SLM Corp., the largest U.S. student-loan company, climbed the most in five months after refusing to lower the price on its $25.3 billion buyout. Chevron Corp. and ConocoPhillips helped lead energy shares higher after crude oil prices advanced for a second day.
The Standard & Poor's 500 Index gained 4.28, or 0.3 percent, to 1,529.7 as of 9:45 a.m. in New York. The Dow Jones Industrial Average increased 27.56, or 0.2 percent, to 13,905.71. The Nasdaq Composite Index rose 10.52, or 0.4 percent, to 2,709.55.
Stocks in Asia and Europe also rallied on expectations that August sales of new U.S. homes fell to the lowest level since 2000, providing further evidence policy makers will lower borrowing costs to stem an economic slowdown.
``The way the market's been reacting here I think investors are looking for the Fed to cut,'' said Kurt Brunner, who helps manage $1.5 billion at Swarthmore Group Inc. in Philadelphia. ``People are expecting that because these numbers are a little difficult, that the Fed has to come in and cut again.''
The S&P 500 has gained 8.4 percent since the central bank cut its discount rate on Aug. 17 to revive investor confidence in credit markets. On Sept. 18 the Fed lowered the benchmark federal funds rate by half a percentage point and said it will ``act as needed'' to sustain economic growth.
SLM, also know as Sallie Mae, rallied $2.76, or 6.1 percent, to $47.77.
Chevron, the second-largest U.S. oil producer, climbed 83 cents to $93.34. ConocoPhillips, the third-largest, added 86 cents to $88.16.
Crude oil for November delivery gained $1.24, or 1.5 percent, to $81.54 a barrel in New York. Stockpiles in the Midwest fell to a 21-month low and a storm formed in the south of the Gulf of Mexico, the source of 25 percent of U.S. production.