By Eric Martin
Feb. 13 (Bloomberg) -- U.S. stocks rose for a third day, the longest stretch of gains in 2008, after increased demand at Applied Materials Inc. spurred a technology rally and energy shares advanced on higher gas-station sales.
Applied Materials Inc., the largest maker of semiconductor- production machines, climbed the most in five years and helped push the Nasdaq Composite Index to its best gain since November. Exxon Mobil Corp. and ConocoPhillips led oil shares higher after the Commerce Department said rising prices at filling stations spurred an unexpected increase in retail sales last month.
``The rally could last,'' said Eric Green, who helps oversee $5 billion as senior managing partner at Penn Capital Management in Cherry Hill, New Jersey. ``We see the market heading higher.''
The Standard & Poor's 500 Index added 18.35 points, or 1.4 percent, to 1,367.21, its biggest gain in two weeks. The Dow Jones Industrial Average climbed 178.83, or 1.5 percent, to 12,552.24. The Nasdaq increased 53.89, or 2.3 percent, to 2,373.93. Four stocks rose for every one that fell on the New York Stock Exchange.
The gain in retail sales defied economists' forecasts for a drop in purchases and spurred optimism that earnings growth outside the banking industry will withstand an economic slowdown sparked by the collapse of the subprime mortgage market. Excluding financial companies, profits have risen 18 percent for S&P 500 members that have reported fourth-quarter results so far, according to data compiled by Bloomberg.
Applied Materials climbed $1.84, or 10 percent, to $19.91. The company said orders for machines that make flat screens will rise as much as 5 percent this quarter, exceeding some analysts' estimates. The stock led makers of computer chips and related equipment to a 2.8 percent advance as a group.
Network Appliance Inc., the maker of data-storage computers for Oracle Corp. and the U.S. Army, added $1.51, or 7 percent, to $23.04.
Exxon, the largest U.S. crude producer, rallied $1.11 to $85.49. ConocoPhillips, the third-biggest, jumped $2.25 to $78.65. Energy companies in the S&P 500 advanced 2.3 percent as oil for March delivery rose 49 cents to $93.27 a barrel in New York.
Filling station sales increased 2 percent in January after remaining unchanged the prior month, the Commerce Department said, as regular gasoline climbed to as high as $3.11 a gallon in early January. Total retail sales advanced 0.3 percent, compared with economists' forecast for a drop of 0.3 percent. Excluding gas, purchases rose 0.1 percent last month, the Commerce Department said.
The S&P 500 Retailing Index added 0.3 percent. Target Corp., the second-largest U.S. discount chain, climbed 60 cents to $54.51. Gap Inc. rose 12 cents to $20.06.
``The consumer is not tapped out yet, which is what everyone had thought,'' said Andrew Seibert, who helps oversee $400 million at Nextier Wealth Management in Pittsburgh. ``The market is looking for every positive it can get at this point.''
Genentech Inc. rallied 93 cents to $70.85. The largest U.S. maker of anti-cancer drugs said its Avastin treatment helped slow the spread of breast tumors in a clinical trial.
Technology shares also gained after the Wall Street Journal reported Yahoo! Inc., seeking to thwart Microsoft Corp.'s $44.6 billion takeover bid, is in talks about a combination with News Corp.'s Internet assets instead.
Rupert Murdoch's News Corp. would get a stake in Yahoo that could be more than 20 percent, the newspaper said on its Web site today, citing people familiar with the matter. The deal would include a cash contribution from News Corp. and a buyout firm. Yahoo added 31 cents, or 1.1 percent, to $29.88. News Corp. Class A shares slid 12 cents to $19.25 and Microsoft added 62 cents to $28.96.
Industrial companies also rose, led by Rockwell Automation Inc., the world's largest maker of factory controls, after the report on purchases by consumers bolstered confidence in the sagging economy. Rockwell increased $3.34, or 6 percent, to $58.92.
