Dec. 19 (Bloomberg) -- U.S. stocks rose for a second day, led by energy producers and financial firms, after oil climbed more than $1 a barrel and China bought a $5 billion stake in Morgan Stanley.

Exxon Mobil Corp., the largest energy company, and ConocoPhillips, the third-biggest U.S. crude producer, led an advance in energy shares. Morgan Stanley gained the most in more than a week after the China investment overshadowed the second- largest U.S. securities firm's first quarterly loss as a public company.

The S&P 500 climbed 0.77 to 1,455.75 at 3:49 p.m. in New York. The Dow Jones Industrial Average added 1.3 to 13,233.77. The Nasdaq Composite Index increased 7.9, or 0.3 percent, to 2,603.93. About eight stocks rose for every seven that fell on the New York Stock Exchange. European stocks dropped, while most Asian benchmarks advanced.

``The market is reacting pretty positively to Morgan Stanley,'' said Christian Andreach, who helps manage more than $15 billion at Manning & Napier Advisors Inc. in Fairport, New York. ``If the economy is going to hang in there, global demand for petroleum products is going to be fine, and that should support energy prices.''

Today's gains boosted the S&P 500's yearly advance to 2.6 percent, while the Dow has risen 6.2 percent in 2007 and the Nasdaq is up 7.8 percent. The gain was limited by speculation a deteriorating credit outlook for the nation's biggest bond insurers will saddle banks with more losses.

Exxon rose 46 cents to $91.88. ConocoPhillips added 98 cents to $84.52. Energy shares gained 1 percent, the most among 10 industry groups in the S&P 500. Crude oil for February delivery rose $1.18, or 1.3 percent, to $91.26 a barrel in New York after a government report showed that U.S. inventories declined more than expected as fog delayed the arrival of imports.

Morgan Stanley

Morgan Stanley added $2.05 to $50.12 after the investment from China overshadowed a fourth-quarter loss of $3.56 billion.

Morgan Stanley joins Bear Stearns Cos., Citigroup Inc. and other financial firms in seeking investments from governments in Asia and the Middle East as credit-market losses eat into capital.

Bear Stearns sold a 6 percent stake to China's government- controlled Citic Securities Co. for $1 billion in October. Citigroup Inc. obtained a $7.5 billion capital infusion from the ruling family of the Middle Eastern emirate Abu Dhabi.

China Investment Corp., the nation's $200 billion sovereign wealth fund, also paid $3 billion for a stake in New York-based private-equity firm Blackstone Group LP in May.

TD Ameritrade

TD Ameritrade Holding Corp. gained 28 cents to $19.68. The third-largest U.S. discount broker raised its fiscal first- quarter earnings forecast after trading rose to a record. Earnings will be about 39 cents a share for the quarter ending this month, up from a previous forecast of as much as 33 cents, the company said.

C.R. Bard Inc. increased $5.76, or 6.8 percent, to $90.78, the steepest gain in the S&P 500. The company's profit estimate for 2008 was raised to $4.35 a share from $4.30 by analyst Rick Wise at Bear Stearns & Co. after executives met with analysts. The maker of medical devices including hernia mesh, breathing tubes and arterial stents, will benefit from sales of new products, Wise said.

Schlumberger gained $1.72, or 1.9 percent, to $92.11. The company was upgraded to ``buy'' from ``neutral'' at Goldman Sachs Group Inc., which said the company will benefit from international sales. Schlumberger is a ``high-quality'' stock in a less certain market, analysts said.

MBIA Inc. tumbled $1.44, or 5.2 percent, to $26.26 after Standard & Poor's cut its debt outlook on the bond insurer because of ``worsening expectations'' for securities backed by subprime mortgages.

Ambac Financial

Ambac Financial Corp. dropped as much as 8.8 percent after S&P also lowered the outlook on the bond insurer's AAA credit ratings to negative from stable. The stock rebounded with a gain of 27 cents to $27.25. S&P also reduced its outlook for Financial Guaranty Insurance Co. and XL Capital Assurance Inc. to negative.

Financial company losses on securities tied to home loans would reach $200 billion if all the insurers were downgraded, Bloomberg data show, as investment guidelines would force some holders to sell their bonds.

SLM Corp., the biggest U.S. education lender, plunged the most ever after saying rising borrowing costs will slow profit growth. SLM, commonly known as Sallie Mae, fell $5.69, or 20 percent, to $23.18.

Hovnanian

Palm Inc. sank 38 cents to $5.55. The company's third- quarter loss will be 14 cents to 16 cents a share, excluding costs such as stock compensation, Palm said. Analysts on average had projected a loss of 5 cents, according to a Bloomberg survey. A year earlier, Palm posted a profit of 11 cents.

Darden Restaurants Inc. fell $7.74, or 21 percent, to $28.60, the steepest decline in the S&P 500. The company reported second-quarter profit that trailed analysts' estimates and reduced its full-year profit forecast.

Hovnanian Enterprises Inc., New Jersey's largest homebuilder, retreated $1.16 to $7.24 after reporting a loss that was four times analysts' average estimate. The company's net loss was $7.42 a share. Eight analysts in a Bloomberg survey forecast a loss of $1.63 a share. The year-ago loss was $1.88 a share.

Hovnanian led a gauge of homebuilders in S&P indexes to a 1.6 percent fall. Lennar Corp., the biggest, dropped 20 cents to $16.72. Pulte Homes Inc., the second largest, slipped 11 cents to $10.12.

Foreclosures Rise

U.S. home foreclosures rose 68 percent in November from a year earlier as adjustable-rate mortgages left subprime borrowers unable to meet higher payments, according to data compiled by RealtyTrac Inc.

Federal Reserve Bank of Richmond President Jeffrey Lacker said economic growth will be ``very weak'' next year as the housing market continues contracting. Speaking in Charlotte, Lacker said he expects housing to drag down economic growth ``well into 2008.'' The inflation picture is ``uncomfortable'' and has worsened, he said.

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

Last Updated: December 19, 2007 15:50 EST