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By Elizabeth Stanton
May 28 (Bloomberg) -- U.S. stocks rose for a second day as a rebound in oil prices spurred a late-day rally in energy shares and industrial companies climbed on better-than-forecast durable goods orders.
Exxon Mobil Corp., the largest U.S. oil producer, led gains in 34 of 36 energy companies in the Standard & Poor's 500 Index after crude reversed a decline of more than $2 a barrel. Caterpillar Inc. and Alcoa Inc. helped send the Dow Jones Industrial Average higher after the government said durable goods orders excluding transportation unexpectedly increased in April. The S&P 500 Banks Index erased half its retreat after falling below its lowest closing level since 2000 on forecasts of more charges from bad debts at KeyCorp.
The S&P 500 added 5.49 points, or 0.4 percent, to 1,390.84. The Dow climbed 45.68, or 0.4 percent, to 12,594.03. The Nasdaq Composite Index increased 5.46, or 0.2 percent, to 2,486.7. Three stocks gained for every two that fell on the New York Stock Exchange.
``People want to put money in things that can at least track inflation and hopefully stay ahead of it,'' said David Baker, chief investment officer at North American Management Corp. in Boston, which oversees $1.1 billion.
The S&P 500 swung between gains and losses more than 25 times as the advances in industrial companies and commodities producers were countered by a drop in financial shares.
Energy Rally
Exxon Mobil climbed 63 cents to $90.43, leading the S&P 500 Energy Index to a 1.5 percent advance, the group's first gain in five days. Crude for July delivery rose $2.18 to $131.03 a barrel after Morgan Stanley said Brent oil from the North Sea may ``easily'' reach $150 a barrel.
Monsanto Co., the world's biggest seed producer, led materials companies to a 2.8 percent advance. Alcoa, the world's third-biggest aluminum producer, rallied 3 percent to $41.57.
Caterpillar, the largest maker of bulldozers, added 1.5 percent to $83.19. Orders for U.S. durable goods excluding cars and planes rose 2.5 percent in April, the most since July, the Commerce Department said. Total orders fell a less-than-forecast 0.5 percent.
Deere & Co. climbed $2.72 to $82.58. The world's largest maker of tractors and combines raised its quarterly dividend 12 percent to 28 cents a share and authorized the repurchase of as much as $5 billion in additional common stock.
Polo Ralph Lauren Corp. climbed the most in the S&P 500, adding 12 percent to $69. The designer of Chaps and Club Monaco clothing reported an unexpected increase in fourth-quarter profit, helped by its new American Living line for J.C. Penney Co. and sales in Europe.
KeyCorp Tumbles
KeyCorp fell the most in the S&P 500, sliding $2.29, or 10 percent, to $19.66, its steepest tumble since 1987. Ohio's third- largest bank said net loan charge-offs will be higher than it estimated less than six week ago as the lender ``deals aggressively with reducing exposures in the residential homebuilder portfolio.''
Regions Financial Corp., Alabama's biggest bank, slumped 96 cents to $18.08, a seven-year low. Marshall & Ilsley Corp., the largest in Wisconsin, slid 71 cents to $22.90.
The 23-company S&P 500 Banks Index declined for a third day, falling 1.6 percent. The measure recouped about half its loss after touching an eight-year low at midday, led by Fannie Mae and Freddie Mac, the two largest U.S. providers of money for home loans. Fannie Mae added 28 cents to $26.81 and Freddie Mac increased 43 cents to $25.16.
AIG Retreats
American International Group Inc., the world's largest insurer, lost $1.71, or 4.7 percent, to $34.91, for the biggest decline in the Dow average. The insurer may seek $5 billion to $10 billion rather than let its credit rating be cut again, Citigroup wrote in a note to clients. AIG said last week it completed a sale of debt and stock to replenish capital lost to writedowns stemming from the subprime mortgage market's collapse.
Ambac Financial Group Inc. tumbled 9 percent to $2.94, a record low. The second-biggest bond insurer said it had $228 million of unrealized losses on collateralized debt obligations in April.
The S&P 500 Financials Index of 92 companies retreated 0.7 percent. It remains 5.3 percent higher than on March 17, when it fell to an almost five-year low on the first trading day after Bear Stearns Cos. averted insolvency by agreeing to a takeover by JPMorgan Chase & Co.
`Elongated Process'
``The recovery for financial stocks clearly is going to be an elongated process,'' said Dan Veru, chief investment officer at Palisade Capital Management, which oversees about $3 billion in Fort Lee, New Jersey. ``The unwinding of badly designed financial instruments is going to take a long time. That's clearly what keeps the market in check right now.''
CME Group Inc., the world's largest futures exchange, fell 3.7 percent to $437.20. CME's pending acquisition of Nymex Holdings Inc. faces opposition from a group of Nymex member who want a higher price and have enough votes to block it, the Chicago Tribune reported.
Lehman Brothers Holdings Inc. lost 1 percent to $36.84. David Einhorn, a hedge fund manager who's betting that Lehman shares will fall, said on Bloomberg Television the fourth-largest U.S. securities firm needs more capital even after raising $6 billion to recover from credit-market losses.
Coca-Cola Enterprises Inc. slid 5.2 percent to $20.20. The world's biggest soft-drink bottler said meeting its forecast for 2008 earnings will be ``challenging.'' Earnings per share in the second quarter may decline in the ``mid-to-high single digits'' on a percentage basis, the Atlanta-based company said in a statement.
ADM, JetBlue
Archer Daniels Midland Co. lost $2.09 to $39.86. The world's largest grain processor said it plans to sell as much as $2 billion in equity units to repay short-term debts and invest in ``long-term growth opportunities.'' The creation of more stock may dilute the stake of existing shareholders.
JetBlue Airways Corp. fell to a record low after the discount carrier said it deferred deliveries of 21 Airbus SAS A320 jets and plans to sell $160 million in debt that can be converted into stock. JetBlue declined 6.8 percent to $4.11.
The Russell 2000 Index, a benchmark for companies with a median market value 95 percent smaller than the S&P 500's, climbed 0.6 percent to 738.46. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, rose 0.5 percent to 14,131.11. Based on its advance, the value of stocks increased by $90 billion.
Treasuries fell, pushing the 10-year note's yield above 4 percent for the first time since January.
To contact the reporters on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.
Last Updated: May 28, 2008 16:44 EDT
