Google Inc. (GOOG), the world’s biggest Internet-search company, jumped 5.6 percent after sales topped projections. Apple Inc. (AAPL)gained 2.7 percent as the company is poised to sell as many as 4 million units of its new iPhone 4S this weekend after customers lined up to buy one of the last products developed under Steve Jobs.Amazon.com Inc. (AMZN) and Caterpillar Inc. (CAT) added at least 2.7 percent, pacing gains among companies most-tied to the economy.
The S&P 500 rose 1.2 percent to 1,218.41 at 3:12 p.m. New York time. The index climbed to the highest level since Aug. 31, on a closing basis. The Dow Jones Industrial Average added 117.09 points, or 1 percent, to 11,595.22, erasing its 2011 loss. The gauge was poised for a third straight weekly advance.
“The economy seems to be re-accelerating as the threats to growth moderate,” David Goerz, San Francisco-based chief investment officer at Highmark Capital Management Inc., which oversees $17.2 billion, said in an e-mail. “If the economy is unable to slow much and resilient profit margins are maintained, then increasing volumes will drive earnings growth.”
The S&P 500 extended its weekly gain to 5.5 percent, rallying for a second week amid speculation Europe will tame its debt crisis. The rebound has yet to bring the gauge out of a price range where it’s traded for more than two months. The index has fluctuated between 1,074.77 and 1,230.71 since Aug. 5. The S&P 500 today pared its advance after rising to 1,221.46, just above levels where rallies stopped in August and September.
The Citigroup Economic Surprise Index for the U.S. turned positive for the first time since April 29, the day the S&P 500 peaked at an almost three-year high. It climbed to 2.2, up from minus 117.20 on June 3. The reading four months ago showed reports were missing the median economist projection in Bloomberg surveys by the most since January 2009.
U.S. equities rose as retail sales in the U.S. rose more than forecast in September, easing concern slumping confidence and scant hiring will derail the biggest part of the economy. Separately, the Thomson Reuters/University of Michigan preliminary index of consumer sentiment decreased to 57.5 this month from 59.4 in September. The median estimate of economists surveyed called for a reading of 60.2.
“The economy is not great, but it’s not as weak as some people expected,” Mark Bronzo, who helps manage $26 billion at Security Global Investors in Irvington, New York, said in a telephone interview. “There’s a good a chance we’ve made a bottom in stocks.”
U.S. stocks also followed a rally in European shares as finance ministers and central bankers from the Group of 20 began talks in Paris. Nations from China to Brazil are considering increasing the International Monetary Fund’s lending resources to help stem the European debt crisis, Group of 20 and IMF officials said. European officials are considering writedowns of as much as 50 percent on Greek bonds, according to people familiar with the discussion.
Google jumped 5.6 percent to $590.20. The shares rallied 19 percent in nine days, the biggest gain since February 2009. Chief Executive Officer Larry Page, who succeeded Eric Schmidt in April, is benefiting from Google’s leadership in search advertising, even as the company pushes into new markets such as mobile, display and social networking.
Profit for S&P 500 companies will climb 17 percent in the third quarter and rise 18 percent to a record $99.86 for all of 2011, according to analyst estimates compiled by Bloomberg. The S&P 500 is trading for 10.9 times forecast earnings for 2012, compared with its five-decade average of 16.4 times reported income, according to data compiled by Bloomberg.
“Investor sentiment might be recalibrated,” Keith Wirtz, who oversees $16.7 billion as chief investment officer at Fifth Third Asset Management in Cincinnati, said in a telephone interview. “We’re expecting this rally in stocks to be indicative of the whole quarter. There has been so much negative sentiment that the simple fact that we’re now in earnings season and we have a new type of information hitting the market, that might be a catalyst.”
Apple gained 2.7 percent to $419.45, adding 13 percent in five days, the most since July 2006. The iPhone 4S, available today in the U.S., Australia, Canada, France, Germany, Japan and the U.K., is projected to outperform last year’s introduction of the iPhone 4, which topped 1.7 million units in its first weekend. For the iPhone 4S, most estimates range from 2 million to 3 million and Yankee Group analyst Carl Howe predicts sales as high as 4 million.
The Morgan Stanley Cyclical Index of companies most-tied to economic growth, added 1.9 percent. Amazon.com, the world’s largest online retailer, increased 3.6 percent to $244.64. Caterpillar climbed 2.7 percent to $83.67.