(Bloomberg News) U.S. stocks rose, giving the Standard & Poor's 500 Index its best start to a year since 1987, after confidence among homebuilders topped forecasts, Goldman Sachs Group Inc. rallied and concern about Europe eased.
Goldman Sachs climbed 6.8 percent as earnings beat estimates amid lower compensation costs. Bank of America Corp. and JPMorgan Chase & Co. jumped at least 4.6 percent, leading the gains in the Dow Jones Industrial Average. PulteGroup Inc. and Lennar Corp. added more than 4.3 percent, pacing an advance in homebuilders. A measure of chipmakers rose the most in the S&P 500 among 24 industries, rallying 3.9 percent.
The S&P 500 increased 1.1 percent to 1,308.04 at 4 p.m. New York time, closing above 1,300 for the first time since July. The Dow advanced 96.88 points, or 0.8 percent, to 12,578.95. The Nasdaq Composite Index climbed 1.5 percent to 2,769.71. The Russell 2000 Index jumped 1.8 percent to 779.26.
"It's great to see the market up," John Carey, a Boston-based money manager at Pioneer Investments, said in a telephone interview. The firm oversees about $220 billion. "People are realizing that Europe is important, but it's not the whole world. They are looking at the economic numbers in the U.S. and seeing that we're not going back into a recession. The economy is still growing. We might be all right at the end of the day."
The S&P 500 has risen 4 percent this year as measures of commodity, financial and industrial shares rallied at least 6.4 percent. The Morgan Stanley Cyclical Index of companies most tied to the economy has surged 11 percent in 2012, with Alcoa Inc. and Caterpillar Inc. soaring at least 15 percent.
Highest Since 2007
Stocks climbed today as confidence among U.S. homebuilders rose in January to the highest level since 2007. Equities extended gains as an official told reporters that Greece's government could forge an agreement with private creditors by the end of this week after talks resumed in Athens today. The International Monetary Fund is proposing to raise its lending capacity by as much as $500 billion to safeguard the economy.
"Investors need a new excuse to commit more capital," Michael Shaoul, chairman of Marketfield Asset Management in New York, which oversees $1.3 billion, said in a telephone interview. "The acute stress of Europe has moderated. Given that we already have good economic data, the most obvious new excuse is earnings. I would expect a decent earnings season."
Companies in the benchmark index, which beat profit estimates in the previous 11 quarters, probably will report a 4.6 percent increase in per-share earnings during the September- December period, analysts' estimates compiled by Bloomberg show.
Homebuilders Rally
Nine out of 10 industries in the S&P 500 rallied as financial and technology gauges advanced at least 1.6 percent. A gauge of homebuilders in S&P indexes climbed 4.6 percent. PulteGroup added 5.9 percent to $7.94. Lennar jumped 4.4 percent to $23.
Goldman Sachs rose 6.8 percent to $104.31. Chief Executive Officer Lloyd C. Blankfein cut compensation 21 percent in 2011 as he reduced costs and focused on international growth to offset a slowdown in trading, which contributes most of the firm's revenue. Goldman Sachs's higher-than-estimated earnings contrasted with previous reports from Citigroup Inc., which fell short of analysts' estimates, and JPMorgan, which matched projections.