US Stocks Gain as Financials Rally

US stocks gained a second day on renewed speculation that the worst is over for the financial and consumer sectors after Merrill Lynch assured investors it has enough capital to maintain its dividend, the dollar rallied and crude oil prices fell. Stocks fell earlier after new-home sales plunged more than forecasts, Starbucks and Amazon.com gave lower-than-expected profit forecasts and falling oil prices dragged down energy shares.

However, a higher-than-expected rise in durable goods orders last month and unexpected fall in initial unemployment claims helped boost speculation that manufacturing and the job market are holding up even as the housing market worsens. The S&P500 Index gained 8.89 points, or 0.6% to close at 1,388.82, while the Dow Jones Industrial Average added 85.73 points, or 0.7% to 12,848.95. The Nasdaq Composite Index rose 23.71 points or 1% to 2,428.92. Almost two stocks rose for every one that fell on the NYSE.