President George W. Bush signed into law today a $168 billion economic stimulus package designed to avoid a recession by boosting spending among consumers and businesses. Rebate checks will be sent to more than 130 million Americans beginning in May. The measure also gives tax incentives to businesses to invest in new equipment.
Telephone Shares Gain
Telephone companies gained 3 percent, the most among 10 industries in the S&P 500, led by Qwest Communications International Inc., the local phone service provider in 14 western U.S. states. Qwest rallied 39 cents, or 7.4 percent, to $5.67 after the stock was upgraded to ``buy'' from ``hold'' by analysts at Deutsche Bank. Qwest shares are ``attractively valued'' and the slowing economy will not ``dramatically'' hurt Qwest's earnings, the analysts said. Qwest reported an 89 percent gain in fourth- quarter profit yesterday after cutting labor expenses.
Deere & Co., the world's largest maker of farm tractors and combines, fell 94 cents, or 1.1 percent, to $85.54. Deere's comments that the U.S. housing slump will maintain ``continued pressure'' on sales of construction and forestry equipment overshadowed its increased annual forecast and first-quarter earnings surge.
More Declines Expected
A survey of Bloomberg users showed benchmarks for the world's biggest stock markets probably will fall for the next six months as economic growth slows. Investors are the most pessimistic in the U.S. and the U.K., the survey showed.
The S&P 500, the FTSE 100 Index, France's CAC 40 Index, the German DAX Index, Italy's S&P/MIB Index, the Swiss Market Index and Japan's Nikkei 225 Stock Average will decline, according to the Bloomberg Professional Global Confidence Survey. Only investors in Hong Kong predicted gains. The survey measured the confidence of 5,148 Bloomberg users from New York to London to Paris to Tokyo.
MGIC Investment Corp., the largest U.S. mortgage insurer, fell the most in the S&P 500, dropping $1.57, or 11 percent, to $12.61. The company said it lost $1.47 billion in the fourth quarter as the rate of delinquent loans leading to claims increased.
Dean Foods Co. tumbled $1.70 to $25.23. The biggest U.S. milk processor said fourth-quarter profit slid 55 percent because of surging raw-milk costs and a glut of organic milk.
Wynn, Jones Apparel
Wynn Resorts Ltd. retreated after the casino company run by billionaire Stephen Wynn reported a decline in earnings at its Las Vegas property. The shares fell $8.93 to $110.91.
Jones Apparel Group Inc. gained $1.70, or 11 percent, to $17.15. The maker of Jones New York clothing and Nine West shoes reported fourth-quarter earnings that beat analysts' estimates.
Health insurers declined, led by UnitedHealth Group Inc., the largest in the U.S. New York Attorney General Andrew Cuomo said he plans to sue UnitedHealth and will issue 16 subpoenas in an industrywide probe of how U.S. insurers compute ``reasonable and customary'' rates to limit payouts. Cuomo said he also will subpoena Aetna Inc., Cigna Corp. and Empire Blue Cross & Blue Shield over their reimbursement practices.
UnitedHealth dropped $1.30, or 2.7 percent, to $46.97. Aetna fell $1.32, or 2.6 percent, to $49.26.
Small Companies Rise
The Russell 2000 Index, a benchmark for companies with a median market value of $551 million, also rose for a third day, adding 2.3 percent to 721.93. Buffalo Wild Wings Inc. gained $2.85, or 12 percent, to $26.25 after the restaurant chain that sells chicken wings reported profit that topped analysts estimates.
Blue Nile Inc. had the biggest drop since 2004, plunging 17 percent to $44.67. The Internet diamond retailer whose stock almost doubled last year said profit and sales will be less than analysts estimated as consumers cut spending.
The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, rose 1.4 percent to 13,843.43. Based on its advance, the value of stocks increased by $245 billion.
U.S. stocks climbed for a second day yesterday, led by financial shares, on expectations Warren Buffett will help stem credit losses by offering to shore up the municipal bond market.