Dec. 12 (Bloomberg) -- U.S. stocks rallied the most in two weeks, led by technology and energy shares, after the Federal Reserve and four other central banks said they will add cash to the financial system to spur lending and economic growth.
Exxon Mobil Corp., Cisco Systems Inc. and AT&T Inc. gained, helping the Standard & Poor's 500 Index recoup more than half its loss from yesterday after the Federal Reserve's quarter- point rate cut disappointed investors. Centex Corp. and D.R. Horton Inc. led a rebound in homebuilders from their biggest drop ever.
The S&P 500 added 26.99, or 1.8 percent, to 1,504.64 as of 10:23 a.m. in New York. The Dow Jones Industrial Average increased 200.45, or 1.5 percent, to 13,633.22. The Nasdaq Composite Index gained 51.27, or 1.9 percent, to 2,703.62. Stocks in Europe also climbed after the announcement.
``The course the Fed was on didn't seem to be working,'' said Doug Peta, a New York-based market strategist at J&W Seligman & Co., which manages about $20 billion. ``We've got this new medicine we can try. I think we all can celebrate that.''
The Fed said it is coordinating the measures with the European Central Bank, Bank of England, Bank of Canada and Swiss National Bank in the biggest act of international economic cooperation since the Sept. 11 terrorist attacks.
Exxon Mobil, the world's biggest oil company, climbed $2.61 to $92.89. Cisco, the largest maker of computer-networking equipment, added 98 cents to $29.
AT&T
AT&T Inc. advanced $1.72 to $41.18. Lehman Brothers Holdings Inc. raised its share-price estimate for the biggest U.S. phone company by 8 percent to $54. AT&T yesterday announced a $15.2 billion stock buyback plan and raised its dividend 13 percent.
D.R. Horton, the fourth largest U.S. homebuilder, advanced $1.22 to $14.43. Centex rose $1.62 to $24.60. Homebuilders in S&P indexes climbed 4 percent as a group.
JPMorgan Chase & Co., the third-largest U.S. bank, climbed $1.02 to $46.96. American International Group Inc., the world's biggest insurer, added $1.46 to $60.71. Financial shares in the S&P 500 climbed 0.9 percent as a group.
The central banks' actions are a response to a surge in short-term borrowing costs. The three-month dollar London Interbank Offered Rate, a gauge followed by central bankers, rose to a two-month high of 5.15 percent a week ago.
The Fed lowered its target rate for overnight loans between banks and its discount rate for direct loans by a quarter percentage point each yesterday. U.S. stocks posted their biggest drop in a month after the cuts failed to allay concern the economy will slip into a recession.
Ford, Chevron
Ford Motor Co., the country's second-biggest automaker, climbed 16 cents to $7.13 after the Financial Times said the second-biggest automaker may disclose its preferred bidder for the Jaguar and Land Rover brands this week. The offers may range from $1.8 billion to $2.2 billion, the Financial Times reported, adding that two people close to the auction said they expect a response from Ford as early as today.
Chevron Corp., the second-largest U.S. oil company, added $2.49 to $92.38. Goldman Sachs Group Inc. lifted its average 2008 forecast for crude oil to $95 from $85 a barrel on ``technological and political uncertainty.'' Oil futures, traded on the New York Mercantile Exchange, may rise to as much as $105 a barrel by the end of next year, the world's largest securities firm said.
Merck
Merck & Co. advanced 83 cents to $61.23. Goldman increased its share-price estimate for the third-biggest U.S. drugmaker by 5.1 percent to $62 following Merck's ``upbeat'' 2007 annual briefing. The company's cervical-cancer vaccine Gardasil is ``a key opportunity,'' analysts wrote in a report.
Microchip Technology Inc. gained $1.53, or 5.1 percent, to $31.73. The computer-chip maker said fourth-quarter profit will be higher than previously estimated and authorized a new share buyback program.
Intel Corp., the world's largest maker of computer chips, added 54 cents to $27.47. Texas Instruments Inc., the biggest maker of chips for mobile phones, rose 68 cents to $33.61.
Manitowoc Co. climbed $3.05, or 7 percent, to $46.60, the steepest gain in the S&P 500. The maker of construction equipment raised its 2007 profit forecast on increased demand for cranes. Annual profit will be as much as $2.60 cents a share, Manitowoc said, 10 cents more than the upper end of the company's previous prediction.
Bank of America
Bank of America Corp. fell 76 cents to $43.89. The nation's second-biggest bank expects writedowns to increase and ``weak'' earnings through the first quarter of next year. ``You certainly can assume results will again be quite disappointing,'' said Chief Executive Officer Kenneth Lewis in a presentation to investors. The final writedowns are ``unknowable,'' he said, ``but we expect to be profitable in the fourth quarter.''
Boeing Co. dropped 50 cents to $88.20. The world's second- biggest commercial-plane maker was downgraded to ``equal weight'' from ``overweight'' at Morgan Stanley. Risks related to its new 787 Dreamliner may weigh on the stock, analysts said. Boeing said yesterday it's still working through ``wrinkles'' in the supply chain for its new 787 Dreamliner and will deliver the first aircraft as scheduled in late 2008.
Morgan Stanley also lowered its view on the airline industry to ``cautious'' from ``attractive.''
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