Feb. 28 (Bloomberg) -- U.S. stocks rebounded from their biggest plunge in four years as strategists advised investors against selling equities and Federal Reserve Chairman Ben S. Bernanke said he still expects the economy to pick up steam.

Consumer, telephone and health-care shares led the advance as investors sought companies with earnings less reliant on swings in the economy. Procter & Gamble Co. climbed the most in seven months for the best performance in the Dow Jones Industrial Average. Sprint Nextel Corp. climbed after reporting sales that beat analysts' estimates, while Merck & Co. gained on an increased profit forecast.

European and Asian markets slumped, while emerging markets were set for their worst two-day decline in eight months in the wake of yesterday's U.S. selloff. Strategists at UBS AG, Merrill Lynch & Co. and Citigroup Investment Research today recommended investors keep buying stocks given growth prospects.

``People are poking around amidst the rubble of yesterday's market collapse, looking for good things to buy,'' said John Carey, who manages about $12 billion at Pioneer Investment Management in Boston. ``The consumer economy here in the U.S. is still pretty strong. The longer-term picture continues to be encouraging.''

The Dow average added 58.72, or 0.5 percent, to 12,274.96 as of 12:12 p.m. in New York. The Standard & Poor's 500 Index rallied 8.87, or 0.6 percent, to 1407.91. All 10 industry groups in the benchmark rose. The Nasdaq Composite Index increased 10.73, or 0.5 percent, to 2418.59.

Before yesterday's tumble, the S&P 500 had gained 2.2 percent for the year, building on four years of advances. The S&P 500 and Nasdaq last week closed at six-year highs, while the Dow set a record. All three benchmarks have now declined in 2007.

`More Technical'

``Following a long, correction-free rally in equity markets, the move appears more technical than fundamental,'' wrote Darren Read and Larry Hatheway of UBS's global asset allocation team in a report distributed today. ``We use this opportunity to add to our equity overweight.''

Europe's Dow Jones Stoxx 600 Index had the worst two-day slide since 2002, while Asian shares fell the most in eight months. Emerging markets slumped, with stocks falling in India, Russia and Turkey. Chinese shares bounced back and recouped some of yesterday's losses that triggered the global selloff.

Bernanke reassured investors, saying there didn't appear to be ``any single trigger'' for the rout in stocks and that financial markets ``seem to be working well'' now. He also cited a ``reasonable possibility'' that the economy will show signs of strengthening around the middle of the year. He spoke in response to questions during testimony at the House Budget Committee.

Trading

On the New York Stock Exchange, about seven stocks rose for every six that fell. Some 1 billion shares changed hands on the Big Board, 81 percent more than the same time a week ago.

P&G jumped $2.17, or 3.5 percent, to $63.42 for its best gain since August. The largest U.S. consumer-products maker postponed the euro part of its proposed $4 billion bond sale after yesterday's stock market slump, according to a person familiar with the transaction.

More details will be released later today, according to the person, who declined to be identified because the terms of the sale aren't set.

Sprint climbed 99 cents to $19.44. The third-largest U.S. mobile-phone company said fourth-quarter profit increased 32 percent on higher sales, which rose 6.7 percent to $10.4 billion. Analysts had estimated sales of $10.3 billion, according to a Bloomberg survey.

Health-Care Shares

Merck, the nation's third-biggest maker of prescription drugs, added 85 cents to $44.03. The company raised its forecast for the year to $2.55 to $2.65 and said it expects to report adjusted earnings per share in the first quarter of 63 cents to 67 cents.

Also in the health-care industry, Hospira Inc. reported a 78 percent jump in earnings last quarter, thanks to an increase in sales. Shares of the hospital supply company that was spun off from Abbott Laboratories surged $2.93 to $38.83.

Housing stocks fell as the government said new home sales plunged the most in 13 years. Sales slid 16.6. percent to an annual rate of 937,000 in January, less than any economist had forecast in a Bloomberg News survey. The figures show home construction will remain a drag on the economy.

All 16 homebuilders in S&P indexes declined. Toll Brothers Inc., the largest U.S. luxury homebuilder, lost 64 cents to $29.94.

Manufacturing contracted for a second month, suggesting factory production will weigh on the economy into 2007. The National Association of Purchasing Management-Chicago's business barometer fell to 47.9 this month from 48.8 in January. A reading lower than 50 signals contraction.

GDP

The Commerce Department said gross domestic product expanded at a 2.2 percent annual rate, compared with a 3.5 rate reported on Jan. 31 and a 2 percent pace in the third quarter, as manufacturers reduced stockpiles. Consumer spending, which accounts for about 70 percent of the economy, increased at an annual rate of 4.2 percent last quarter.

In the same report, the Fed's preferred measure of inflation rose 1.9 percent in the fourth quarter, less than previously estimated.

Fremont General Corp. slumped $1.54 to $10.11. The third- largest provider of subprime U.S. mortgages through brokers and lenders postponed filing earnings for the fourth quarter and for the year 2006.

To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.

Last Updated: February 28, 2007 12:13 EST