Sept. 23 (Bloomberg) -- U.S. stocks rose, led by technology shares trading at their cheapest level since at least 1995 and phone companies that don't depend on the economy's growth for profits.

Microsoft Corp. climbed 2.5 percent and Intel Corp. added 3.9 percent after valuations on computer companies slid to the lowest level compared with earnings since Bloomberg began tracking the data. Sprint Nextel Corp. jumped 6.5 percent, leading gains in eight of nine phone companies in the S&P 500. Financial stocks swung between gains and losses as lawmakers expressed skepticism after Treasury Secretary Henry Paulson urged Congress to pass his $700 billion plan to bail out banks.

The Standard & Poor's 500 Index gained 4.07 points, or 0.3 percent, to 1,211.16 at 3:20 p.m. in New York. The Dow Jones Industrial Average added 38.95, or 0.4 percent, to 11,054.64. The Nasdaq Composite Index increased 17.52, or 0.8 percent, to 2,196.5. About the same number of stocks rose as fell on the New York Stock Exchange.

``Technology stocks got hammered in the last week, more than the overall market, so it's not surprising on an up day they'd have a bigger bounce,'' said Tom Wirth, senior investment officer at Chemung Canal Trust Co. in Elmira, New York, which manages $1.7 billion

Technology companies in the S&P 500 lost 1.4 percent as a group last week even as the overall index gained 0.3 percent after Paulson and Federal Reserve Chairman Ben S. Bernanke proposed buying troubled assets from banks. The S&P 500 Information Technology Index ended the week with an average valuation of 17.6 times earnings, the cheapest since Bloomberg began tracking the data in 1995.

Microsoft, Dell

Microsoft Corp. rose 61 cents to $26.01. The world's largest software company's authorization of a $40 billion stock buyback ``signals management's greater confidence in the long- term potential of the company,'' Deutsche Bank analysts wrote. The buyback may boost next fiscal 2009 per-share earnings by 4 cents, they wrote, maintaining a $34 share forecast.

Sun Microsystems Inc., priced yesterday at an all-time low 9.38 times profit, added 2.7 percent to $7.90. Dell, the second- biggest personal-computer maker, rose 8 cents to $16.65 after its price-earnings ratio fell to the lowest in a decade.

The S&P 500 Information Technology Index added 0.8 percent and contributed the most to the market's advance.

Sprint rallied 38 cents to $6.88, leading the S&P 500 Telecommunications Service Index to a 1.5 percent advance.

Short List

General Growth Properties Inc. rallied 7.7 percent to $17.32 after U.S. regulators added the real-estate investment trust and eight other companies to the list of stocks temporarily protected against short sales.

Paulson and Federal Reserve Chairman Ben S. Bernanke warned skeptical lawmakers that failure to pass a plan to buy troubled assets from financial firms would threaten markets and the U.S. economy.

Some lawmakers have balked at rubber-stamping the proposal, with Democrats demanding support for homeowners and limits on executive pay and some Republicans questioning the plan's reach and size.

`Urgently Required'

``Action by the Congress is urgently required to stabilize the situation and avert what could otherwise be very serious consequences for our financial markets and for our economy,'' Bernanke said in testimony prepared for delivery today to the Senate Finance Committee. ``Global financial markets remain under extraordinary stress.''

ImClone Systems Inc. added 5.9 percent, the most in two weeks, to $62.89. Bristol-Myers Squibb Co. increased an offer to buy 83 percent of the maker of the Erbitux cancer drug to $62 from $60 a share. ImClone rejected the $60-a-share offer July 31.

The S&P 500 lost 3.8 percent yesterday on concern the government's $700 billion plan to shore up banks' balance sheets will fail to prevent a recession.

Last Week's Rally

An 8.5 percent, two-day rally at the end of last week was the S&P 500's biggest since the aftermath of the crash of 1987. The gain followed a drop of 7.6 percent over three days that started when Lehman Brothers Holdings Inc. filed for bankruptcy, Merrill Lynch & Co. was sold to Bank of America Corp. and the U.S. took control of American International Group Inc.

The benchmark index for U.S. equities is down almost 18 percent this year on concern more than $500 billion in credit losses and writedowns at financial firms worldwide and a slowing economy will hurt profits. Earnings for companies in the index are forecast to fall 5 percent this quarter, according to analyst estimates compiled by Bloomberg.

A decline in third-quarter profits would make this streak of decreases the longest since the period ended in 2002, the year the benchmark index for American equities completed a 49 percent plunge from its March 2000 record. The S&P 500 has lost 23 percent since its all-time high reached in October 2007.

HSBC Holdings Plc, Europe's largest bank, cut its recommendation on developed-market equities to ``underweight'' from ``neutral.''

While Paulson's plan to stabilize the banking system ``puts a floor -- fingers crossed -- on the worst of the downturn, it seems unlikely to be able to prevent a nasty slowdown, for the simple reason that both the financial system and the real economy will continue to deleverage,'' HSBC strategist Richard Cookson wrote today.

Oppenheimer & Co. banking analyst Meredith Whitney said the government's bailout plan has ``little hope of improving core fundamentals over the near and medium term.''

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.

Last Updated: September 23, 2008 15:21 EDT