Oct. 22 (Bloomberg) -- U.S. stocks rebounded from the worst week in two months on speculation banks and homebuilders, two of the poorest-performing industries this year, are takeover targets.

Beazer Homes USA Inc., whose shares have fallen 79 percent since December amid a federal probe, pushed homebuilders to their biggest rally in five years. Bear Stearns Cos. helped financial companies post their first advance in nine days after saying it will sell a stake to China's Citic Securities Co.

``There's some speculation there was going to be some type of outside investment made in Beazer Homes,'' said Michael James, senior equity trader at Wedbush Morgan Securities in Los Angeles. ``Just the talk of that got the stock up and a lot of homebuilders moving up because of the short interest. Rumors in highly shorted stocks move them around.''

The Standard & Poor's 500 Index added 4.28, or 0.3 percent, to 1,504.91 at 2:19 p.m. in New York. The Dow Jones Industrial Average climbed 44.87, or 0.3 percent, to 13,566.89. The Nasdaq Composite Index increased 22.44, or 0.8 percent, to 2,747.6, helped by gains in Apple Inc.

U.S. stocks rebounded from their lowest level since the Federal Reserve cut its benchmark lending rate Sept. 18, overcoming declines in Europe and Asia spurred by the Group of Seven finance ministers' statement that global economic growth would slow.

Beazer, D.R. Horton

Beazer, the most-shorted company on the New York Stock Exchange as of Oct. 15, climbed 80 cents, or 8.8 percent, to $9.86. ``Chatter went around this morning that there was going to be a strategic infusion of cash in the company,'' said Frank Davis, director of sales and trading at Lek Securities Corp. in New York. There's also ``been some speculative chatter about Beazer as a possible takeover candidate because the price of the stock is so low.''

D.R. Horton, whose shares are down 52 percent this year, added 84 cents, or 7 percent, to $12.79.

A gauge of homebuilders in S&P indexes climbed 6.8 percent, the most since October 2002, as all 15 members advanced. Their shares made up the top four gains in the S&P 500.

Apple Inc. increased $3.08, or 1.8 percent, to $173.50. The maker of the iPod media player and iPhone is scheduled to report earnings after the close of U.S. exchanges and may say annual sales surpassed $20 billion for the first time in the company's 31-year history, according to analysts surveyed by Bloomberg. The iPhone, introduced June 29, was AT&T's best-selling handset in the third quarter, Boston-based researcher Strategy Analytics said Oct. 18. Apple also will disclose for the first time its share of the $60 to $220 monthly fees AT&T receives for providing iPhone service.

Bear Stearns

Bear Stearns Cos. gained after the fifth-biggest U.S. securities firm and China's Citic Securities Co. agreed to invest $1 billion in each other in an alliance to pool their businesses in Asia. Citic will buy the equivalent of 6 percent of New York- based Bear Stearns' shares as the banks collaborate to develop financial products and services in China, the companies said.

They will also form a Hong Kong-based joint venture to bring together their operations outside of China. Bear Stearns advanced 76 cents to $117.17.

A gauge of financial companies rebounded from its steepest decline in more than a month, gaining 1 percent. Lehman Brothers Holdings Inc., the fourth-biggest securities firm, added 75 cents to $57.97.

Halliburton Co. added 31 cents to $39.16. The world's second-largest oilfield-services provider said third-quarter net income rose 19 percent as clients increased spending on wells in the Middle East and Asia. Excluding an increase in environmental reserves and a tax gain, third-quarter profit was about 66 cents a share, 1 cent higher than the average of 21 analyst estimates compiled by Bloomberg.

Stocks fell earlier in the day after the prospect of weakening economic growth pushed down mining and energy shares.

Energy, Metals Stocks

Exxon Mobil Corp., the biggest energy company, lost $1.29 to $90.85. Chevron, the second-largest U.S. crude producer, slipped $1.48 to $87.79. Oil fell for a second day on speculation that credit-market losses may stunt economic expansion, curbing energy demand, and as the risk of a Turkish offensive in Iraq receded. Crude for December delivery dropped as much as 2.6 percent to $84.73 a barrel in New York.

Newmont slumped 67 cents to $44.99 after copper fell to an almost five-week low and gold retreated from a 27-year high.

American Express, DuPont

American Express Co. lost 52 cents to $56.59. Analysts surveyed by Bloomberg expect the company to report profit excluding some items of 85 cents a share after the close of U.S. markets. Lehman cut its rating on American Express to ``equal weight'' from ``overweight,'' saying ``it is just a matter of time'' before losses spill over to credit cards, auto loans and other forms of credit.

DuPont Co., the third-largest U.S. chemical maker, retreated 40 cents to $46.47 after Citigroup cut the shares to ``hold'' from ``buy.''

MGM Mirage decreased 30 cents to $91.65. Dubai World stopped buying shares in the world's second-largest casino company because they were overpriced, its chairman said. The state-owned investment group agreed Aug. 22 to purchase as many as 28.4 million shares in billionaire Kirk Kerkorian's MGM and 50 percent of the Las Vegas-based company's CityCenter hotel-and-casino project. The group sought to buy half the shares in a public tender at $84 each. By the end of August, MGM's had exceeded Dubai World's offer price.

Schering-Plough Corp. fell $4.52 to $28.19. The drugmaker reported profit, excluding items related to the $14.4 billion acquisition of Akzo Nobel NV's Organon unit, that trailed the average estimate of analysts surveyed by Bloomberg.

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

Last Updated: October 22, 2007 14:20 EDT