June 29 (Bloomberg) -- U.S. stocks rose, giving the Standard & Poor’s 500 Index its biggest three-day gain since March, as Greece passed austerity measures, pending home sales climbed and Monsanto Co.’s sales beat estimates.
Financial companies in the S&P 500 added 1.9 percent, following gains in European lenders. Bank of America Corp. climbed 3.1 percent after agreeing to pay $8.5 billion to resolve claims over soured mortgages. Monsanto, the largest seed company, rose 4.2 percent after net income jumped 77 percent. U.S. Steel Corp. paced a rally in steelmakers, rising 6.7 percent, as Deutsche Bank AG predicted demand rebound.
The S&P 500 rose 0.9 percent to 1,308.59 at 1:46 p.m. in New York, extending its three-day rally to 3.2 percent. The Dow Jones Industrial Average added 89.46 points, or 0.7 percent, to 12,278.15. About 4.1 billion shares changed hands on U.S. exchanges, 21 percent more than at the same time a week ago.
“Greece is kicking the can down the road,” said Bruce McCain, who helps oversee $22 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland. “That’s certainly an important first step. On top of that, the economy has a number of catalysts that could help push the market higher over the next few weeks. We’ve came down a lot on price. It seems a bit overdone.”
The S&P 500 fell 3.6 percent in June through yesterday, and headed for the second straight monthly loss, amid concern about the European debt crisis and weaker-than-expected economic data. The index was still up 3.1 percent in 2011 through yesterday on government stimulus measures and better-than-estimated profits.
Global stocks rose for a third day, the longest advance in a month, as Greek Prime Minister George Papandreou clinched enough votes to pass the first part of an austerity plan aimed at meeting European Union aid requirements and staving off default for his debt-laden nation. Papandreou is now on track to secure a bill setting out the strategy for a 78 billion-euro ($112 billion) package of budget cuts and asset sales that is the condition for further rescue funds.
“It relieves a certain amount of uncertainty related to outsized risks that would come with a default,” said Kevin Caron, market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co., which has more $110 billion in client assets. In addition, “most of the data for the economy continues to show an improvement overall. It was good to see that home sales rose more than expected. That was a positive sign.”
More Americans than forecast signed contracts in May to buy previously owned homes, signaling the residential real estate market may be rebounding from a slump earlier in the year. The index of pending home resales increased 8.2 percent from April after a revised 11 percent drop the prior month that was smaller than initially reported, the National Association of Realtors said. Economists forecast a 3 percent increase, according to the median estimate in a Bloomberg News survey.
The KBW Bank Index increased 1.7 percent as 23 of its 24 stocks advanced.
Bank of America added 3.1 percent to $11.15. The stock rose even after the bank said the settlement will contribute to a second-quarter loss of $8.6 billion to $9.1 billion, or 88 cents to 93 cents a share. Bank of America also said it’s adding $5.5 billion to a liability reserve for future loan-repurchase demands and will record $6.4 billion in other charges including legal costs and a writedown of mortgage-unit goodwill.
Citigroup Inc. advanced 2.7 percent to $41.24. Bank of America raised the stock to “buy” from “neutral,” saying potential earnings should lift the shares.
Gauges of raw material and energy shares gained at least 1.5 percent. The S&P GSCI Index of 24 commodities advanced 2 percent as oil and metals rallied.
Monsanto climbed 4.2 percent to $69.71. The world’s largest seed company reported fiscal third-quarter earnings that topped analysts’ estimates and raised its full-year profit forecast on higher sales of Roundup weed killer and genetically modified crop seeds. Profit excluding some items will rise to $2.84 to $2.88 a share in the fiscal year through August. Its previous forecast was for $2.72 to $2.82.
U.S. Steel rose the most in the S&P 500, rallying 6.7 percent to $46.19. Deutsche Bank AG said demand and prices for the metal will rise. Steel producers in the U.S. will benefit as Chinese inventories empty and industrial activity picks up in the second half of 2011, analysts including David Martin and Jorge Beristain wrote in a research note yesterday.
Deutsche Bank raised its ratings on Pittsburgh-based U.S. Steel and AK Steel Holding Corp., the third-largest U.S. steelmaker, to “buy” from “hold.”
BJ’s Wholesale Club Inc. climbed 4.6 percent to $50.28 as Leonard Green & Partners LP and CVC Capital Partners agreed to buy the warehouse-club chain for $2.8 billion. Its investors will receive $51.25 a share in cash for each common stock they hold, the companies said. That’s 6.6 percent more than the closing price yesterday.
--With assistance from Inyoung Hwang, Cecile Vannucci, Whitney Kisling and Jeff Kearns in New York. Editor: Joanna Ossinger
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