AT&T, the carrier for Apple Inc.'s iPhone, sent telephone stocks to the steepest gain since January after adding more wireless customers than analysts predicted. The almost $4-a- barrel drop in oil boosted 28 out of 29 retailers in the Standard & Poor's 500 Index. Fannie Mae and Freddie Mac jumped more than 11 percent each after lawmakers reached a deal to bail out the largest providers of money for U.S. home loans.
The S&P 500 added 5.19 points, or 0.4 percent, to 1,282.19, a three-week high. The Dow Jones Industrial Average increased 29.88, or 0.3 percent, to 11,632.38. The Nasdaq Composite Index advanced 21.92, or 1 percent, to 2,325.88. Three stocks rose for every two that fell on the New York Stock Exchange.
The S&P 500 extended its rebound from an almost three-year low on July 15 to 5.5 percent as seven of ten industries in the index advanced. Companies outside the financial industry have posted second-quarter earnings that topped analysts' estimates by an average of 3.3 percent, according to data compiled by Bloomberg.
The S&P 500 Telecommunication Services Index rose 3.4 percent, the most since Jan. 29, as all nine companies in the group advanced. Sprint Nextel Corp., the third-largest U.S. wireless carrier, added 1.1 percent to $8.51.
Financial stocks in the S&P 500 gained 1.9 percent as a group, extending their rebound from a nine-year low last week to 30 percent. U.S. Treasury Secretary Henry Paulson said legislation to bail out Fannie Mae and Freddie Mac, the largest mortgage-finance companies, will send ``a very strong message'' of confidence to investors. The House of Representatives is set to vote on a rescue plan for the companies today.
Fannie Mae gained 12 percent to $15 and Freddie Mac added 11 percent to $10.80. National City Corp. rose 7.8 percent to $4.71. SunTrust Banks Inc. increased 9 percent to $43.21.
Oil fell 3.1 percent to $124.44 a barrel, dropping below $125 for the first time in six weeks, after a U.S. government report showed that fuel stockpiles increased as consumption tumbled to the lowest in more than a year. Precious metals and crops joined oil's retreat as the dollar strengthened, limiting the appeal of commodities as a hedge against inflation.
Crude prices have lost 14 percent after topping $145 a barrel on July 14. Energy stocks in the S&P 500 lost 9.3 percent since then. The industry group, which was the best-performer last month, has now ceded that spot to raw-material producers and consumer staples companies.
Retailers in the S&P 500 gained 2.4 percent to the highest level since June 26. The Amex Airline Index advanced 8.5 percent, adding to yesterday's 22 percent rally, which was its biggest gain ever. General Motors Corp., the largest U.S. automaker, rose 2.1 percent to $14.62.
The S&P 500 is still 18 percent below its October record, having pared a decline of as much as 22 percent from that peak.
Stocks climbed today even as all 12 regional Federal Reserve bank districts reported ``elevated or increasing'' price pressures during June and July as the cost of food, fuel and metals increased. The economy ``slowed somewhat,'' the district banks said in the Beige Book report, with five signaling ``a weakening or softening in their overall economies.''