S&P 500 has best 3-day rally since January on economic reports

U.S. stocks rose, sending the Standard & Poor’s 500 Index to its biggest three-day rally since January, on better-than-estimated economic data and assurances on stimulus efforts from Federal Reserve officials.

All 10 industries in the S&P 500 advanced. JPMorgan Chase & Co. and Citigroup Inc. gained more than 1.4% as financial companies rallied. An S&P index that tracks homebuilders surged 2.7% as D.R. Horton Inc. and Lennar Corp. increased at least 3.7%. Time Warner Cable Inc. jumped 4.7% as billionaire John Malone was said to be exploring scenarios for how Charter Communications Inc. could acquire the company.

The S&P 500 advanced 0.8% to 1,615.99 at 3:33 p.m. in New York. The Dow Jones Industrial Average rose 144.86 points, or 1%, to 15,055. Trading of S&P 500 companies was 8.6% below the 30-day average at this time of day.

“The market was pessimistic and overreacted to the downside last week on Bernanke’s comments,” said Thomas Nyheim, a Wilmington, Delaware-based fund manager for Christiana Trust, which oversees about $16 billion. “Federal Reserve board members are coming out and saying they won’t taper quantitative easing until the last few months of this year, if this year. The market is much more pleased with what it’s hearing and now it’s retracing its gains.”

The S&P 500 has rallied 2.7% over the past three days, the most since Jan. 4 and paring its decline for June to 0.9%. The index dropped more than 5% from May 21 through June 24 as the Fed said it may reduce its bond purchases if the economy and labor market improve as forecast.

Bull Market

Central bank stimulus has helped fuel a rally in stocks worldwide, with the benchmark U.S. index surging as much as 147% from its March 2009 low. Despite this month’s decline, the S&P 500 is up 2.8% for the quarter and has soared 13% for 2013.

Consumer spending in the U.S. rebounded in May following the largest drop in more than three years. Household purchases, which account for about 70% of the economy, rose 0.3% after a 0.3% decline the prior month, Commerce Department figures showed today in Washington. Incomes advanced 0.5%, more than projected.

More Americans signed contracts in May to buy previously owned homes than at any time in more than six years. Claims for unemployment benefits decreased by 9,000 to 346,000 last week, indicating employers are slowing the pace of firings.

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