March 7 (Bloomberg) -- U.S. stocks posted their first two- day advance since mid-February after a Federal Reserve official said the economy is ``quite strong,'' echoing comments from Treasury Secretary Henry Paulson that the U.S. will avoid a recession.

Exxon Mobil Corp., Boeing Co. and Hewlett-Packard Co. helped the Standard & Poor's 500 Index and Dow Jones Industrial Average add to their biggest rally since July. Energy shares jumped 2.6 percent for the best performance among 10 industry groups as oil prices climbed the most in two weeks.

Chicago Fed Bank President Michael Moskow's remark follows comments made by Paulson today in Seoul that economic growth is ``solid'' and inflation low. In its regional survey of the economy today, the Fed reported continued growth in retail sales and rising demand for services in its districts.

``Moscow is coming out and saying the economy's strong and right now, the market is looking for signs of strength,'' said James Awad, who oversees about $1.3 billion as chairman of Awad Asset Management in New York. ``When it's all said and done, the economy's going to be fine.''

The S&P 500 added 2.79, or 0.2 percent, to 1398.20 as of 2:59 p.m. in New York. The Dow average increased 27.08, or 0.2 percent, to 12,234.67. It was the first two-day advance for both benchmarks since Feb. 20. The Nasdaq Composite Index was little changed, slipping 2.12, or 0.1 percent, to 2383.02.

Stocks yesterday broke a weeklong slump and posted their biggest gains since July after Paulson eased speculation that rising mortgage defaults will undermine the economy.

In addition to his assessment of the economy, Moskow said the prospect of rising inflation still outweighs the risk of slower growth. Moskow, who votes on rates this year, spoke in a speech to the Jewish United Fund Luncheon in Chicago.

Global Gains

Today's rise follows a second day of gains in Europe and Asia. The Dow Jones Stoxx 600 Index extended its rebound from a five-day decline, while shares in Asian emerging markets such as China and Malaysia led the region's advance.

Energy companies rallied 2.4 percent as a group, rounding out their best two-day advance since November. Oil futures climbed 1.9 percent to $61.86 a barrel in New York after the government reported an unexpected decline in inventories.

Exxon, the world's largest energy producer, increased $1.59 to $72.59. ConocoPhillips, the third-biggest U.S. oil company, jumped $2.44 to $68.26.

In the Dow average, Boeing added $1.05 to $88.87, while Hewlett-Packard increased 82 cents to $40.25.

To contact the reporter on this story: Michael Patterson in New York at mpatterson10@bloomberg.net.

Last Updated: March 7, 2007 15:03 EST