Stocks advance as US Dollar Index extends longest rally ever

May 15 (Bloomberg) -- U.S. stocks rose, with benchmark indexes rebounding from three-month lows, as growth in New York manufacturing bolstered optimism in the economy. The Dollar Index extended its longest rally ever as European equities slid after talks to form a new Greek government failed.

The Standard & Poor’s 500 Index increased 0.2 percent to 1,342.6 at 12:56 p.m. in New York after falling 0.2 percent earlier. The Dollar Index, a gauge of the currency against six major peers, rose for the 12th straight day. The Stoxx Europe 600 Index lost 0.7 percent to close at the lowest level of the year. Ten-year U.S. Treasury yields added two basis points to 1.78 percent. Spanish and Italian 10-year yields rose at least 12 basis points.

U.S. equities gained as the Federal Reserve Bank of New York’s economic index topped estimates and another report showed confidence among homebuilders climbed to a five-year high. A second Greek election threatens to extend the political gridlock that left the country without a government since the last vote on May 6, fueling concern the nation will exit the euro.

“Respectable economic data can at least provide some floor to the market in an environment where you have a resurfacing headwind in Europe,” said David Sowerby, a Bloomfield Hills, Michigan-based portfolio manager at Loomis Sayles & Co., which oversees about $170 billion. “The Empire manufacturing was a meaningfully better number. Germany is still the poster child for what’s being done right in Europe.”

The New York Fed’s general economic gauge, known as the Empire manufacturing index, increased to 17.09 this month from 6.6 in April, topping the median economist estimate for a reading of 9. Gross domestic product in Germany, Europe’s largest economy, rose 0.5 percent from the fourth quarter, compared to a 0.1 percent gain forecast by economists, while growth in the euro area stagnated, reports showed today.

Market Leaders

Consumer-discretionary, financial and technology companies led gains among the 10 main industry groups in the S&P 500, while energy and utility companies fell the most. JPMorgan Chase & Co., United Technologies Corp. and Bank of America Corp. rose at least 1.2 percent for the biggest gains in the Dow Jones Industrial Average.

JPMorgan rallied 3.6 percent after falling 12 percent in the previous two sessions, its biggest drop in three years. Chief Executive Officer Jamie Dimon, responding to shareholders at the company’s annual meeting after disclosing a $2 billion trading loss last week, said he sees no reason the bank’s dividend would be affected. The Department of Justice and the Federal Bureau of Investigation have begun a criminal probe of the loss, a person familiar with the matter said.

Groupon Inc. surged 12 percent after the largest daily-deal website reported first-quarter profit that topped analysts’ estimates.

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