JPMorgan Chase & Co., Citigroup Inc. and Wachovia Corp. helped push the Standard & Poor's 500 Index higher after Paulson outlined the broadest overhaul of U.S. financial regulation since the Great Depression. General Electric Co. and Deere & Co. rallied on a gauge of business activity that increased more than economists forecast. Merck & Co. tumbled the most since 2004, limiting the Dow Jones Industrial Average's advance, after doctors recommended not using one of its cholesterol pills in favor of a cheaper alternative.
The S&P 500 climbed 9.18 points, or 0.7 percent, to 1,324.4 at 2:30 p.m. in New York, paring its worst quarterly retreat in almost six years and reducing its monthly loss to less than 0.5 percent. The Dow average increased 72.79, or 0.6 percent, to 12,289.19. The Nasdaq Composite Index added 22.3, or 1 percent, to 2,283.48. Two stocks rose for every one that fell on the New York Stock Exchange.
The S&P 500 pared its yearly decline to 9.9 percent as the National Association of Purchasing Management-Chicago report showed exports spurred new orders, easing concern that business investment would dry up as the economy slows. The Fed, which engineered JPMorgan's takeover of Bear Stearns Cos. this month and became lender of last resort to the biggest securities firms, will oversee ``market stability'' under Paulson's proposal.
The S&P 500 is still poised to post its worst quarter since September 2002, when the fallout from telephone company WorldCom Inc.'s bankruptcy sent the benchmark for U.S. equities down almost 18 percent.
The S&P 500 Financials Index gained 1.7 percent today, paring its decline this year to 14 percent. JPMorgan, the third- biggest U.S. bank by assets, rose 92 cents to $43.63. Wachovia gained 97 cents to $26.96.
Paulson's 218-page ``Blueprint for Regulatory Reform,'' commissioned two months before credit markets seized up in August, said more rules aren't the answer to the current period of turmoil. The former chairman of Goldman Sachs Group Inc. said the structure of regulating banks, securities firms and insurance companies is outmoded, and the Fed should expand its oversight of financial services beyond banks.
The MSCI World Index of developed nations has dropped 9.7 percent this year. Both it and the S&P 500 are poised for the biggest quarterly retreat since September 2002.
Still, the S&P 500 has outperformed stock benchmarks in 15 of the world's 20 biggest equity markets this year, including Japan's Topix Index and the U.K.'s FTSE 100 Index, according to data compiled by Bloomberg. Taiwan's Taiex index was the only winner among the biggest markets' indexes in the first quarter, rising 0.8 percent. China's CSI 300 Index, which surged 162 percent last year, has retreated 29 percent in 2008 for the worst performance.