Citigroup Inc. and JPMorgan Chase & Co. rose at least 7.7 percent as the KBW Banks Index extended its gain since March 6 to 46 percent. KB Home led a rally in construction companies and Home Depot Inc. jumped 6.7 percent as housing starts unexpectedly climbed 22 percent in February, the biggest jump since 1990. Apple Inc. climbed 4.4 percent to help lead technology shares higher after updating its iPhone software.
The S&P 500 rose 3.2 percent to 778.12, led by a 6.6 percent gain in financial companies. The Dow Jones Industrial Average increased 178.73 points, or 2.5 percent, to 7,395.7. The Nasdaq Composite Index jumped 4.1 percent. About eight stocks rose for each that fell on the New York Stock Exchange.
The S&P 500 yesterday halted a four-day rally that had propelled the index up almost 12 percent from its 12-year low on March 9. The gains were triggered by optimism that the worst of the financial crisis was over after Citigroup, Bank of America Corp. and JPMorgan said they were profitable in the first two months of the year.
The S&P 500 has declined 14 percent in 2009, rising in only two of 10 weeks this year, as mounting losses at banks raised concern the government would be forced to nationalize some lenders. The index lost 38 percent in 2008, its worst year since the Great Depression.
The 17-month U.S. stock market decline may be at or near an end after investors exhausted their will to sell, according to Tobias Levkovich, chief U.S. equity strategist at Citigroup.
Today’s advance came amid speculation that Fed policy makers will consider increasing the pace and size of a $600 billion program to purchase mortgage securities and other assets. That would signal a more aggressive stance from Fed Chairman Ben Bernanke after the economy and job market deteriorated further since the Federal Open Market Committee last met, analysts and investors say. The FOMC is expected to release a statement tomorrow afternoon.