bank of America Corp. rose more than 20 percent, sending financial shares in the Standard & Poor’s 500 Index to the first advance in eight days, as Federal Deposit Insurance Corp. Chairman Sheila Bair said large U.S. banks have enough capital. Home Depot Inc., Macy’s Inc. and Nordstrom Inc. climbed at least 10 percent after the retailers reported profit that topped analysts’ estimates. All 24 S&P 500 industries advanced as the index rebounded from a 12-year low.
The S&P 500 added 4 percent to 773.14 for the biggest rally since Jan. 21. The Dow Jones Industrial Average increased 236.16 points, or 3.3 percent, to 7,350.94. The Russell 2000 Index of small companies climbed 4.5 percent to 412.48. Ten stocks gained for each that fell on the New York Stock Exchange, the broadest rally since Dec. 16.
The S&P 500 traded for 12.9 times company profits from the past 10 years as of yesterday’s close, the cheapest valuation since 1986, according to data compiled by Yale University professor Robert Shiller. He uses a decade of earnings to smooth out short-term fluctuations.
The U.S. stock market maintained its advance even after reports showed the housing slump and consumer confidence worsened and Bernanke told Congress a full economic recovery may take more than three years.
The Conference Board’s consumer confidence index declined more than forecast to 25 this month, the lowest level since data began in 1967, from a January reading of 37.4.