March 12 (Bloomberg) -- U.S. stocks posted the biggest three-day gain since November as General Electric Co. said losing the top credit rating at Standard & Poor’s won’t hurt business and Bank of America Corp. said it’s profitable.

GE added 13 percent after losing the AAA ranking that it held since 1956, while Bank of America Corp. surged 19 percent. Wal-Mart Stores Inc. rose 3.1 percent after the government said retail sales beat estimates, indicating the biggest part of the economy is stabilizing. General Motors Corp. jumped 17 percent after saying it won’t need U.S. aid this month. Pfizer Inc. rallied 9.6 percent following success in a drug trial.

The S&P 500 Index increased 4.1 percent to 750.74, giving it an 11 percent surge since March 9 that’s the steepest over three days since November. The Dow Jones Industrial Average climbed 239.66 points, or 3.5 percent, to 7,170.06. The Russell 2000 Index of small companies advanced 6.5 percent to 390.12.

“Those banks have been beaten down to almost nothing -- same goes for GE -- so any kind of good news would allow for a bounce,” said Bruce Bittles, the Nashville, Tennessee-based chief investment strategist at Robert W. Baird & Co., which manages $15 billion. “The rally is certainly welcomed, and it may very well be that we have made a low for the year.”

U.S. stocks have surged since the S&P 500 dipped to a 12- year low of 676.53 on March 9. Bank of America today joined two of its biggest competitors, JPMorgan and Citigroup Inc., in saying this week that it made money during the first two months of the year, rebounding from the worst year for financial institutions since the Great Depression.

No ‘Significant’ Harm

GE rose 13 percent to $9.57. The shares have surged 36 percent since March 6 in what may prove to be the biggest weekly gain since at least 1980. It “does not anticipate any significant operational or funding impacts” from the credit downgrade, according to a statement. The long-term debt rating was cut one level to AA+ with a “stable” outlook. GE is down 41 percent in 2009.

Bank of America rallied after Chief Executive Officer Kenneth Lewis said that the largest U.S. bank by assets was profitable during the first two months of the year and that it expects to be make money in 2009. Lewis also said that the bank isn’t likely to need more aid when the government completes its “stress test.”

“While some banks may need more public support in the future, I don’t believe we will,” Lewis said in the prepared text of a speech for the Boston Chief Executive Officers’ Club.

Bank of America rose 19 percent to $5.85. JPMorgan advanced 14 percent to $23.20. Citigroup climbed 8.4 percent to $1.67. The S&P 500 Financial Index jumped 10 percent, giving it a four- day surge of 33 percent.

Futures Rebound

Futures on the S&P 500, which had declined 1.3 percent, rebounded after the Commerce Department said at 8:30 a.m. New York time that retail sales decreased 0.1 percent in February, less than the 0.5 percent slump economists forecast. January’s gain was almost double the previous estimate. Excluding automobiles, February sales unexpectedly climbed 0.7 percent.

“It’s good to see anything in the economic front that beat expectations,” said David Heupel, who helps manage $60 billion at Thrivent Financial for Lutherans in Minneapolis. “Any news that is not bad right now is good for the market.”

Wal-Mart, the world’s biggest merchant, added 3.1 percent to $48.94 following the government’s retail sales report. Best Buy Co., the nation’s biggest electronics retailer, rose 4.1 percent to $29.50. Clothing seller Gap Inc. climbed 5.3 percent to $11.47.

Cost Cuts

GM rose 17 percent to $2.18. The largest U.S. automaker said it no longer needs the $2 billion of government aid it had requested by the end of March because of savings from cost cuts.

Pfizer Inc. led a gauge of 54 health-care companies in the S&P 500 to a 5.2 percent gain, the second-biggest advance among 10 industries. Its cancer drug Sutent showed “significant benefit” in patients with a form of pancreatic tumor, the company said.

Pfizer increased 9.6 percent to $14.02.

CV Therapeutics Inc. climbed 32 percent to $21.04, the highest price since April 2006. Gilead Sciences Inc. agreed to buy the company, which develops drugs for the treatment of cardiovascular diseases, for about $1.4 billion, or $20 a share.

Celgene Corp. surged 12 percent, the most since Oct. 28, to $47.16. Thomas Weisel Partners LLC touted the biotechnology company among its “best ideas,” citing sales growth of its top-selling blood cancer product Revlimid.

Money to Work

“We’ve actually been putting a little bit of money into the stock market from the cash reserves we had,” said Dayle Malone, who helps manage $1 billion at Old Second Wealth Management in Aurora, Illinois. The rally in U.S. stocks is either driven by investors closing bearish bets or “people taking a longer-term perspective, saying that ‘I know things look bleak but the risk is worth the reward.’”

Steel Dynamics plunged 15 percent to $7.25. The fifth- largest U.S.-based steelmaker by market value forecast a first- quarter loss because demand is weakening.

JPMorgan cut its earnings estimates for U.S. steelmakers and said Steel Dynamics, AK Steel Holding Corp., U.S. Steel Corp. and ArcelorMittal may not meet the financial requirements of its credit agreements should the price of steel fail to recover this year.

AK Steel lost 0.8 percent to $6.49. U.S. Steel dropped 1.2 percent to $19.10. ArcelorMittal slipped 0.1 percent to $20.27.

Microsoft Corp. fell 0.6 percent to $17.01 for the only decline in the 30-stock Dow average. The world’s largest software maker had its earnings estimates reduced at Morgan Stanley, which said the personal-computer market will remain “choppy” this year.

Earnings at companies in the S&P 500 are projected to drop 34 percent in the first quarter and 10 percent for the year, according to estimates compiled by Bloomberg.

“First-quarter earnings are expected to be very weak, and that’s what investors are looking at,” said Randy Bateman, who oversees $15 billion as chief investment officer of the asset management unit of Huntington Bancshares Inc. in Columbus, Ohio.

To contact the reporter on this story: Rita Nazareth in New York at nazareth@bloomberg.net.

Last Updated: March 12, 2009 16:28 EDT