U.S. Stocks Gain for 2nd Day; Morgan Stanley, Alcoa Advance

Dec. 19 (Bloomberg) -- U.S. stocks gained for a second day, led by financial companies, after Morgan Stanley said China bought a $5 billion stake and the Federal Reserve added $20 billion to the banking system.
Morgan Stanley, the second-biggest U.S. securities firm, gained the most in a week. Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. also advanced. Alcoa Inc. climbed after the price of aluminum increased on speculation falling exports from China will reduce stockpiles.
The Standard & Poor's 500 Index added 6.17, or 0.4 percent, to 1,461.14 at 10:26 a.m. in New York. The Dow Jones Industrial Average rose 38.53, or 0.3 percent, to 13,271. The Nasdaq Composite Index increased 11.26, or 0.4 percent, to 2,607.29. About four stocks gained for every three that fell on the New York Stock Exchange. European stocks dropped, while most Asian benchmarks rose.
``For the financials it's positive because you need capital and the situation is only going to stabilize with more capital,'' said Steve Roukis, who helps oversee $1.8 billion, including Morgan Stanley shares, as managing director of Matrix Asset Advisors Inc. in New York.
Falling interest rates signaled that actions by central banks in Europe and North America to provide banks with cash may be easing gridlock in credit markets. The Federal Reserve lent the $20 billion in 28-day funds at a rate of 4.65 percent in the first of four auctions planned by the central bank.
Lower Rates
The three-month euro interbank offered rate, or Euribor, dropped 0.07 percentage point to 4.81 percent, the lowest since Nov. 30, the European Banking Federation said. The three-month rate for pounds declined 18 basis points to 6.21 percent, the lowest in four months, the British Bankers' Association said.
Today's advance pushed the S&P 500's gain for the year to 2.9 percent, while the Dow has added 6.4 percent and the Nasdaq is up 7.9 percent in 2007.
Morgan Stanley added 81 cents to $48.88 after it reported a fourth-quarter loss of $3.56 billion and said it obtained a $5 billion investment from China Investment Corp., the nation's sovereign wealth fund.
Bank of America, the second-biggest U.S. bank, rose 53 cents to $42.03. JPMorgan, the third-largest, climbed 47 cents to $44.37. Citigroup, the biggest, advanced 32 cents to $30.70.
TD Ameritrade gained 35 cents to $19.75. The third-largest U.S. discount broker raised its fiscal first-quarter earnings forecast after trading rose to a record. Earnings will be about 39 cents a share for the quarter ending this month, up from a previous forecast of as much as 33 cents, the company said. Rival E*Trade Financial Corp. gained 3 cents to $3.68.
Palm
Palm Inc. sank 62 cents to $5.31. The company's third- quarter loss will be 14 cents to 16 cents a share, excluding costs such as stock compensation, Palm said in a statement. Analysts on average had projected a loss of 5 cents, according to a Bloomberg survey. A year earlier, Palm had a profit of $11.8 million, or 11 cents.
Hovnanian Enterprises Inc., New Jersey's largest homebuilder, retreated 64 cents to $7.76 after reporting a loss that was four times analysts' estimate. The company's net loss was $7.42 a share. Eight analysts in a Bloomberg survey forecast a loss of $1.63 a share. The year-ago loss was $1.88 a share.
U.S. home foreclosures rose 68 percent in November from a year earlier as adjustable-rate mortgages left subprime borrowers unable to meet higher payments, according to data compiled by RealtyTrac Inc.
Darden Restaurants Inc. fell $6.34, or 17 percent, to $30, the steepest decline in the S&P 500. The company reported second-quarter profit that trailed analysts' estimates and reduced its full-year profit forecast.
U.S. stocks climbed for the first time in three days yesterday after the ECB injected $500 billion into the financial system.