April 24 (Bloomberg) -- U.S. stocks rose for a second day after companies from Ford Motor Co. to American Express Co. posted better-than-estimated results and bank shares advanced as the Federal Reserve released the criteria for its stress test of lenders.

KeyCorp and Zions Bancorporation jumped more than 12 percent to lead bank shares higher as the details of the evaluations eased investor concern. Ford surged 11 percent after slowing its consumption of cash, while American Express climbed 21 percent on earnings and plans to repay the government’s investment. Microsoft Corp. added 11 percent on a smaller-than- forecast drop in profit and prediction of bigger cost savings.

“The most important headline is that most banks have adequate capital and that’s what the economy needs to finance the recovery,” said David Sowerby, who helps oversee about $100 billion at Loomis Sayles & Co. in Bloomfield Hills, Michigan. “We’ve seen earnings news collectively prove better-than- expected. That can keep the market pushing forward.”

The Standard & Poor’s 500 Index added 1.7 percent to 866.23, trimming losses at the end of its first weekly drop in almost two months. The Dow Jones Industrial Average rallied 119.23 points, or 1.5 percent, to 8,076.29. The Russell 2000 Index increased 2.6 percent. Almost four stocks climbed for each that fell on the New York Stock Exchange.

The S&P 500 ended the week down 0.4 percent after concern about rising credit losses triggered a 4.3 percent plunge on April 20. The U.S. benchmark index has rebounded 28 percent from a 12-year low on March 9, trimming its 2009 loss to 4.1 percent, on speculation government efforts to fix the banking system and revive the economy will pull the nation out of a recession.

Ford, American Express

Ford Motor rose 51 cents to $5. The only U.S. automaker not on government aid posted a first-quarter adjusted loss of 75 cents a share, 40 percent narrower than the $1.24 average of analyst estimates compiled by Bloomberg. Ford’s cash use was $3.7 billion, down from $7.2 billion in the fourth quarter.

American Express climbed $4.33, or 21 percent, to $25.30 for its best rally since at least 1980. The biggest U.S. credit- card company by purchases reported first-quarter profit from continuing operations of 32 cents a share, more than double the average analyst estimate.

Microsoft, the world’s largest software maker, added $1.99, or 11 percent, to $20.91 for its steepest gain since November. The company yesterday reported a smaller drop in third-quarter profit than some investors anticipated and predicted bigger cost savings this year by cutting jobs and travel spending and putting off part of a campus expansion. Morgan Stanley raised its recommendation for Microsoft to “overweight” from “equal weight,” citing an “accelerating growth story.”

‘Seen the Worst’

“A lot of the big negative surprises are behind us,” said David Rudow, an analyst with Thrivent Asset Management in Minneapolis. The company oversees about $65 billion, including Microsoft shares. “We’ve seen the worst. It’s just a question of when we see return to growth and normal spending again.”

The S&P 500 Financials Index of 80 banks, insurers and investment firms rose 2.5 percent, after declining 1 percent earlier today. The group is up 80 percent from a 17-year low on March 6 amid speculation the worst of the credit crisis is over.

The Fed said the recession and market turbulence have “substantially reduced” reserves at some of the 19 largest U.S. banks, while most of the firms hold capital “well in excess” of regulatory standards.

“Losses associated with the deepening recession and financial market turmoil have substantially reduced the capital of some banks,” the Fed said in a description of stress tests of the companies. “Most U.S. banking organizations currently have capital levels well in excess of the amounts required to be well capitalized.”

Stress Tests

The 19 firms that underwent stress tests, including Citigroup Inc., Bank of America Corp., Goldman Sachs Group Inc., GMAC LLC, MetLife Inc. and regional lenders including Fifth Third Bancorp and Regions Financial, receive preliminary results of the tests today. The results will be published on May 4.

Amazon.com Inc. advanced 4.8 percent to $84.46. The biggest Internet retailer reported first-quarter sales and profit that beat analysts’ estimates, bolstered by free shipping offers and demand for the Kindle electronic-book reader.

Juniper Networks Inc. climbed 16 percent to $22.33. The second-largest maker of networking equipment forecast second- quarter profit in line with analysts’ estimates and said a measure of profitability will increase from last quarter.

Earnings Watch

Of the S&P 500 companies that reported earnings from the close of trading yesterday through today’s open, 34 beat the average analyst estimate and 16 missed, according to Bloomberg data. Profits have surpassed consensus estimates by an average of 18 percent for the 178 companies that released results since April 7, even as average earnings declined 33 percent.

The period is projected to be the seventh straight quarter of declining earnings, the longest stretch on record.

Energy and raw-materials producers helped lead the gains as crude oil rose for a fourth day, metal prices advanced and Schlumberger Ltd. said first-quarter profit fell less than estimated as producers pulled back spending after crude prices tumbled.

Schlumberger surged $3.12, or 6.7 percent, to $49.73. Exxon Mobil Corp., the world’s largest oil company, gained 1.3 percent to $66.57. U.S. Steel Corp. added 7.4 percent to $29.03.

Crude oil for June delivery rose $1.93, or 3.9 percent, to $51.55 a barrel in New York. Futures are up 16 percent this year.

Eastman Chemical Co. jumped 21 percent for the biggest gain in the S&P 500. The largest U.S. producer of plastic for beverage bottles reported first-quarter profit excluding some items of 25 cents a share, topping the average analyst estimate by 80 percent, according to Bloomberg data.

Home Sales Surprise

Lennar Corp., the fourth-biggest U.S. homebuilder by revenue, led a rally of homebuilders after a report that showed sales of new homes in the U.S. last month were higher than anticipated, providing further evidence the market may be stabilizing.

Lennar climbed $1.30, or 15 percent, to $9.97. D.R. Horton Inc. gained 8.2 percent to $12.99. Centex Corp. added 7.9 percent to $11.50.

New-home sales decreased 0.6 percent to an annual pace of 356,000 after a 358,000 rate in February that was stronger than previously estimated, the Commerce Department said. The median sales price decreased 12 percent from March 2008, while inventories of unsold homes fell to a seven-year low.

Orders for U.S. durable goods in March fell less than forecast and sales of new houses were higher than projected, signs the economic slump is easing. Bookings for goods meant to last several years fell 0.8 percent last month, the Commerce Department. The median estimate of economists surveyed by Bloomberg News called for a 1.5 percent drop. New-home sales dipped 0.6 percent to a 356,000 annual pace after Commerce said the February reading was stronger than previously estimated.

U.S. stocks advanced yesterday as better-than-estimated earnings at companies from Marriott International Inc. to ConocoPhillips and EBay Inc. overshadowed a drop in existing home sales and higher jobless claims.

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

Last Updated: April 24, 2009 17:15 EDT